Download Supercharging shopper solution results - Strategy

Supercharging
shopper solution
results
Improving returns
through shopper
marketing and
trade promotion
alignment
Contacts
About the authors
Amsterdam
Cleveland
New York
Coen De Vuijst
Partner
+31-20-504-1941
coen.devuijst
@strategyand.pwc.com
Steven Treppo
Partner
+1-216-696-1570
steven.treppo
@strategyand.pwc.com
Matthew Egol
Partner
+1-212-551-6716
matthew.egol
@strategyand.pwc.com
Chicago
London
San Francisco
Penny Boswell
Principal
+1-312-578-4883
penny.boswell
@strategyand.pwc.com
Richard Rawlinson
Partner
+44-20-7393-3415
richard.rawlinson
@strategyand.pwc.com
Nick Hodson
Partner
+1-415-653-3500
nicholas.hodson
@strategyand.pwc.com
Jon Van Duyne
Senior Executive Advisor
+44-20-7393-3346
jon.vanduyne
@strategyand.pwc.com
Matthew Egol is a
partner with Strategy&
based in New York. He
focuses on strategy and
capability development
work with clients in the
consumer packaged
goods, retail, marketing
services, and media
industries, and he leads
the firm’s work in
shopper marketing.
Jon Van Duyne is a
senior executive advisor
with Strategy& based in
London. He is a member
of the leadership team
for the firm’s trade
promotion excellence
practice and focuses on
increasing trade
promotion, sales, and
marketing effectiveness
through process,
technology, and
organizational
improvement.
Penny Boswell is a
principal with Strategy&
based in Chicago. She
focuses on go-to-market
strategy and sales and
marketing capability
development in the
consumer packaged
goods and retail sectors.
This report was originally published by Booz & Company in 2012.
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Strategy&
Executive summary
Alignment between trade promotion and shopper marketing is
essential to optimizing investments in shopper solutions. A new
Strategy& survey reveals that there is a select group of shopper
marketing leaders that are capturing more influence with retailers and
better returns. They achieve this by identifying and pursuing the right
solution platform priorities, aligning their sales and marketing
organizations to better focus on their platform priorities, and
developing new funding and planning processes to support better
decision making, greater lead time, and superior execution.
Strategy&
3
Better alignment, better results
Consumer packaged goods (CPG) manufacturers can capture greater
returns and competitive advantage by more closely aligning shopper
marketing initiatives with trade promotion activities. When this
alignment is achieved, shopper marketing programs will produce
significant gains in return on investment (ROI) and brand equity, while
also strengthening relationships with retailers.
Recognizing that the consumer is not always the shopper, and that there
are important touch points at home, on the go, and in the store that can
be used to reinforce brand equity and convert sales, CPG companies
increasingly design brand marketing programs to include a shopper
marketing component. In most cases, shopper marketing complements
trade and consumer promotion activities, overlaying a shopper solution
on a price promotion in collaboration with a specific retailer.
Shopper solutions offer added value beyond price discounts, and
simultaneously create motivation and drive action. As detailed in our
annual report on shopper marketing prepared for the Grocery
Manufacturers Association (GMA), shopper solutions typically feature
two or more products that can be purchased together.1 For example, a
solution might bring together multiple categories and brands from
across a store, such as a display that combines snacks, condiments,
serving products, and charcoal to entice shoppers to transform an
everyday meal into a cookout for family and friends (motivation) and
provides the ancillary products needed to create it (action).
The better the alignment between trade promotion and shopper
marketing, the better the returns on shopper solutions. Coordination
between the two disciplines is essential because, no matter where
shopper solutions are executed on the path to purchase, their objectives
virtually always include driving shoppers to the store and increasing
the size of their baskets. Indeed, most shopper solutions involve
customized displays and communications that are built around a trade
promotion event staged with a particular retail partner. As such, their
success requires the full support and involvement of account teams and
retail partners.
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Strategy&
If alignment of shopper marketing and trade promotions is neglected, it
is difficult to attain the full potential of shopper solutions. In fact, a
recent Strategy& survey of 49 sales and marketing executives at major
CPG companies reveals that many of the pain points associated with
shopper marketing are directly related to the lack of cooperation and
collaboration at the intersection of trade promotion and shopper
marketing (see Exhibit 1).
Exhibit 1
Shopper marketing pain points
Retailer alignment
Retailers gravitate to price discounting in their shopper
communications even for shopper solutions that are meant
to provide additional value beyond pricing
53%
Retailer alignment
It is challenging to sell in programs that combine brands
from multiple categories to retailers
53%
Program strategy
We spread our investment and resources against too many
events rather than fewer, bigger programs
39%
8% 47%
Program measurement
Shopper marketing programs make it challenging to
measure the ROI for trade promotion events
39%
4% 43%
Program execution
We have too little lead time to execute solutions
effectively with retailers and with other manufacturers
41%
Organizational alignment
It is hard to build the business case for investment
within the organization
“To what extent do you agree that the following pain points are related to your shopper
marketing programs?” (Percentage of respondents who agree or strongly agree)
29%
33%
14%
86%
67%
2% 43%
10% 39%
Agree
Strongly agree
Source: Strategy& Trade
Promotion–Shopper
Marketing intersection
survey, Nov.–Dec. 2011
Strategy&
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The results divide
The survey also revealed a clear divide among the shopper marketing
initiatives of CPG companies. In fact, there is a select group of
companies that is moving away from the pack in terms of shopper
marketing practice and results.
Our analysis of the survey data finds that some companies are reporting
improved gains in “soft” results — that is, influence with retailers —
in comparison to the average company’s performance. These leading
companies are doing a better job of gaining a seat at the table with their
retail accounts, and their shopper solutions are providing them with a
valuable bartering chip as they seek to build account volume.
There is an even greater performance gap when it comes to “hard”
results. Here the leaders are capturing significantly faster sales growth
from their shopper marketing programs than the average company.
Though there is a wide range of results across individual programs
within all companies, leaders also report higher overall ROI from their
shopper marketing programs than from their other advertising and
promotion programs (see Exhibit 2, next page).
These findings are consistent with those of surveys that Strategy& has
undertaken with the GMA and Path to Purchase Institute.2 Moreover,
all of our surveys link the development of a leading shopper marketing
capability with a coherent strategy that prioritizes the right shopper
solution programs and aligns retailers and service agencies in their
design and execution to enhanced influence and results.
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Strategy&
Exhibit 2
The leaders are breaking away
Strongly
disagree
1
Disagree
2
Neutral
3
… our collaborative efforts with retail partners give us greater
influence over the programs they execute
Influence
Results
… our shopper marketing ROI is higher than that for our
other advertising and promotion investments
“Due to our shopper marketing programs overall …”
(Mean score of survey responses)
Strongly
agree
4
5
4.3
3.8
4.4
… our category leadership position with some of our most
important retail partners is enhanced
… the brands in our portfolio are growing their sales faster
than competitors in their categories
Agree
3.9
4.1
3.1
4.1
3.2
Leaders
Average company
Source: Strategy& Trade
Promotion–Shopper
Marketing intersection
survey, Nov.–Dec. 2011
Strategy&
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What leaders do
What accounts for the enhanced performance of shopper marketing
leaders? As might be expected, experience and size are correlated with
shopper marketing success: The longer a company has practiced shopper
marketing and the bigger the company is, the more successful its
shopper marketing initiatives tend to be. But there are also a number of
practices that are correlated with shopper marketing success that are
unrelated to either a company’s size or its experience with the stillemerging discipline.
Leaders in shopper marketing better manage the critical intersection of
shopper marketing and trade promotion. This improves their ability to
sell programs into retail accounts and enables them to better collaborate
with retailers, creating shopper solutions that are more effective at
growing the category than promotions focused on price discounting
alone — thus realizing two of the major promises of shopper marketing.
They accomplish this through three actions:
1. Identifying and pursuing the right solution platform priorities (those
that offer attractive headroom for growth) and engaging the right set
of retail partners around these priorities
2. Aligning their sales and marketing organizations to better focus on
solution platform priorities
3. Developing new funding and planning processes to support better
decision making, greater lead time, and superior execution
1. Identify and pursue the right solution platform priorities.
Determining the right platform priorities enables manufacturers to fund
and deliver shopper solutions that are most relevant for their retail
partners and shoppers. Clearly recognized priorities give direction to
investment and insight development programs, and serve as the basis
for sustained commitment.
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Strategy&
Prioritizing solutions starts with shopper insights, the currency for
driving internal and external alignment around investments. The most
effective shopper marketing programs take a problem-solution approach
to driving desired shopper behaviors by addressing a focused set of
shopper pain points.
At the strategic level, this involves prioritizing areas where closing the
gap between motivation and action can produce the greatest headroom
for growth. This headroom may be found in a shopper segment (new
moms, Hispanics, boomers), a department within the store that underindexes compared with other retailers, or an occasion or trip mission. For
example, as described in our report for GMA, Clorox discovered
headroom in the gap between shoppers’ motivation to prevent sickness
during cold and flu season and their likelihood to take action given pain
points in the shopping experience. In response, the company developed a
scalable set of wellness programs and customized them for specific
retailers, such as its “Prevent, Protect & Soothe” solution with Roundy’s
Supermarkets (see Exhibit 3). In prioritizing this solution, Clorox captured
an opportunity to accelerate growth and provided a key platform for
retailer collaboration that enhanced promotional effectiveness.
Exhibit 3
Clorox finds headroom for growth
Dial® Soap
On me
Objective
Partner with Roundy’s to drive traffic to pharmacy and increase
total store sales
Insights
Shoppers look for health and wellness solutions in or near the
pharmacy, but the products are typically found in the center of the
store in multiple locations
SCOTTIES® Facial Tissue
Burt’s Bees® Lip Balm
Brita® Water Filtration
In me
Headroom for growth of several hundred million dollars in closing
the gap between interest and action around prevention
Kellogg’s Special K Products
®
®
Campbells’ Soup
®
Around me
Help me
Clorox® Disinfection Products
In-store Flu Shots
In-store Pneumonia Shots
Vision
Execution &
results
Connect center store with pharmacy to become health and wellness
“one-stop shop” during cold and flu season
Bundle and co-locate products to create “Prevent, Protect & Soothe”
theme and leverage combined marketing voice
Delivered education on health and wellness solutions for family, as
well as coupon savings on multiple purchases
Clorox Home Care up 2.3% in 2010, and up 16% during program;
Clorox Disinfecting Wipes up 54%
Source: GMA Shopper
Marketing 5.0 study; Clorox
and AMG; Strategy&
analysis
Strategy&
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At the event level, shopper solutions must be grounded in one or more
insights that enable them to deliver value beyond the product itself. For
this reason, the most effective shopper solutions are often focused on
the experience of buying and using the product, rather than just the
features and benefits of the product itself. Best-in-class shopper
solutions share several key characteristics, all of which require
developing insights to focus on “words that work” and the right
motivational cues and calls to action to enhance their effectiveness:
• Superior shopper marketing programs make the solution obvious,
capture shoppers’ attention, and help them to visualize the value
beyond price alone.
• They focus on simple, concise messaging and content, avoiding
overly complex or heavily loaded displays.
• They offer compelling “news” and a clear call to action that explains
why the shopper should put the product in her basket today.
• Finally, they bring products together for a complete solution when
required. A multi-manufacturer solution is not always necessary, but
in some cases, it can be worth the additional execution complexity to
create more value for the shopper.
2. Align the sales and marketing organizations to better focus
on solution platform priorities.
Because shopper solutions can simultaneously build brands and volume,
shopper marketing can be a bridge between a CPG company’s business
units, marketing, and sales, enabling better-integrated programs and
optimized returns.
Too often, the siloed nature of CPG companies blocks this benefit. The
shopper marketing organization will propose solution programs and
their appropriate platforms, but then must struggle to sell the programs
to its own company’s field sales organization and business units. This is
particularly common with scale programs that cut across more than one
brand in the company and require greater coordination of efforts. The
result is wasted time and resources for the CPG manufacturer and in
some cases for its agency partners and other service providers, such as
those involved in developing custom merchandising and displays.
Creating greater transparency around the highest-value solution
priorities and communicating effectively are key steps in driving greater
organizational alignment. To achieve greater traction, companies need
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Strategy&
to get beyond “heroic” efforts to sell programs internally to the
organization and across marketing service providers and retail partners.
Metrics are also essential to creating organizational alignment. Most
companies are measuring the effectiveness of their shopper marketing
to some degree, but few are measuring it as completely as needed to
drive alignment (see Exhibit 4).
Driving greater alignment also requires addressing roles, processes, and
decision rights for shopper marketing investments. Instead of working
separately, trade planning, category management, insight development,
and shopper marketing must be able to collaborate with business units
to optimize shopper solutions, especially for those programs that need
to be customizable at scale. The economics of shopper solutions require
Exhibit 4
Measurement is inconsistent
Never
Sometimes
About
half the
time
1
2
3
Most
of the
time
4
Incremental costs of shopper marketing programs
5
3.5
3.4
Brand sales lift from shopper marketing programs
Program compliance
3.1
ROI of shopper marketing programs
3.1
Category growth for retailer from shopper programs
2.9
Developing a complete view of the costs of shopper marketing
programs, including the costs of trade promotions, consumer
promotions, and associated retailer-targeted media spend
2.9
2.5
Retailer share gain from shopper marketing programs
Brand health impact from shopper marketing programs
(change to brand attributes tracked)
For all
programs
1.9
“How consistently do you measure the effectiveness of your shopper marketing programs?”
(Mean score of survey responses)
Source: Strategy& Trade
Promotion–Shopper
Marketing intersection
survey, Nov.–Dec. 2011
Strategy&
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that they be scalable across retailers, while successful sell-in requires
that they offer retailers the ability to differentiate themselves from their
competitors and achieve often unique objectives. Given the need to roll
out shopper solutions that include trade promotion elements across a
broad set of customers in a way that is proportionately fair and equally
available, it is also important to have the ability to develop “lite”
versions of solution platforms that can be scaled more easily within
channel or area teams as opposed to customer-specific teams.
Greater collaboration is an imperative for solutions featuring products
from across categories. For shopper marketing to leverage the full
product portfolio, attain the scale needed to make solutions economical,
and address the priorities of retailers, CPG manufacturers need to align
resources by customers and channels as opposed to brands. Often this
will require bringing customer marketing, shopper insights, category
management, and trade promotion planning expertise more closely
together, whether in a united organization or through more integrated
planning processes and decision-making forums. The key to success is
focusing not solely on the “lines and boxes” on the organizational chart,
but on how decisions are made and how the execution of program
activities is managed.
Further, most of the organization’s shopper marketing resources should
be directed to the customer, channel, or area teams in the field that
customize platforms and execute shopper programs. Talent in the field
should be supported by a lean shopper marketing center of excellence
that is focused on synthesizing the insights and business cases,
galvanizing the organization around the right set of shopper solutions,
and supporting program management capabilities in both customer and
brand marketing teams.
3. Develop new funding and planning processes to support
better decision making, greater lead time, and superior
execution.
Efficient and timely funding and planning processes are essential to
fielding effective shopper solutions. Many CPG marketing and sales
executives — nearly half of the respondents in our survey — are
experiencing planning-related pressures. They are concerned that they
are spreading their efforts too thin by trying to field too many shopper
marketing events. They also say they lack the proper lead time for
successful execution.
These problems are often exacerbated by the way funding is managed.
Though shopper marketing is growing rapidly, it often receives funding
in stages rather than through a preset budget. Today, annual shopper
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Strategy&
marketing investments are approximately 10 percent of trade spending,
US$30 billion by CPG companies (excluding other categories such as
consumer electronics, home improvement, and entertainment).
In addition to this dedicated funding, a significant share of spending for
shopper marketing programs is released during the year from brand and
trade budgets. When these additional funds are taken into account,
total spending on shopper marketing can be as much as twice the
amount budgeted up front for the year. In all, shopper marketing
spending is greater than the current spend on digital media.
When funding is not secured up front during the planning cycle, shopper
marketers often find themselves “tin-cupping” for dollars. In some cases,
this problem is exacerbated because all funds must come from tincupping — more than a third of the companies we surveyed have no
dedicated shopper marketing budget at all (see Exhibit 5, next page).
One consequence of these conditions is an inability to focus on fewer,
bigger, and better programs. Another is compressed lead times, which
affect the ability to execute solutions effectively. Improved budgeting
and planning processes provide shopper marketing with more time to
conceive and deliver solutions that are better aligned to both brand and
customer strategies. Shopper marketing leaders are more likely to have
preset budgets that incorporate funding policies and terms with overall
trade investment requirements and eliminate tin-cupping. They also
have planning processes and tools that enable them to align their
programs with trade planning in terms of timing and execution.
Strategy&
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Exhibit 5
Too much tin-cupping
Disagree/strongly disagree
90%
10%
We have an annual budget for shopper marketing that has been
established by reallocating brand marketing funds
23%
We have a dedicated annual budget for shopper marketing that has
been established by reallocating trade promotion funds or slowing
the growth of trade funding
73%
20%
50%
“Tin-cupping” to obtain funding from brands/business units during
the year rather than from a dedicated budget represents a significant
source of funding for our shopper marketing programs
A significant share of the funding for shopper marketing
programs comes from customer trade promotion funds that are
diverted during the year rather than from a dedicated annual
budget for shopper marketing
Agree/strongly agree
60%
32%
40%
48%
70%
57%
“To what extent do you agree with each of the following statements?”
50%
34%
30%
23%
Leaders
Average company
Source: Strategy& Trade
Promotion–Shopper
Marketing intersection
survey, Nov.–Dec. 2011
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Strategy&
The alignment advantage
Leading CPG manufacturers are embracing shopper solutions to drive
volume and build their brands with consumers, and to reduce their
reliance on price-focused trade promotions and retailer events that can
have lower ROIs in many cases and provide less opportunity for building
brand equity. Toward these ends, they are leveraging insights to develop
solutions that better tap into shoppers’ core motivations and activate
equity along the path to purchase. But in the rush to develop shopper
marketing as an organizational capability and a competitive advantage,
CPG manufacturers should keep in mind that shopper marketing is
inherently cross-functional and its success depends on alignment across
marketing and sales functions, especially with trade promotions.
Achieving greater alignment between shopper marketing and trade
promotions is not solely a matter of creating a center of excellence or
reshuffling organizational lines and boxes. Rather, it requires aligning
marketing and sales to better engage retail partners in the development
and execution of shopper solutions that deliver added value beyond
price reductions to shoppers.
This is a challenging task; it will often require developing new ways of
working, and truly changing behaviors across the marketing and sales
organizations. But CPG manufacturers that are successful at creating
alignment not only will capture greater returns from the shopper
solution programs and build strong brands, they will earn the right to
win in their categories.
Strategy&
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Endnotes
For more information on shopper solutions, see “Shopper Marketing 5.0:
Creating Value with Shopper Solutions.” www.strategyand.pwc.com/media/file/
Strategyand-Shopper-Marketing-5.0.pdf
1
See also “Ensuring Success in Shopper Marketing: The Essential Role of the
Sales Team,” by Matthew Egol and Jon Van Duyne. www.strategyand.pwc.com/
media/file/Strategyand-Ensuring-Success-Shopper-Marketing.pdf
2
This report was originally published by Booz & Company in 2012.
www.strategyand.pwc.com
© 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further
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