A Revolution in Shopper Marketing?

Nov 16 2014

The Shopper Marketing Revolution by Toby Desforges and Mike Anthony joins a very short list of books on the topic of shopper marketing. Notably, the book is full of up-to-date examples and reflects the very latest developments in the field, arguing that manufacturers have three customers - consumers, shoppers and retailers. The authors focus on the importance of metrics of behaviour change at point-of-sale and point out some of the failings of market research in understanding shopper behaviour, with many Asian examples.

The book starts with some staggering statistics. The authors cite a study of 700 retail promotions showing that 70% of them lost money for the manufacturer (that is, any incremental profit from them was less than the manufacturer’s costs). The average return on investment was 30 cents on the dollar, but in 75% of the promotions the retailer made money. If this return was projected globally, then the authors calculate a total loss of $ 196 billion across the top 250 consumer goods companies in the world, based on spending 10% of their revenues on in-store promotions. For comparison, this is equivalent to the GDP of Portugal, or half the potential profits of these companies.

They point out the difference between consumption and sales, using an example of holiday beer sales, which peak before such holidays as Christmas, Chinese New Year and US Independence Day. One study in the UK showed that sales declined significantly in the three months after holidays (perhaps not surprising), but at a much lower level than that of consumption. The study found that families stocked up on beer for the holidays, and then drank little of what they had bought, leaving cases of beer gathering dust in storage rooms and garages. Therefore, sales went down, but also many drinkers didn’t finish what they had bought because the beer was not in the fridge, ready to drink.

Much of the book focuses on the differences between the consumer (user), the shopper (buyer) and the retailer (provider). The authors argue that good marketing strategies reach all three of these ‘customer’ groups, but creating consumer desire to use a brand, maximise opportunities for shoppers to buy more of the brand, and motivating retailers to support the brand. Importantly, they are very clear that all of this depends on changing behaviour, and that any marketing strategy therefore should specifically address how this will be achieved (although they rarely do). And that’s not just changing the behaviour of the user, but also the shopper. To go back to beer, over 95% of beer in some retail markets is bought by people who are not the end consumers.

While in some cases the shopper and consumer are the same person, in many cases, perhaps the majority of sales in many categories, they are not the same person. The implication is that manufacturers should have different strategies for consumer and shopper (the book uses the example of Sunny Delight with different strategies for mums and kids). Moreover, shopper strategy is not limited to in-store strategy as much shopper behaviour happens before they enter the store.

The Shopper Marketing Revolution argues that promotions rarely work to the advantage of the brand, although retailers do well from them. In large part this is because all shoppers get the same offer. “Deal” shoppers, who may not be users and just look for the best bargain, may sometimes account for up to 80% of a promotion budget. For such shoppers, brands are ‘buying’ a boost in sales (but probably not profitability), but are not making any change to longer-term behaviours. Even worse, for their loyal and infrequent users, they are giving them what they want at a discounted price, reducing their profits and perhaps diminishing the longer term value of the brand. Remember, users would probably have bought the brand anyway!

The authors argue that path to purchase models such as AIDA (awareness-interest-desire-action) have limited value in describing shopper behaviour and in developing strategies to change that behaviour, and that they rarely distinguish between the shopper and the consumer. Unfortunately, the path is more winding and convoluted than any manufacturer (or researcher) would like to admit.

In fact, market research focuses far more on the consumer than the shopper (according to the author’s figures, only around 10% of research budgets are directed at shopper research). This is partly because of awareness and the more recent development of ideas of shopper marketing, but also because of the lack of skills and experience among researchers and a history of poorly conceived and reported research.

The last part of the book offers advice for revolutionising shopper marketing. I like the way the book reframes the manufacturer-centric 4 ‘P’s into a more customer-centric 4 ‘C’s (first putt forward by Robert Lauterborn and then Philip Kotler). Thus, Product becomes Customer need/value, Price becomes Cost (of ownership), Place becomes Convenience and Promotion becomes Communication.

These principles lead to some good advice on designing the shopper experience. For example. their guidance for shelf layout includes:

  • Make it easy to see the products you want people to buy
  • Put impulse products where they are hard to avoid
  • Put premium products in hot spots
  • Group products according to your strategy (as long as it doesn’t stop shoppers finding what they want)
  • Get big packs off the bottom shelf
  • Block horizontally and not vertically to get attention
  • Understand where people go and where they pay attention

I particularly like the last point, as there is still not enough emphasis placed on observing behaviours in-store (something I always find very insightful to understand triggers and barriers of behaviours).

Overall, The Shopper Marketing Revolution is a great read for anyone interested in buyer behaviour and optimising the retail environment. While other books better address the psychology of shopping (see the references below), this is the first book to combine the perspectives of consumer, shopper and retailer and how these audiences collectively contribute to successful marketing. Moreover, the book is very up-to-date and full of examples including many from Asia.

REFERENCES

The Shopper Marketing Revolution: How marketing must reinvent itself in the age of the shopper by Toby Desforges & Mike Anthony

Inside the Mind of the Shopper: The science of retailing by Herb Sorensen

Why We Buy: The science of shopping by Paco Underhill

Decoded: The science behind why we buy by Phil Barden

Brand esSense; Using sense, symbol and story to design brand identity by Neil Gains

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