Shopper marketing: Before you consume, you shop!
When Tim Dorgan first suggested teaching a class in shopper marketing, circa 2005, he was advised that the idea sounded more like a lecture than a class. Last year, he offered that class to students in the integrated marketing communications program at Northwestern’s Medill School – and the new course opened with a waiting list. Shopper marketing’s influence is growing, and its focus on the shopping experience is aligning brand, retailer, and shopper interests in new ways. We caught up with Tim between his day job (he runs Peapod’s interactive business and manages the company’s e-merchandising) and his teaching responsibilities at Medill to talk about the new course.
BMC: Would you begin by giving us a definition of shopper marketing?
Tim: When I was building the curriculum for the new course, I found a number of definitions, but the one I liked best was “brand marketing in a retail environment.” It’s concise and clear.
The focus is different from consumer marketing. A shopper is a consumer in action on the path to purchase. A key difference? Shopper marketing isn’t looking for one-size-fits-all answers – it’s account specific. It’s about shopping for a particular product at a specific retailer.
At its core, it’s about using shopper-driven insights to support the shared interests of the retailer and the brand.
How do you increase the shared interest in a way that satisfies the needs of both the brand and the retailer?
Tim: Shopper marketing looks a lot like the classic Venn diagram where three sets of interests overlap – the brand, the retailer, and the shopper. The manufacturer and the retailer must align to appeal to the shopper. The conversation often starts with identifying the retailer’s most important dimension, and then moves to developing insight about their shoppers that both can leverage to appeal to the shopper at the shelf.
So the success of a shopper marketing program depends on shopper insights. What can you tell us about how these are developed?
Tim: The best insights come from good targeted research into the shoppers at a specific retailer. This can involve all the different kinds of research – quantitative research like surveys and shopper intercepts and qualitative research like focus groups, shopalongs, and top shopper dialogs. But in my experience, the insights typically don’t somehow pop automatically out of the research. They result from a lot of firsthand observation and discussion within the team about what’s going on.
The formal research is always important, particularly when it comes to confirming the “draft insights,” but at the end of the day, development of powerful shopper insight is in significant part a creative process. There is art involved, as well as science. Best practices are emerging in a number of areas, but building an effective shopper marketing program has not yet evolved to a step-by-step process.
It’s easy to understand why shopper marketing works for manufacturers, but what attracts retailers to it?
Tim: Shopper insights. Shopper insights are the great equalizer. What good retailer wouldn’t take the opportunity to learn from insights into what their shoppers are looking for and would like? When these insights are brought by suppliers who also want to work to improve the shopping experience in their stores so they can sell more product, it’s hard not to want to get involved.
So far so good, but this seems to be about selling more of a manufacturer’s product, whereas a retailer may want to grow an entire category.
Tim: The best shopper marketing programs lift a category, but it’s not always easy to bring new shoppers into the category or to bring them back from channels where they may have shifted their purchasing. Shopper marketing can create excitement in the category, which helps to stem the loss of shoppers for the retailer and sell more for the sponsoring brand.
How do companies measure the success of shopper marketing?
Tim: Shopper marketing is not one of the best-measured disciplines yet. It’s a young and evolving practice that’s done in a complicated retail environment where it’s not easy to apply traditional test and control measurements.
That said, companies are looking at three main areas to gauge the success of shopper marketing programs.
- Sales lift – How much product did the program sell?
- Loyalty – How effective was the program in retaining customers and increasing the spending of individual households at the retailer?
- Equity – How effective was the program in enhancing the equity of both the brand and the retailer?
Progress is being made in measuring and metrics, but these are still early days.
One indication of shopper marketing’s power, however, is the fact that Procter and Gamble quickly adopted this point of view. They restructured their approach to start with the shopper at the shelf and work backwards, and they’re bringing a lot of high quality talent to the task. Shopper marketing brings together a lot of sophisticated talent from many disciplines – research, promotions, marketing – to create programs for retailers.
Do you see a time when retailers will be the ones initiating shopper marketing programs?
Tim: Today shopper marketing is still driven primarily by manufacturers, and it seems to me that many of them are making long-term commitments to it. At the same time, when you look at what retailers are doing as part of their loyalty/CRM programs to better understand the needs and segment their shoppers, you can see a data platform that could be used to initiate shopper marketing. What Kroger has done and continues to do with dunnhumby is an example of how this could all play out.
For BMC readers:
- Where and how does the growing practice of shopper marketing intersect with shopper use of personal technology?
- Where do you see good examples of shopper marketing?
- Will retailers ever (or occasionally) take the lead?
- What barriers need to be overcome before this happens?