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The Growing Importance of Shopper Marketing in Asia

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Shopper marketing has been growing in importance in Europe and the US for some time, but how widely adopted is the discipline in Asia? A recent survey of Asian managers conducted by Nielsen and engage reveals that most managers predict shopper marketing will become more important for the companies they work for in Asia. More than half of the managers surveyed said their companies had begun making shopper marketing a priority in the last 5 years.

So why is this happening in Asia now? Read my thoughts on the growing importance of shopper marketing in Asia over on the engage blog.

What is the difference between Trade Marketing and Shopper Marketing?

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Shopper MarketingOver the last few weeks, I’ve been asked a number of times about the differences between trade marketing and shopper marketing. Many of those who’ve asked the question are managers struggling with organizational questions like “Where should shopper marketing sit?” and “Isn’t it really just a new brand name for trade marketing?”

The reality is that the differences between shopper and trade marketing are more than just semantic and there are major issues in believing them to be interchangeable.

The history of trade marketing

Trade marketing has been with us for more than 25 years. Initially conceived as a function which would organize tailored promotions for large retail customers, it became increasingly important in the ‘90’s. Media fragmentation, retail consolidation and the growth of category management led many large FMCGs to conclude that greater support was needed in managing the trade. So trade marketing developed into a specialist function supporting marketing and sales, charged with the development and execution of point of purchase activities.

Trade marketing today

Today, almost all leading manufacturers have a trade marketing function in their business. But this fact alone does not mean that all businesses have a common understanding of trade marketing. Indeed one of my colleagues urged me to check-out the definition of trade marketing on Wikipedia; the long, rambling and incoherent ‘definition’ is accompanied by a request for help in improving it!

There’s no doubt that in most companies the support of trade marketers is valued by their colleagues in sales and marketing. But different companies seem to have different requirements of their trade marketers. For some it’s a strategic stand-alone function, for others it’s an administrative support function. Indeed there appear to be four common forms of trade marketing in operation globally, all with quite different roles and responsibilities. As a result, for many companies trade marketing is the sum of its activities.

No surprise then that with the advent of the term ‘Shopper Marketing’ over the last decade we have seen many managers rebranding trade marketing as shopper marketing. This is a bad idea!

What is shopper marketing?

Unlike trade marketing, shopper marketing is not an organizational function. It is a clearly defined business process with specific commercial outcomes. Shopper marketing is marketing; to shoppers: It is the process of defining and executing a marketing mix, the purpose of which is to change shopping behavior in order to drive the consumption of a brand.

As a result, and unlike trade marketing, shopper marketing is not the sum of all the potential activities that could be applied to influence shoppers. Rather, the activities that are created are the product of the shopper marketing process itself.

This is more than a semantic distinction – consumer goods companies need to market to shoppers more effectively now than at any time in the past.

Why shopper marketing is important now

Consumer goods brands face a barrage of competition, more so than at any other time in history, and the traditional mechanisms of above-the-line and below-the-line are faltering as communication becomes digital and mobile. At the same time retailers which have been growing and consolidating over the past 25 years now find that they need new business models to attract and retain shoppers.

In this environment the ability to understand, target and change the behavior of specific shopper groups is as commercially important today as being able to market products to consumers and sell them to retailers. Those businesses that excel in integrating their efforts with consumers, shoppers and retailers find that internal decision making is faster and marketing investment decisions are easier. They also enjoy greater support from retailers, which leads to superior results.

Where does this leave trade marketing?

The creation shopper marketing puts the trade marketing function at a crossroads:

  • The function could develop deeper specialization in the trade space: focusing more on marketing to the trade, rather than marketing in the trade. This would, without doubt, enhance the impact of many sales teams around the world. It would also require marketing teams to extend their purview to include shoppers.
  • The function could remain largely in its existing space but focus more on effectively engineering trade investments. This again would require marketing to extend its remit.
  • The function could take on accountability for the execution of the shopper marketing process. This would require it to build stronger capability in shopper research, shopper insights and strategic planning and would bring the function much closer to the consumer marketing function. It would also require the sales function to be much more focused on execution with customers.

In any instance, the advent of shopper marketing is anything but the creation of a new name for trade marketing!

If you’d like to learn more about shopper marketing, trade marketing, and how they can help your business, check out and subscribe to this blog from my company, engage.

Growth of online shoppers in emerging markets: How ready are you?

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Again China has blown online shopping records out of the water. US$ 5.75 billion in one day! That’s nearly three times greater than all online sales on Cyber Monday in the US last year. Here’s the kicker though – it was all via one portal – T-Mall.

Shoppers In Emerging MarketsChina’s huge online market shows the potential for shoppers in emerging markets to leapfrog traditional retail environments and jump straight in to online shopping. Why wait for your favorite brand to open a store near you, or for your uncle to travel to the States when you can get the product via your mobile?

What does this mean for retailers?

  1. Global presence does not always depend on the number of physical stores you have, it depends on how accessible your online offer is: For years ‘global’ retailers have expanded by putting pins on the map. Tomorrow’s winners will not need to invest in bricks and mortar, but will expand virtually.
  2. Your brand is more important to you now than your supply chain: Walmart has grown over the last 5 decades by virtue of its super-efficient supply chain, which has created massive returns on working capital. The retailers of the future will need strong brands to attract shoppers to them online. Amazon achieved this by building trust and a keen pricing model; Zappo’s simply blew their shoppers’ minds with the level of customer service they offered, in both cases the brand pulled people towards the site.
  3. Don’t wait for markets: They are waiting for you: Too many retailers are waiting for emerging markets to reach certain thresholds in development before entry. This closes down the opportunity to service the market that already exists –the hundreds of millions of internet-connected middle class shoppers all over the developing world.

What does this mean for manufacturers?

  1. Online is mainstream: Too many companies push the whole issue of ‘online’ into a small team in marketing and e-commerce and is often dismissed as irrelevant by sales directors. The reality is that treating online as a niche or a specialism will lead to major organizational issues when it dominates marketing and sales – make it a mainstream activity now and capitalize on the growth opportunity.
  2. E-commerce is not based in the US: Too many businesses focus their e-commerce attention in developed economies like the US. This is a mistake! There is more to be gained from building massive competence in the economies and  shoppers in emerging markets, particularly those in Asia.
  3. Don’t wait for retail: Waiting for WalMart to capitalize on opportunities in emerging markets is likely to leave the door open to your competitors globally and locally. Many markets could be tapped rapidly by constructing a branded online offer.

At engage, we help various clients with their strategy for penetrating emerging markets, both through online and offline channels. If this is an area you are struggling with, please feel free to contact me for help!

Managing The Tesco Category Action Plan

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category action planningIt’s November! With less than two months of the year to go, Tesco’s suppliers around the world will be preparing the ground for agreeing next year’s Joint Business Plan. This year the Thailand business unit, Tesco Lotus has launched a new twist to the process, encouraging and leading manufacturers to pool their ideas. Clearly Tesco’s Thai managers hope that by gathering a category’s leading lights, they will be able to access a level of insights they have failed to tap to date. Whilst this is great for Tesco’s commercial team, many Thai trade marketers are burning the midnight oil to meet expectations!

How the Category Action Planning process works

The whole journey starts with the health-check; data is gathered to determine Tesco’s relative performance as compared to other retailers in the space and to the category as a whole. Based on this data Tesco works with suppliers to develop a Category Action Plan. Each supplier then develops a business plan designed to support the category action plan as an input to the joint business planning process. Once the planning process is complete and both sides have signed-off the joint scorecard, terms are agreed for the coming year.

Viewed in this way, there is little new about the overarching process. Indeed some of the tools applied here have been around since the earliest days of Category Management and Efficient Consumer Response. However, this year, Tesco’s Thai team have added a couple of twists just to keep category managers on their toes!

Category Action Planning Twist One: Working With Competitors

I have to say that when I first heard about this, even I was a little surprised: The presentation of each company’s view on the Category Health Check and the development of Category Action Plans is to be done with all key vendors concurrently. Yup, that’s right, P&G, Unilever and L’Oreal each get to present their insights and ideas, whilst the others are in the same room!

Now whilst I’d love to be a fly on the wall in these meetings this twist presents a few challenges:

  1. How do you persuade Tesco you are the guys to support whilst not sharing your key insights with competitors?
  2. How do you avoid being shown up as not knowing enough by your competitors? And;
  3. How do avoid sharing your key strategies with competitors and hence loose competitive advantage across, potentially, the whole modern trade?

Category Action Planning Twist Two: Using Dunnhumby data is a must

This is much less of a surprise: Clubcard data provides some rich veins of data to analyze and at least has the benefit of being equally available to its subscribers. But of course insisting this be the key source immediately excludes vendors who don’t subscribe. Even for subscribers there are challenges too:

  1. How do you avoid offering anything other than the most generic analysis of Dunnhumby’s data without, again, exposing your own insights to competitors?
  2. How do you approach the process if your team does not yet have a high-level of competence in managing this sort of data (our recent research with Nielsen  suggests nearly 80% of consumer goods businesses in Asia have inadequate processes to support the analysis of shopper data)?
  3. How do you tie in other data sources to ensure that the analysis not only reflects what’s happening within Tesco, but also in the competitive world outside?

Managing the Challenges

Whilst the particular twists that Tesco have introduced this year are new, many suppliers have worked with Tesco successfully for years. We found that there are steps that these companies take, that with a small amount of modification will deliver in these circumstances:

  1. Define where Tesco sits in the company’s strategy. It’s easy to assume that just because Tesco is a large customer that it’s an important customer. For many Tesco attracts a large volume of shoppers which drives high category volumes. But, as I wrote last week, many Tesco shoppers, particularly in large format stores operate on auto-pilot. This means that relatively little investment is needed in this part of the portfolio if this behavior works well for your brands. If, however, Tesco’s diverse store base helps you to un-tap shopping behavior that could drive your brands growth, the retailer may be more import.
  2. Define clear objectives for Tesco. Be specific on the business changes you are seeking and define precisely in which groups of stores you expect these changes to be delivered. This will help you focus more clearly on the insights you need to develop to prove a future business case for supporting your agenda.
  3. Offer insights, not just information. In this process everyone is party to the same information, be it Kantar, Nielsen or Dunnhumby. Offering another formulaic sets of charts that just describe the situation will neither distinguish you, nor defend against a more aggressive competitor. Convert your objectives into hypotheses and then use commonly available data to prove or disprove these. Avoid sharing research you have conducted, however, until you are one-on-one with Tesco.
  4. Use retailer’s language. Tesco (as is clear from their high-handed approach) do not care about vendors – they care about their performance in the category. They don’t care if your sales are up, and they don’t measure your performance in invoice sales. BUT, they do care about their growth in both real and like-for-like retail sales; they care about their market share and their share of the category as they define it; they care about their stock-holding and your contribution to this and they care about the margins they make from the category. These are the measures you should focus on – not your own!
  5. Offer practical solutions. Too many vendors propose exciting and creative retail solutions only to find that the ones that get implemented are the simpler more generic approaches of their competitors. This is because the best solutions for Tesco are ones they can rapidly and easily deploy across all there stores in a group of outlets.

I’m fortunate to have worked with Tesco, to have supported key account managers for many years and to be surrounded by veterans in the field, so it’s relatively it’s easy for me to identify how to manage the category action planning process. However it may not be so easy for you and your team.

Do please feel free to get in touch to learn more about how our team at engage can help you develop and negotiate joint business plans with Tesco or any other accounts around the world, or contact me if you feel you’d benefit from some one-on-one coaching.

Why Are Grocery Stores So Dull?

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Why are grocery stores so dull?I’ve been spending a lot of time in grocery stores recently. Over the last six months I’ve visited supermarkets and hypermarkets in two continents and in seven different countries.  You’d think that in such a diverse world, with so many cultural differences, that our grocery stores would reflect our diversity and differences, wouldn’t you?

And yet when I compare grocery stores in Spain and Singapore, Udine and Udon Thani, Dublin and Driotwich I’m often faced with exactly the same picture: aisle after aisle of uniformly presented shelves full of evenly stacked and ubiquitous products. The similarity between the places we shop in is striking and at the same time it’s stultifying!

Do  grocery stores have to be so dull?

On a recent trip to Ireland, I got to spend some time with Ken Hughes from Glacier Consulting, and it was that meeting that got me thinking about this. Ken is a behavioral economist, which means he’s interested in how our behaviors influence the economic choices we make. He applies this expertise when looking at the way we shop. He has watched shoppers, measured their brain waves, even tracked the speed at which trolleys are pushed through stores and all of his research leads to a singular conclusion – when we shop, we do so on auto-pilot.

Studies time and again bear this out; as grocery shoppers we pay little attention to our environment, only seeking out the products we actually want in a category most of the time. Ken likens this to using the grocery store as an extension to our pantries – we just reach into stores and grab what we want, without really thinking about it.  So of course we find shopping dull – for many of us it’s dead time.

But does the in-store environment of grocery stores we shop in need to be dull?

Dull environments sustain habits

Ironically, a dull environment may be exactly what we need. A dull environment may not be sexy but it is extremely predictable.  Predictability supports habits.

We actually buy a relatively limited range of grocery products every year and we tend to buy from portfolios of brands we trust – in effect many of us buy grocery products habitually. Many shoppers habitually go to the same store every week for their groceries and many of us will be familiar with the sensation when go shopping that we can’t really remember where we’ve been in the store and how our carts managed to get so full. The conclusion that shopping is habitual for many people is therefore unavoidable.

Retailers and manufacturers like this. For good reasons: it helps them plan; predictable habits support accurate forecasting which leads to effective inventory, logistics and production planning, all of which keeps costs down.

So dull, predictable environments are good for manufacturers and retailers, right? Well, no!

In order to grow, habits need to change

You don’t have to be a student of physics to have heard Einstein’s definition of insanity: “Doing the same thing over and over again and expecting different results.” This should be invoked often in the world of consumer goods marketing, because whilst the industry craves predictability, it needs growth to thrive. Unfortunately, the only way to grow is to encourage shoppers’ behavior to change, either by getting people who don’t buy to buy or buy getting those who do buy, to buy more, more often.

To do this, shopping environments need to be dynamic.

Creating a dynamic shopping environment

One of the coolest things about online retail environments is they have the potential to be in permanent flux. As my needs change and develop, Amazon’s offer (for instance) changes to reflect my changing behavior. Bricks and mortar stores are not so flexible, so creating a dynamic in-store environment  of grocery stores is a much bigger ask. It requires a much higher level of collaboration between manufacturers and retailers to be successful. Together they need to:

  1. Identify the shopper behavior they want – do manufacturers and retailers want shoppers to trade-up, buy in greater volumes, join the category for the first time or (yes) stick to what they’ve always done?
  2. Ensure that the store can deliver – store operators (and their suppliers) need to be honest about what can be achieved in a grocery outlet. Will shoppers notice the new bigger idea? Are they prepared to take the extra time to learn about the category? Will they be upset if you mess with their habits?
  3. Define what needs to happen to change behavior – behaviors change as a result of stimuli – if you provide the right stimuli, behaviors will change. So together, retailers and manufacturers need to learn what stimuli really work.
  4. Make change a habit – shoppers will adapt to changes in retail environments quickly, so what was once an innovation rapidly becomes wall-paper and new habits get formed. To continue growing, marketers and merchants have to consistently innovate.

At engage we’ve made it our mission to help consumer goods companies to improve their engagement with consumers, shoppers and retail customers. If you are facing a growth challenge, contact us, to learn how we can help.