It has always been said that the ‘Customer is King’ and you may think it has never been more so than in the current trading environment.

The reality is that the customer still has a hugely important and influential role in any trading relationship, but in terms of absolute importance the shopper has succeeded to the throne.

Historically, when it came to suppliers executing their multi-million pound consumer brand marketing activities, investing directly in customers, and in particular the multiple grocery retailers had been an afterthought. There were a number of reasons for this, including:

• Marketing teams did not understand the benefit of a totally through-the-line campaign
• Poor in-store implementation
• Clear aisle and retailer-only POS policies
• Supplier reluctance to invest more money in what can be a very expensive sales channel
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Understanding shoppers is key

Jointly developed in-store launches are successful

There are a few examples – the Gillette Fusion launch being one of them – where the supplier has embraced the opportunity multiple grocery retailers represent and jointly developed a totally integrated, in-store, consumer facing launch campaign with great success.

Things have moved on at a pace since the Gillette Fusion launch. The retailers, when looking to increase their market share in an ultra competitive environment, have invested in the resource and expertise to really understand shoppers. Enticing new shoppers into store or maintaining loyalty of existing shoppers has become a science – where success is driven by having great understanding and insight into their behaviour and using it to meet their needs through their business strategy.
 

Suppliers understanding shoppers

What does this mean for suppliers? Success for a supplier’s product or brand in this channel is becoming more reliant on having the same great understanding as the retailers of shoppers in their specific category. Only when the supplier has this understanding and is able to align their objectives and strategies with the retailer will they start to realise the benefits having access to the multiple grocery retailer’s stores and shoppers represents. Bringing retailer and supplier knowledge and insight together to develop jointly executed activities and plans is a very powerful and effective combination.

Focusing on the shopper implies that grocers and suppliers need to influence them at the point of purchase. This is not replacing but supplementing existing ATL campaigns that drive brand and product 'awareness' and 'consideration' outside of the store environment.

But statistics such as these suggest more work is needed:

• Seventy per cent of brand selections are made at stores
• Sixty eight per cent of buying decisions are unplanned

Investment in the shopper and shopper marketing in particular, has according to a draft industry study, doubled since 2004 and is on track for a compound annual growth rate of 21% to 2010.
 

Opportunities and threats from shopper power

The forward-thinking manufacturers and suppliers have very quickly recognised the massive opportunity, or conversely the threat, this ‘tipping’ of the balance of power towards the shopper represents. We have seen more resource directed into sophisticated customer and shopper centric business units – this is not just in terms of money but also people.

The large brand owners have set up sophisticated structures crossing over traditional trade marketing, category development and consumer and trade insights - pulling these functions together under one ‘umbrella’ function often referred to as customer marketing. This will typically incorporate customer and shopper research and insight, shopper marketing, category development and specific customer execution teams. These departments provide end to end solutions from ‘insight’ to ‘idea’ to ‘point of purchase planning’ through to ’implementation’.

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Many organisations have had to wrestle with the internal stresses involved when creating these teams and delivering the resources required to ensure success with retailers. In many cases the investment and very often the people resource has been diverted from traditional marketing and brand marketing teams as well as sales team customer budgets. In others it has been seen as an incremental opportunity worth supporting with incremental investment. The former is the most likely and common approach.

Category management - ever present 

The one ‘ever present’ we have seen despite the ‘morphing’ of functions into these new customer marketing teams is category management. And never has great category management been more important - if influencing shoppers in store at the point of purchase, the traditional domain of category management - is the key fundamental to successful implementation of your shopper strategy.

This recognition of the importance of shoppers, as well as the clear distinction between shoppers and consumers, has led to the need and thirst for new information and research to help find the unique insight that will unlock new value streams for suppliers and retailers alike. Developing the compelling ’Win, Win, Win’ propositions – no longer is it just the retailer and supplier, it also has to deliver a benefit for the shopper as well - is absolutely essential to being at the forefront of the success of shopper marketing. This can only be done by having detailed understanding of shoppers in your category in the target retailer.

Developing processes to succeed 

Organisations are starting to approach shopper marketing from the perspective of developing business process. Generally, the processes that have been developed reflect the traditional eight-step category management process in many ways. In fact if you have a detailed understanding of the category definition from a shopper perspective, the category role from a customer perspective and carried out a full category assessment, you are well on your way.

The process will be made up of a series of inputs, a clear category vision and with the traditional category tactics of assortment, price and promotion right at its heart – confirming the importance of the role of category management.

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STEP 1 – Start with the corporate and marketing objectives and strategies
This requires a clear understanding of the manufacturer’s brand essentials.

STEP 2 – Make the right choices –'you can't do everything with everyone'
Consider three criteria: value of retailer to manufacturer; degree manufacturer can hit target consumer through retailer and finally the collaborative opportunities.

STEP 3 – Get an in depth understanding of the current business situation at the retailer
One size does not fit all – an in depth understanding of the retailer’s current performance as well as the category performance. Just knowing is not enough – knowing why is essential.

STEP 4 – Get an in depth understanding of key retailer’s organisation, objectives and strategies
What’s in it for the retailer – will it help the retailer achieve its market objectives and does it respect their operational standards?

STEP 5 - Know the shoppers and their behaviours
Having an in depth and interesting understanding of shopping behaviour in the retailer will open the doors to success.

STEP 6 – Develop a shopper marketing strategy and plan as part of tailored and complete joint business plans
Have the ambition of developing and implementing strategies that maximise impact at the point of purchase - use traditional category tactics, but be creative.

STEP 7 – Execute with excellence and measure the results
Have a plan, pay attention to the small detail, have the right resource and extract the learnings – everything can be improved.

Successful development and execution of effective shopper marketing programmes is important for retailers and manufacturers and will have a dramatic impact on the success or failure of their future relationships and brands. Both parties believe that success is there to be realised for the quick and nimble who are prepared to take the risk, engage with retailers on a collaborative platform to jointly explore the possibilities.

There is no short-cut to success – you must have the right information and resource, both financially and physically, coupled with the energy, flare and know how to develop the best and most effective propositions with the best return on your investment.

Test yourself 

Are you ready to maximise the shopper opportunity? Take the test below and see how many you can answer ‘yes’ to.

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More information:

	Successful Category Management: Getting Started
	If you’re new to category management and need to understand the jargon used, the challenges category managers face and the solutions on offer to address them, this practical, one-day category management workshop is just what you need - no previous experience is necessary.

	Successful Category Management: Introducing Ranging & Merchandising
	This one-day workshop delves deeper into ranging and merchandising, enabling you to assemble an effective assortment and display to deliver your category objectives. You will learn about UK and International best practice and discover opportunities for your business.

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Graham Dorrington is a Commercial Development Manager in the Business & People Development Team at IGD, responsible for developing and delivering Category Management & Commercial Performance Improvement training programmes to IGD customers. Graham has previous experience of customer marketing, category management & commercial planning in a major FMCG organisation within the UK & internationally.