Shopper Marketing is a Supply Chain Partner's Next Marketing Frontier

"We are convinced that Shopper Marketing is the way in which we will achieve our growth objectives in a depressed market. We are equally convinced that we will have to dramatically overhaul our business model to activate shopper marketing."
(CEO of a Fortune 500 consumer goods company)

Shopper marketing has been attracting more and more attention since its inception in the early 2000s.

It refers to the complex but coordinated combination of marketing and sales tools that supply chain partners -- such as consumer goods manufacturers (CPGs), sales intermediaries, advertising agencies, data companies, and retailers -- use to engage shoppers, build brand equity, and persuade shoppers when they are in the 'shopping mode.'

Shopper marketing understands how target consumers behave as shoppers and leverages this intelligence across the supply chain to benefit the company, brand, consumers, retailers, and shoppers.

"Shopper marketing is the hottest issue in retail and consumer package goods," said UT Shopper Market Forum organizer Dan Flint, UT's Proffitt's Inc. Associate Professor of Marketing.

Seventy-three percent of consumer product goods manufacturers and 86% of retailers rank shopper marketing as the number one activity that delivers meaningful return on investment. Over the next three years, 80% of manufacturers and retailers will increase their non-trade, in-store programs; 40% will increase their budgets more than 5%.

"Few other universities are paying serious attention to the shopper marketing opportunity -- so far," continues Flint, "The remark above, made at our inaugural Shopper Marketing Forum, underlines the promise and challenges that the new concept of shopper marketing presents to all supply chain partners."

The economic downturn, coupled with changes in shoppers' behavior and attitudes, has forced companies to rethink ways to entice customers to buy, particularly since 70% of the time, shoppers choose what to buy while they are shopping, 8% of buying decisions are unplanned, and only five percent of customers are loyal to the brand of one product group.

The current economic climate presents consumer packaged goods (CPG) manufacturers and retailers with a distinct new set of marketing, sales, and supply chain challenges in the pursuit of the shoppers' dollar. Notwithstanding the billions of dollars spent on shopper marketing, brand loyalty is at an all-time low and Internet technology and social media is developing a new type of customer, one who is considerably more educated regarding products and pricing, more interactive with other consumers in sharing shopping and product experiences, and more particular in shopping behavior.

According to a Deloitte Study, retailers and manufacturers who are embracing shopper marketing and executing against a core set of principles are growing 50% faster than the categories in which they participate. Why? Because whereas 35 million people watched the American Idol finale, 150 million people shop at Wal-Mart EVERY week!

Besides its cross-functional, integrative character, shopper marketing focuses on continuously gaining insight into the shopper's buying motivation. Shopper marketers try to understand how and why economic, demographic, and environmental factors cause changes in shopper behavior, including factors such as a store's physical lay-out, atmosphere, and the presence of in-store shopping technology (e.g.: shopper radio, TV, coupons, etc.)

Shopper marketing tries to understand shoppers' motivation to 'move' the shopper from the shopping list to the shopping cart, ensuring that the entire shopping experience is viewed favorably. Its customer-centric philosophy emphasizes the rapid customization of products, merchandising, and in-store assortments to meet the wants and needs of the ever-changing and diverse shopper.

Many of the more elaborate retail sales promotions timed around events such as the Superbowl are examples of shopper marketing in action. In a particular Superbowl event, a major retailer and its supply chain partners developed a seamless media and elaborate, in-store display event that included related products as diverse as wide-screen TV's and chips and dip.

In another instance, a retailer teamed with a manufacturer to develop a "training pants" section of the store. This focused store area contained products uniquely catering to this audience.

Shopper marketing activity may require the combination of different product and service categories that forces the creation of shopper-orientated manufacturer/retailer partnerships. Although these supply chain partnerships may seem attractive from the shopper marketing perspective, they create a new dynamic in the existing relationships between channel partners.

Shopper marketing is dissolving the traditional boundaries between suppliers, intermediaries, and retailers. It is a new and rapidly developing field.

During the recent inaugural Shopper Marketing Forum at the University of Tennessee, Knoxville, chief executives of CPG companies, market intermediaries, data companies, and retailers met to discuss the latest developments in shopper marketing with each other and university faculty and researchers.

Marcel M. Zondag is a Ph.D. Student at University of Tennessee.

Daniel Flint is the Proffitt's Associate Professor in Marketing at University of Tennessee.

Recognizing the prominent role of shopper marketing in the future of marketing and its resulting impact on supply chain issues, the University of Tennessee has established the Shopper Marketing Forum as a public-private partnership between the university and industry with the goal to advance the field of shopper marketing from a practitioners and academic perspective. For more information, please visit http://bus.utk.edu/smf.

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