Case study: Shopper Marketing Ramps Up

Retail experts may disagree as to an exact definition of "shopper marketing." However, most agree that it encompasses in-store deals, promotions that are not store-based and even digital coupons. Shopper marketing includes promotional activity by retailers and manufacturers before a shopper enters the store (such as a Web-based search), as well as in-store promotions. According to the director of integrated shopper marketing at Campbell Soup (www.campbellsoup.com): "Shopper marketing is bigger than just customer marketing because it takes into account what the consumer is thinking when he or she is outside the store and not planning an immediate purchase."

In many cases, shopper marketing is conducted in a coordinated manner by manufacturers and retailers. A marketing manager at General Mills (www.generalmills.com) says that by working closely with retailers, it helps "them win their share of wallet, align with their programs, and offer solutions that are going to ultimately benefit them [the retailers] the most."

Both manufacturers and retailers can gain from working together in shopper marketing activities. Manufacturers may be able to limit competition from retailers private brands or to ensure that its second- and third-tier brands get adequate pro motion. Retailers may want to use shopper marketing to access new technologies developed by manufacturers, such as in-store couponing via a consumer's smart phone.

Nonetheless, there are major obstacles that need to be overcome for shopper marketing to reach its full potential. In the past, many retailers and manufacturers did not work together on joint promotions. Sometimes, shopper marketing is impeded by channel conflict among channel members, such as when retailers have insisted on obtaining slotting fees, trade allowances, and promotional reimbursements.

An executive at a firm that manufactures private-label products suggests that: "If you continue with the mode of accepting money as a trade allowance [absent other changes], the reality is you are actually letting a national manufacturer control your store environment."

Another major impediment to shopper marketing is the control of prime shelf space by retailers. Wal- Mart (www.walmart.com) and other major retailers tightly control the amount of shelf space allocated to each brand, as well as their location on a shelf. In general, eye- level locations and end-of-aisle end-cap locations are preferable to ankle-level and mid-aisle locations. Some retailers will give the best locations to either the best-selling national brands or their own private label products. Changing this culture may be very difficult.

The increased utilization of the Web, including social media, has had a

major influence on shopper marketing. A study by the Grocery Manufacturers

Association (www.gmaonline.org) found that 62 percent of shoppers now look

for deals on line before at least one-half of their shopping trips. This behaviour shifts channel power to manufacturers by influencing shoppers through discount coupons and other special incentives. Manufacturers such as General Mills have also become more adept at reaching shoppers by using social media and other digital tools. The goal for General Mills is to "build a relationship with them [consumers] so that they take that relationship into the stores and you don't have to work as hard to win in that moment when they're at the shelf."

Questions

1. Provide three of your own examples of shopper marketing that are beneficial for both manufacturers and retailers. (5 marks)

2. Is a retailer's desire to build up its private-label brands an inevitable source of channel conflict? Explain your answer. (5 marks)

3. Describe how digital coupons offered by manufacturers shift channel power to the manufacturer. (5 marks)

What is question 1 answer.