April, 2013

Research Perspective and Comments & Analysis

Shopper Marketing Coming To A Produce Department Near You

By Bill Bishop, Chief Architect, Brick Meets Click, & Founder, Willard Bishop LLC

Big consumer goods companies such as Procter & Gamble and General Mills pioneered the use of shopper marketing by translating their understanding of what catches customers’ attention into programs to get them to buy. These manufacturers have used shopper marketing to help retailers sell more product and, at the same time, improve the shopper experience. There are now signs that shopper marketing is coming to produce and, at least for early adopters, this could create some significant competitive advantage.

Shopper marketing has proven to be effective in-store and is now being extended to digital. Today, for example, with most shoppers carrying a cell phone and shopper marketing driven promotional texts are being used to cost effectively alert customers to special promotions, there’s a good chance that within the next year or two shoppers will actually be getting their personal circular via text.

To better understand where shopper marketing is going, Brick Meets Click completed some research last fall looking at what’s next. From the study results and other work recently done, it’s clear that shopper marketing is no longer limited to consumer package goods suppliers and is already being used in perishables. For example, Cargill recently introduced a website to help improve shopper experience buying and using ground beef, which shows that even suppliers of unbranded perishable products are now using digital shopper marketing. This is just one of the reasons we expect to see shopper marketing used more in produce.

There’s a lot to shopper marketing, but one aspect with application to produce is solution-selling, and this is a tool that’s gaining traction.

Shopper marketing practitioners are using solutions to increase collaboration with retailers and to drive higher sales. Over two-thirds (68 percent) of those surveyed agreed that solutions are getting more focus, and that this tactic is producing significant benefits including:  

  • Producing measurable sales increases.
  • Strengthening the relationship be-tween supplier and retail customers.

While shopper solutions can take more effort to develop and execute, compared to traditional merchandising, these solutions also tend to create greater value so they represent a good investment.

Proof Of Concept

The power of shopper marketing solutions in produce can be seen in a test that showed strong sales increases by selling berries and yogurt/cheese together.

We conducted this study, Dairy Meal Solutions, Merchandising Works with the Retail Advisory Board of The Innovation Center for U.S. Dairy. The study was carried out in the stores of five retailers: Brookshire’s, K-VA-T, Roche Bros., Save Mart, and Weis Markets. It was designed to develop and test different meal solutions, including one for snacking.  

The motivation for the snacking solution came from the realization that healthy snacking is very popular; i.e., 51 percent of snack occasions involved nutritious snacks such as fruit, nuts, and yogurt.  This selling solution was called Perfect Pairings. It was executed on-shelf in the produce department and gave shoppers “new ideas, new tastes, and new twists on old favorite snacks.”  The Perfect Pairings solution combined different types of berries with yogurt and snack cheeses.  The sales increases from this snacking solution were the highest of any of those tested.

Next Steps

Shopper marketing will not be for all produce suppliers, but for those who want to learn more so they can decide if it can help them grow the sales of their product, here are three things to do:

1. Look at the “dairy meal solutions study” report.  It’s available at www.usdairy. com/retailers under the Meal Solution Merchandising tab on the left.  While the focus is mainly on dairy, it provides detailed examples and shows where and how there is an opportunity for produce.

2. Think through what things you have learned about why shoppers are buying your product and then see if there is an insight that can be used to build a shopper marketing solution or themed message.

3. Approach a retailer who already does a good job supporting and selling your product and offer to work together to create a shopper marketing solution or themed message that can be tested. As you move forward, be sure that the plan supports the retailer’s marketing strategy while selling more of your products.

Shopper marketing won’t be a replacement for “good ole” mass merchandising, but it will be a way to drive additional sales and increase consumption by better meeting shopper needs.


Produce Variability Makes It Harder For Solution Selling

One is always wise to pay attention to Bill Bishop, and so when he gives the clarion call that produce marketers should pay attention to “shopper marketing,” one should start taking notes.

Shopper marketing has varying definitions but, in essence, the idea is to look at how one’s target customers behave in their role as shoppers and then try to leverage these insights into increased sales. Initially, the efforts focused mostly on the in-store experience, but increasingly, the focus has shifted to efforts outside the retail environment.

Think about how specific consumers decide to add something to their shopping list and how they decide to deviate from that list, and then think about what understanding these processes could do in terms of offering opportunities to change those consumers’ purchasing behaviors. One then starts to gain insight into “shopper marketing,” and one understands why a company such as Proctor & Gamble spends upward of half a billion dollars annually on these efforts.

The challenge in produce is the difficulty in getting accurate data on consumer behavior, combined with a paucity of marketing budgets to implement whatever insights can be derived. Even the relevance of the data we do have is often suspect, because quality, condition and availability of product — both the one we are studying and competitive products — are ever-changing variables in produce. So what will work just fine under dataset one will be a total failure under dataset two, collected one week later. Consumer packaged goods companies don’t generally work under the same highly variable conditions.

Of course, the idea of solution marketing, basically selling not a product but a solution to consumers’ problems is very powerful. The example Bill Bishop gives is a case in point: One philosophy is to offer a whole bunch of products in different parts of the store and make the consumers solve their own problems.

This attitude, pretty much the universal way product is merchandised and marketed in supermarkets, poses a couple of challenges. First, it means that shopping is going to be hard work. Consumers have to be organized and search out products all to solve their problems — in the example Bill gives, what shall I buy to have healthy snacks around the house? Second, it is bound to reduce sales either because consumers don’t realize all their needs or they don’t find all the options that might help them in identifying a solution to their problems.

So it is not surprising that offering “Perfect Pairings” would be a hit with many consumers. It solves their problem, simplifies their lives and expands their horizons all at once. In a sense, it is a “no-brainer.”

Yet the fact that these types of efforts happen so rarely that they are the exception — worthy of a Bill Bishop study — rather than the rule, points to major obstacles in implementing these types of solutions.

Part of the challenge is the way retailers are structured. When a produce department gives shelf space to yogurt, that ring typically still goes to dairy. So the companion produce product has to increase in sales sufficiently to cover the total loss of a produce ring on the shelf space given to the yogurt for the enterprise to be profitable for produce. In other words, if the promotion is berries and yogurt, and the consequence is that the apples got scaled back to make room for the yogurt, the berries alone have to increase in sales sufficiently to cover the reduced sales of apples. The yogurt sales, no matter how large, don’t count because that ring goes to a different department.

Produce vendors often fail to even propose these types of solutions. They are into selling their “stuff,” and neither have good insight into what consumers might really want, nor do they have the time or skills to put together deals with other companies in different fields for jointly merchandised solutions.

Of course, some produce companies, particularly in the value-added area, have honed right in. Sometimes the solution selling is inherent in the product — say party vegetable trays. Sometimes they segregate a market — say mini carrots sold with ranch dressing or peanut butter in a snack pack. Sometimes it is the packaging that provides the solution, as in cup-holder-sized-and-shaped snacking packages.

Gaining insight and developing products is key, of course, but retailers know which consumers they are targeting, so the most successful shopper marketing efforts depend crucially on collaboration between a retailer and a vendor.  More of that is much to be desired and would probably boost sales all by itself.