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Thursday, September 3, 2009

Building a Shopper Marketing Department

Whether it falls under marketing or sales, the principle remains the same -- structure should follow strategy
By Erica Walkup

While they may not agree on the definition of shopper marketing, experts do agree that CPGs need to develop expertise and execute programs in this area. Creating a new, dedicated department within an established organization may seem daunting, but companies in multiple product categories have at least begun the process.
Dannon, Kimberly-Clark and Dr Pepper Snapple Group are three examples that illustrate how building a shopper marketing department can be done, but are by no means the only templates to follow. Each one is organized differently, with one falling under sales, one under marketing, and one landing somewhere in the middle.

Even if companies haven't started yet, Rob Holston, shopper marketing practice leader at New York-based Deloitte Consulting, says there's still time to get on board. "Some nimble, maybe No. 2 [company] in the category could offer some more innovative ideas on how to grow the category and the retailers would be more interested in partnering." 
According to last year's Deloitte Consulting/Grocery Manufacturers Association study, less than 10% of companies have entered the final phase of developing their shopper marketing programs, referred to as "culturally embedding." Holston says the majority, 60% to 70%, are in the "scaling" or growth phase, and the remainder are just getting started, or "incubating."

Dannon
The Dannon Co., White Plains, N.Y., started small and created its three-person shelf obsession team in 2007. The team now has more than 20 members and was renamed the store obsession team to broaden its scope beyond the dairy aisle, taking on cross-category promotions such as pairing yogurt with granola.

"We realized that we needed to have a very focused approach to how we were working with retailers to help them envision the continued development of the yogurt section, which is the largest engine of growth in dairy, and that was not reflected in the investments that were being made," says Michael Neuwirth, senior director of public relations.
Most of the team came from within the sales department and reports there as well. "You have to draw the line somewhere," Neuwirth says. "We have drawn the line at the door of the store in part because that real estate is under the management and control of the customer as opposed to a media agency or something like that." He adds that the team also works closely with marketing.

The department's main objective is to make the yogurt aisle easier to shop by organizing products by benefit, such as digestive health, plain yogurt for cooking or yogurt for a child's lunchbox. "That's the way the shopper approaches the store shelf, and that's the way we've been working with retailers to reorganize the store shelves," Neuwirth says.

Kimberly-Clark
At Kimberly-Clark, Irving, Texas, shopper marketing is instead part of the marketing organization, with members embedded in both the brand marketing and customer teams. "We really don't see it as its own island but rather as a powerful part of our IMP [integrated marketing planning] process," says Mark Scott, vice president of shopper marketing and sales planning. Before this process was put into place, "We were in a much more transactional relationship with our major customers as opposed to wanting to use our brands to become an indispensable partner with them," he says. "[It's a] very different change in culture."

Late 2008 was the first time the company explicitly put "shopper marketing" in job titles, but the team was really created to "help facilitate" this new IMP process that brings everything together. "We now have that process and the brands are much more focused on commercial ideas that they want to execute and then the role that in-store or shopper marketing is going to have as those come to market," Scott says.

Case in point, K-C worked with Safeway to reformat its baby care aisle, making it more inviting for moms to shop. After collecting insights via its virtual reality tools, Safeway rolled out the concept to three test stores and has since expanded it.

Dr Pepper Snapple Group
Plano, Texas-based Dr Pepper Snapple Group (DPSG) has yet another department structure. Like Dannon, the department was built from within, starting with five people five years ago. Now called the customer development group, it has grown significantly to include 40 members with backgrounds in analytics, promotions, brand marketing and other areas. The team collaborates with both marketing and sales but reports into what the company calls a center of excellence, which Rob Colarossi, vice president, customer development, says resides "smack in the middle of sales and marketing."

"A lot of times, the skill set we look for is someone who truly understands insights and strategy, so I'll get people from marketing backgrounds who have had a sales or retail bent. I'll also get people from category management and a sales background who have a consumer or shopper or marketing bent," Colarossi says. "Five years ago, this wasn't as proven of a skill set, and over time it's really morphed and grown."

DPSG got on board when shopper marketing wasn't as prevalent as it is today. "What we realized is we had a salesforce building relationships and business plans with our customers, but we really did not have anyone looking at it through the lens of the shopper," he says. "So there was no duplication, we thought it was a significant opportunity, and that's how the department started."

The company is working with multiple retailers to drive consumption and trip frequency, using customized messaging and offers (such as coupons) to target specific shopper segments, such as light to moderate Dr Pepper users. Taking it one step further, the company is also working with CPGs in complementary categories, including Kraft and Unilever, to build co-marketing initiatives, and is doing market basket analysis with loyalty-card and shopper-segmentation data.

"Instead of just one brand, we're going in with multiple categories and shopper solutions based on themes, needs and wants of shopper segments," Colarossi says.

Where to Start
As was the case at Kimberly-Clark, building a shopper marketing department may require a change in the company's culture. "Manufacturers are set up structurally and organizationally to run broad-based national activities. But shopper marketing is not a broad-based national activity, it's a customer-by-customer activity," says Jon Kramer, chief marketing officer of Winston-Salem, N.C.-based Alliance, a shopper marketing design and display firm. "Shopper marketing needs to be a category activity, not a brand activity, so that's really where the challenge comes in."

Although the process differs for each company, Deloitte's Holston stresses that structure should follow strategy, and not the other way around. "If organizations are viewing this as an extension of the brand and marketing activities, then they're most likely going to report to the brand and marketing organization. If companies view it as a tactic to deliver the brand plan and get deeper relationships with the customer, they might embed that in the customer sales organization," he says.

Alison Chaltas, principal at sales and marketing firm Interscope, Westport, Conn., echoes Holston's advice, adding that companies first need to understand what shopper marketing means to them. "First and foremost, I think a shopper marketing department needs to define what is shopper marketing for that organization and what is that organization's shopper marketing strategy?" she says. "[They need to] really understand what the company is trying to get out of shopper marketing: 'What do I want to be? Do I want to be the smartest player in the store? Do I want to be the fastest new product innovator? Do I want to be the voice of a particular category?'"

Kramer says the best way to structure a shopper marketing department is to have it reporting to sales, as Dannon does. "Shopper marketing is really about shopper activation and not necessarily marketing," he says. "Sales needs to be the driver for the shopper marketing programming because it's a retailer proposition, and who understands their distribution channels and their customer base, the retailer base, better than sales?"

However, Holston says "a lot of companies are migrating it back into the marketing organization because they view it as a critical part of brand strategy and planning overall." Neither approach is necessarily right or wrong, he asserts, as long as the structure follows the strategy.

Putting Insights Into Action
Once a shopper marketing team is in place, it needs to own certain core competencies. Again, this will vary depending on the company's strategy, but understanding shopper insights and how to put them into action is key.
Dr Pepper Snapple Group follows a four-step process to bring its campaigns to life at retail. The first phase is the full insight assessment. "It's really finding those 'ah-ha' moments, digging deep, and finding the data and relevant pieces from the shopper perspective," Colarossi says. Next comes strategy, in which the company builds a strategic business plan with the retailers. The third step is activation, followed by a full evaluation and post analysis of the project.

More specifically, the team works with retailers to understand their "primary and secondary shopper first, and then develop insights and strategies for them," building shopper loyalty to the store and getting those shoppers to buy more.

Dannon's store obsession team is also responsible for bringing research to the retailers, presenting new products and promotions to them, and activating those promotions in-store, whether through sampling, P-O-S materials, co-marketing campaigns or video displays and kiosks. "They're also helping retailers to analyze what's working and what can be further optimized," Neuwirth adds.

Rather than listing specific job functions, Scott talks about shopper marketing at Kimberly-Clark in terms of the team's ultimate objective. "We want to do things that build our brand and differentiate the retailer at the same time," he says. "They're going to have to have a deep understanding of our brands and of our key customers, and as we bring commercial ideas to life, how we can do both of those things."

Since shopper marketing is a relatively new discipline, the department may also need to spend some time on education. "We need shopper marketing organizations to educate the organization on what is shopper marketing, to be advocates for shopper marketing in the organization, and then to own some tactical elements," says Interscope's Chaltas.

Holston also sees a need for spreading shopper marketing throughout the organization. "Some companies have even made it part of their HR policies that you can't advance in the brand organization unless you've spent some time in the customer or shopper marketing space to get that perspective," he says.

Published: June 2009 


Shopper Marketing is another buzzword for CPG enthusiasts. Competing to be in the mind of consumers before entering the store has always been challenging. However, the real make-or-break arena is where the shoppers are going in front of the shelves or some call it the first moment of truth.

It needs strong collaboration between account manager equipped with marketing-resources with the retailer counter-part. The starting point is deep understanding how the target shoppers shop, and develop in-store marketing program to direct them backward.

The author suggest that the initiative should be part of the strategy & the staffing (resource) should sufficiently allocate for it. Of course, since this area is still new, there may need some efforts to show its benefit for the company to entire organization, especially the sales teams.