Brands struggle with shopper marketing

07 February 2012

NEW YORK: Many US brand owners are struggling to get the maximum benefits from their shopper marketing programmes due to problems with budgeting and measurement, a study has revealed.

Booz & Company polled executives from 49 consumer packaged goods manufacturers, and discovered that a variety of obstacles existed preventing the desired outcomes from such schemes.

The consultancy suggested that formal shopper marketing budgets stood at $30bn per year, a total that doubled when adding funds released from brand and trade expenditure, making it "greater than the current spend on digital media".

Overall, 86% of the panel agreed retailers "gravitate to price discounting in their shopper marketing communications", even where programmes were meant to offer value beyond pure cost advantages.

A further 67% cited difficulties in selling initiatives covering brands in a range of categories to retailers, 47% spread expenditure across too many schemes, and 43% found it challenging to determine payback.

The most common forms of metrics tracked when trying to ascertain effectiveness included incremental costs, sales increases, retailer compliance levels and ROI rates.

Elsewhere, 43% said that time constraints were typically too tight to develop the best ideas with retailers and other manufacturers, and 39% said it had been hard to convince key in-house stakeholders about the business case for shopper marketing.

Upon assessing if this discipline had helped their brands grow sales at a faster pace than the category, the average firm delivered a score of 3.1 points on a five-point scale.

This rose to 3.2 points as to whether the return on investment from these activities bettered that of other types of advertising and promotional spending.

Booz & Company also reported that 90% of the top-performing firms boasted dedicated shopper marketing budgets which had been reallocated from brand-building efforts, standing at 60% for redirecting promotional expenditure.

Another 50% of this group acquired resources for shopper marketing on an ad hoc basis – known as "tin cupping" – from external business units. Ratings in these three areas hit 74%, 32% and 34% for the average company in turn.

"More than a third of the companies we surveyed have no dedicated shopper marketing budget at all," the study said. "When funding is not secured up front during the planning cycle, shopper marketers often find themselves 'tin-cupping' for dollars."

Data sourced from Booz & Co; additional content by Warc staff