Are we playing the mobile shopper marketing game all wrong? (Part 1 of 2)
I recently read this Moms Love Smartphones article.
And once again, I was all sparked up with ideas. Most were opportunistic, once I got over the frustration I’ve had all along with mobile shopper marketing. Some of the facts in the article further convinced me that many shopper marketers are activating mobile all wrong. This week’s post is about what’s wrong with this scenario, in my humble shopper marketing opinion. Next week I will talk opportunities, and there are many! Feel free to join in via the comments section.
FACTS: Moms with Smartphones:
- Are 18% more likely than women overall to own a smartphone – 53% own one
- 68% use smartphone while shopping
- 62% use shopping apps to compare prices
- 46% take action as a result of a smartphone ad, using coupons, local deals and scanning bar codes for lower prices.
The research data is solid. But guess what? The activation centers on the use of coupons. The actions we're asking Moms to take on their smartphones are further depleting profits for the manufacturers and brands we all know and love. Marketers are continually flocking to the use of mobile to dole out the deals. I say we need to re-think this.
When did we decide it was a good idea to use digital and mobile technology to expand the opportunity to make less money? Why do we use mobile technology to offer more shoppers more products via the “trade promotion” model of (what I bluntly call) “margin-sucking” offers and deals? We already know they don’t do much to enhance brand value. And if our discount offers generate great shopper response, we're in "over redemption" trouble on the marketing budget as well.
If I’m a CMO, I vote NO on taking that money out of my brand budget. If I’m the SVP of Shopper Marketing I vote no to pouring good money after bad. And I don’t want to explain to the CFO why I support a higher percentage of low margin sales. Even the Sales VP avoids that meeting.
As an industry, we may be activating this way because we think it’s more measureable, but why are we still measuring the cases sold on deal instead of the health of our effective relationships with shopper?
The stats for shopper mobile coupon usage will continue to escalate, because we let them. Because we fail to use the insights derived from studies for inspiration and ideation to plan and then actually do things that might be dramatically more meaningful and effective to build our brands with shoppers over time.
The more we default to mobile as a channel to extend the reach and frequency of price promotion behaviors, the more damage we do to the strategic opportunity shopper marketing holds for both brands and retailers.
Join me next Thursday for the discussion about the opportunity side of mobile marketing, where we examine more facts and insights derived from the study and take a look at what marketers might do differently in the future.
Anne Howe is a twenty-year veteran of shopper marketing, and now runs a consulting practice with a focus on commercial innovation in shopper marketing. She is active on Twitter as @ShopperAnnie and on her personal ShopperAnnie Blog at www.annehoweassociates.com
Shopper Insights: Red Lines and Green Threads
Most of us in shopper marketing spend time every day trying to get shoppers to do something different. But we are measured by short-term brand or retail sales goals. So we ramp up offers, discounts, promotional prices and extend them via endcaps and displays. We sign up for Groupon or Living Social programs to extend our discount reach beyond the TV and the shelf. Shopper behavior changes with the use of those tools. But, sustained and profitable growth rarely emerges from this practice. Cases go up but profit goes down.
And we are left staring at the red line on the balance sheet.
Can insights help us get to green? Yes. But, in order to start the process of insights discovery that can tie to profit, it helps to examine our cultural and economic roots. From a cultural perspective, we need to explore anthropological roots and shifting tides of consumer behavior, so we understand why big shifts are happening.
From an economic insights perspective, it’s wise to explore the underlying nature of influence when it comes to shopping behaviors. That means we must understand how people feel about spending. I like to watch and try to understand that red line in the Consumer Confidence Index chart, which tracks the Present Situation Index.
The Present Situation Index is the one that most directly connects to retail sales. And while it correlates to the overall confidence index, it dove and now lingers below the other lines, a sure indicator that shopper are not quite ready to bust out the green in a way that matches their long term expectations for the economy. The spending today is more about trade-offs than it is about accumulation of stuff.
That red line of the consumer present situation index is rather scary. Especially if you’re in shopper marketing and charged with profitable growth at retail for a national brand.
If we want to drive profitable growth as marketers, we’ve got to get beyond promotions that revolve around discounted price. We need to stop tracking what shoppers tell us they’re going to do and start shopping with them to understand when and why the wallet opens up for a full price purchase. And why it doesn’t.
I’m calling that knowledge the green thread. As creative marketers, we can make something with green threads. We can offer a reason to buy that resonates beyond price. In this precarious climate of growth, we can indeed find the green thread though insights. But we need to change the question from what to why.
Meet Tommy. He’s 22 and just out of college. Why does he break the budget and buy a new iPad? What happens down the line when he steps outside the budget? Does he prefer the iPad over healthy food to eat? Does he forgo the J.Crew trip for new jeans and shirts? Maybe he stops paying his student loan. What he does is one thing. Why does he do what he does? How does he decide what drops off?
Meet Caitlin. She’s 34, with three kids and a big house she can’t really afford. Why does she buy that luxurious Kate Spade handbag? Does it mean she skips fresh produce and buys more frozen pizza for the family meals? Or is it not a trade-off at retail at all? Does she just defer by making a smaller payment on her credit card balance? Or is she just not saving for the kid’s college this quarter? When and why is your brand worth the trade off? Do you know? How do you get her back in the produce aisle? Or do you just give her more frozen pizza coupons?
Meet Janet. She’s 57 and just spent $3,000 on a trip to Costa Rica. That doesn’t include all the fine dining, bathing suits and hiking shoes. She hasn’t bought a national brand in the grocery store for years. Private brands are good enough and she figures the savings over time more than paid for her trip. Why does she do this? Food brands just don’t satisfy her quest for adventure. Does your laundry soap brand stand a snowball’s chance in he** of getting back in her cart? Perhaps not.
Back in 2007, when the Present Situation red line was above the other Confidence indices, we knew it was all about leverage. We could market to the consumer desire and not worry about the “value equation” so much. The “banked investments” could cover the backside. Tommy could get Dad to cover the tech, Caitlin could flip the house and buy Kate Spade luggage to match her bag and Janet could sell her Ford stock to cover the trip. Marketing was fun. But that’s over.
How do we understand shopper behavior today in a way that helps us get to profitable growth? Today we need to walk the line to the CFO and explain how we’re going to drive profit, not just volume. He hates that red line on your marketing ROI balance sheet more than you do.
Insights are the green thread. Without them we are dead in the water. Insights that uncover the “why” can provide inspiration for innovation that allows us to sew together integrated and effective action plans to help shoppers to make full price value decisions on our products and services. Think EDLP (the new Walmart price strategy, btw) and then: what else can you offer the shopper?
Insights allow us to understand consumer problems and shopper mindsets. We all need to focus on gaining deeper insights, using the green threads as a critical element when we sew up our story and decide what it is we might do to change shopper behavior in a way that serves the shopper, the retailer and the brand in ways that are profitable for all of us.
Anne Howe is founder of Anne Howe Associates, LLC, a consultancy that specializes in shopper marketing capability, innovation, positioning and communication strategies. She blogs as ShopperAnnie.
Kroger Simplifies Digital Couponing
Brandweek.com reports that Kroger grocery shoppers can load coupons to their loyalty cards prior to their store visits. Kroger, which has been offering some digital coupons for about three years, has rolled out a new service for consumers that puts more than 100 coupons on its Web site for private label and name-brand items. Dubbed the Digital Coupon Center, it's shepherded by San Francisco-based YOU Technology, which has worked with the chain and various packaged goods marketers on previous Kroger digital efforts, and the current "Summer of savings" sweepstakes and promotion.
If this initiative proves to be a success for Kroger, will other grocery stores follow?
Learn more: Kroger Simplifies Digital Couponing
Best Buy taps promotions into smartphones
Best Buy is testing an innovative location-based tool to connect with customers via smartphones. The company has started to use a tool developed by Shopkick, a California-based start-up. According to FT.com, customers who activate the Shopkick application on their phones will automatically receive “kickbucks” credits just for entering the store that can be traded for benefits including gift cards, computer gaming credits or music downloads from Best Buy’s Napster service. They will also receive special in-store offers from the retailer.
Best Buy will eventually also be able to use the system to send participants in its loyalty scheme promotional offers that can be customized to reflect their shopping history and interests.
According to FT.com's Jonathan Birchall, in-store mobile shopping applications are likely to become increasingly important to retailers as they seek to close deals with shoppers equipped with smartphones that can search and compare prices at rival stores and online.
ShopLocal gives circulars a digital life
Retailers Canadian Tire, CVS, JCPenney, Michaels, Office Depot, OfficeMax, Save-A-Lot, Sports Authority, Staples, True Value and Walgreens are using an innovative marketing campaign aimed at making circulars digital on Facebook. Allfacebook.com reports that the retail marketing software, ShopLocal, allows Facebook users and customers to see the most relevant and personalized circular offering based on their location and demographic data. The suite includes a Deals Tab, Deals Widgets, targeted ads and Become a Fan’ widgets for third party websites. Facebook users must ‘like’ the corporate page or agree to allow the retailer to view their basic details before the customization can take effect. The report notes that the JCPenney page already has 917,000 fans.
What benefits do you feel that retailers would have by implementing this technology?
Wal-Mart may open hundreds of stores in India
The world's largest retailer may soon be opening stores in India. Bloomberg reports that if foreign restrictions are lifted, the retailer may make their move quickly. Bentonville, Arkansas-based Wal-Mart runs two wholesale stores in India as local laws, aimed at protecting owners of smaller shops, limit overseas companies to operating single- brand stores, or wholesale outlets.
“If the laws of the country change to opening up to foreign direct investment in retailing we could open hundreds of stores,” Raj Jain, managing director of Bharti-Walmart Pvt., a wholesale joint venture between Wal-Mart and India’s Bharti Enterprises Pvt., told reporters.
If the restrictions are lifted and Wal-Mart heads to India; will other Western retailers follow?
Fancy a Snack? Try Some Ice Cream!
As I said in my previous post, just because it's the last day of the conference doesn't mean the content and questions aren't thought provoking! And maybe hunger provoking too!
I had the chance to sit in on the Nestle's New Merchandising Location Strategy preso specifically covering ice cream cups presented by Russ Onish and Alex Sodek. The added bonus for sitting in? A chance to sample some of the great ice cream. Talk about a delicious multi sensory experience!
Nestle's ice cream brands include Haagen Dazs, Dreyer's, Edy's as well as Skinny Cow. All of these brands have cup options for a total of 30. Cups are an interesting concept because ice cream can be an intensely personal experience. Everyone has their own favorite brand or likes to eat ice cream in a certain way. Cups also let you be a little more adventurous. You can try a new flavor without committing to a whole tub. And, for us permanent dieters, cups are great for portion control.
For the retailer and manufacturer, cups are a huge revenue opportunity to expand ice cream to be more than ice cream, like desserts or snacks. Here's an interesting ratio to give a sense of scale $10 Ice Cream : $40 Dessert :$100 Snack. So, if these cups are crucial to expand into "snack" then the question becomes how to merchandise these cups properly: either with the parent brand or within a separate case? And how do you learn the answer quickly and reliably?
The answer lies in virtual shopping research! There were two questions:
- Should the cups be in a dedicated case or with the brand family?
- How should promotional pricing be communicated: 99 cents or 10 for $10?
I wish I could show you the virtual shopper research demo! We saw a video of how the shopper traversed the virtual grocery store and arrived at the ice cream aisle. The shopper could stop at any case and make any amount of purchase they desired. Here's a little of what they learned:
- The Skinny Cow branded cups performed better when placed with their parent brand and the 10 for $10 offer resonated more than the 99 cent each offer.
- The other branded cups performed better in a dedicated case. When placed in the dedicated area, people bought more within the category, they bought in multiple, they bought in variety yielding more dollar sales. People also traded up to more cups versus tubs ($1/serving versus $.31/serving).
- In terms of pricing the 10 for $10 offer yielded 21% sales penetration versus 18% for the 99 cent each offer. Also, people bought more cups when offered at 10 for $10.
Nestle made recommendations for retail implementation. Here are some of the results:
- 90% of stores now stock the cups together. These stores have sales 53% higher than the 10% that did not stock the cups together.
- 85% of the stores keep the Skinny Cow cups with the parent brand. These stores have sales 136% higher than the 15% that did not stock the cups with the parent brand.
- Sales are currently at $50MM which is up 45% over one year ago. 2011 Forecast shows $300MM in sales.
All in all, these are delicious results for Nestle. I really enjoyed this preso - what about you?
Parissa Behnia
Idea Chef
678 Partners
Welcome to Day 4 of Shopper Insights in Action 2010!
Welcome to our fourth and final day of coverage at Shopper Insights in Action 2010. This week we’ve heard from amazing speakers who challenged us with the next best practices and fueled us to create what’s next for retail innovation. But there’s so much more to come!
Our team’s coverage continues today as we share in the twitter discussion at #Shopper360. We encourage you to take a look at our coverage from the conference.
Have a great time today!
Cheers,
The Shopper Insights in Action Event Team
Where Do Your Eyes Go?
Are you enjoying these sessions as much as I am? I've learned quite a bit so again, a big thanks to IIR and Shopper Insights in Action!
After lunch, I listened to Herb Sorenson and Jacob Suher present The Path of the Eye in Shopping and Purchasing. It was a fascinating discussion of how our biological framework can be a help and a hindrance to our shopping. As I was listening to their comments, I remembered yesterday's keynote by Mark Changizi so I will try to bring in some of his comments here as well.
This presentation showed us through a practical video example that the current aisle setup and merchandising creates clutter which forces the shopper to filter through the choices to eliminate what they don't want in order to focus on and select what they do want. The video showed us that while our torso and our feet move, our point of focus does not move. This rather reminded me of the hand exercise in yesterday's keynote. If you recall, when we blocked one open eye with a hand, that hand became semi transparent.
Sorenson and Suher's research showed that if the shopping times were quicker, then the basket sizes grow larger. A few approaches to minimizing shopping time include reducing the number of SKUs and also laying out products horizonally instead of vertically. In other words, if you maximize shopper efficiency, the time you give back to the shopper will be rewarded with larger baskets and increased loyalty.
What's interesting here (and what I couldn't ask because Q&A time was over) was that WalMart lost sales and customers because they minimized SKUs. I wish I could understand how and why WalMart's practical example differs from the research findings. Furthermore, Changizi's comments yesterday suggested more depth than breadth when it comes to displays/merchandising which is also different from the recommendation here. It would be good to know where and how these findings fit in with one another.
Another question I had was typical big box/warehouse stores typically are longer shopper times (not shorter) with inefficient layouts. Why and how is it that it's impossible to walk out of Costco, Target or WalMart having spent more than you intended if the trip is long (especially taking checkout into consideration)?
I know there are good answers to these basic question? Were you in the session with me? What would you add?
Parissa Behnia
Idea Chef
678 Partners
Coca-Cola’s Cappy Juice Success
What an amazing presentation today by The Coca-Cola Company! Jessica Ellickson took us through the journey through Coca-Cola's juice brand, Cappy Juice. Popular in Turkey, Coca-Cola wanted to revamp the image of Cappy Juice and to make it the #1 choice for Mom's and kids in the country. Coca-Cola partnered with popular grocery retailer Migros, who was thrilled to partner with the company. Coca-Cola and Migros started an intensive shopper research study that looked at who, why and when shoppers reach for juice and how Coca-Cola and Migros could get those shoppers to purchase Cappy Juice first.
The roadmap that they followed went as follows: 1. Identify opportunity 2. Gather insights 3. Generate ideas 4. Action in market
1. Identify opportunity:
Coca-Cola saw that the opportunity existed to increase sales and recognition with the Cappy Juice brand. The company made an executive decision to focus on one channel to grow the brand, grocery stores.
2. Gather insights:
Ellickson said that Coca-Cola almost has too much data to worth with - so how do they decide which data to use? They decided to focus on who is the shopper of this brand and how do they use the brand. At this point in the roadmap, Coca-Cola decided to focus on Eye Tracking, Shop-Alongs, Shopper Intercepts, In-store observation, shopper segmentation - all to discover how to make the package more shopable.
Here is a brief overview of what they discovered:
Who's the shopper?
Female, shopping for juice for self/children
Fill-in mission: 55% of supermarket trips, 60% of value
Females spent 16 min in the store vs. 13 min of store time for Men
40% juice purchase in store
70% bakery items
What do they like?
90% want variety
85% like to browse
60% like product tasting
Coca-Cola discovered that 100% naturalness is most important purchase criteria for juice
3. Generate Ideas
Migros & Coke work to prioritze and create actionable solutions together. They implemented breakouts in teams of four to understand and generate ideas. After brainstorming and working together they came up with the winning idea: "Welcome to Cappy Orchard"- A return to nature so you can pick the best Cappy "from a tree." Juice fountains provided free samples to customers.
4. Action in market
Coca-Cola and Migros created an in-store landscape that allowed the customers to try the product and experience juice in a completely new way. Taking the brand outside the juice aisle and near to the baked goods, they were able to increase sales and boast brand health scores at the highest level that they'd been for the Cappy Juice brand.
We'd love to hear your thoughts on the presentation. This was such a popular presentation that we ran it twice for attendees!