Promotions – a hard habit to break


I work in an industry that is addicted to promotions.  An average consumer goods company will spend 10% of gross sales on promotions. Applied to the world’s 250 leading consumer goods companies this equates to an annual promotions spend of close to US$310 Billion. That’s roughly US$44 spent for every person on the planet and nearly twice as much as is spent on cancer research every year in the EU. And yet research suggests that less than one third of promotions break even (see page 18 of “The Shopper Marketing Revolution“). Promotions have become a habit that many will find difficult to quit, even if ultimately it may kill their business.

How did we get hooked on promotions?

Let’s be honest, promotions were not always a bad idea. Every now and again a great offer enticed new buyers to the brand and get loyalists to stock up or prevent them from trying something else. In those days promotions could be planned well in advance, production could gear up for them and they’d even become an event. Retailers, then, unlike now, were unconsolidated and the extra sales were a welcome bonus from an appreciated supplier.

Then the world of marketing changed, consumers stopped attending to adverts and retail became dominated by massive brands and so promotions became a more important part of the effort to persuade consumers to buy the brand in-store. As retailers grew, promotions then became an essential cornerstone of both their corporate profitability and their brand positioning. When the balance of power shifted towards the retailers, promotions became an essential part of the contracts manufacturers signed to get their goods into stores.

The pernicious promotions addiction

Today promotions are a habit. As shoppers we are used to stores and websites dripping with messages about the latest offers. Manufacturers dedicate not only huge financial resources to promoting but also huge human resources. Over the last couple of weeks, I’ve been working with two very different companies in very diverse markets and yet in both, managers estimate nearly 80% of the time is spent planning, executing and evaluating promotions. Retailers too are preoccupied by promotions; Morrison’s is just the latest UK retailer to announce further price cuts in response to declining sales.

This is a pernicious addiction: some brands claim that 80% of their sales are made on promotion and others report they are on promotion more often than not. Demand for most brands is simply insufficiently elastic to pay for this: Even a reasonably profitable brand (making say 25% EBIT) would have to sell 66% more in order to break-even on a 10% price discount (see page 219 of “The Shopper Marketing Revolution“). According to Deloitte’s, the average composite net margin of a global consumer goods business is 9.6%, so for most securing a break-even is probably economically impossible.

Promotions are a hard habit to quit

So why not just quit? The blunt answer is either fear or ignorance. Fear is a powerful reason for not changing behavior in any context. The risks of stopping promotions are clear: shoppers might go elsewhere; retailers might withhold support, or; competitors might fill the gap. All of these would be reasonable reasons to continue if they were proved true but so often they are not, which leads to the other reason why we continue to promote which is ignorance.

In truth most managers don’t know if shoppers would leave the brand or not, but even if they did, many managers have no idea which shoppers would leave. In most categories the market can be split into deal buyers and loyalists. The consequence of losing deal buyers would certainly be lower volumes but concurrently could also drive better profits. For many, today, it’s tough to access this equation so the risk of quitting remains unquantified.

Likewise discussions with retailers almost always revolve around price and margin despite nearly 30 years of effort to change this. In the absence of tried and tested alternatives, maintaining the status quo is far easier. Lastly, since most manufacturers are unprepared to change, it’s almost impossible to gauge what the competition will do and so the habit persists.

Breaking the promotions habit

Knowledge is the only cure for fear and ignorance. If brands want to learn what will happen if they stop promoting, they could just stop and find out, but that’s fraught with risk. The logical alternative is to test and learn in the same way tech start-ups do: Try a limited, targeted pilot and see what happens, take the learning forward into the next pilot and keep learning until you have so much knowledge about what works and what doesn’t that fear and ignorance become things of the past.

The technology now exists to micro-target shoppers and retail has always been a phenomenal laboratory, so defining a discrete shopper group and a small group of stores makes this sort of testing easier. If the risk is still too great then virtual stores can be a solution. And whilst its potentially costly to conduct research in this field, the payback is enormous – breaking even on every promotion would double the profits of the almost everyone of the top 250 consumer goods firms.

Let us help

We’d be delighted to help you quit your promotions habit, if you’d like to know more about how we can help, contact me.

Big Data in Shopper Marketing

Streams Collide

It’s high time we started thinking about the implications of Big Data on Shopper Marketing. For the last five years, the promise of Big Data has begun to influence marketers’ thinking on how they might improve targeting, investment planning and the evaluation of execution. Concurrently marketers have also embraced the fundamental idea that just marketing to consumers just isn’t enough to secure a purchase.

These two streams of thought are about to collide in interesting and important ways that many marketers have yet to consider.

Shopper Marketing depends on Big Data

Shopper Marketing remains a misunderstood practice, many still labor in the mistaken belief that Shopper Marketing is all about executing activities in shops. This is wrong. Shopper Marketing is the Marketing process of determining a marketing mix which will change the purchasing behavior of a targeted group of shoppers in order to deliver specific consumption opportunities.

By its very nature, Shopper Marketing is complex: there may be numerous opportunities to drive consumption of a brand, all with different target shoppers who’s behavior might be influenced in a wide range of retail environments (both online and offline). Getting this right requires a great deal of insight.

Developing such insight requires a lot of data, from a number of sources. This data must be effectively combined and analyzed. Let me give you an example, we worked with Sony to determine the optimum mix of in-store investment required to drive TV sales in China (see The Shopper Marketing Revolution for more information). Based on behavioral research we identified over two million combinations of in-store activity might have an impact on shoppers’ behavior. Defining which combinations might be optimal, in which outlets, is a big data challenge.

Big Data means big changes in Shopper Marketing

Today’s Shopper Marketing teams are often too fixated on the execution of activity, much of which differs very little from sales promotion and merchandising tactics that have been used for decades (though perhaps now they have a few more bells and whistles). These activities are often procured from creative agencies who are briefed on the basis of scant information. The agencies themselves almost always lack the ability to develop insights for clients independently, so their process is driven by creative ideation which takes place in a data vacuum. The result is nice ideas that win awards but not shoppers.

The convergence of Big Data and Shopper Marketing is likely to make the entire process much more scientific. This doesn’t negate the role of creative thinking at all, what it means is that creative ideation will take place in the context of truth rather than assumption. Further it will shift the current power base away from the agency and toward the marketers themselves as they create better briefs and seek out better quality agency partners.

Big Data in Shopper Marketing demands big changes

This is all a tall order. According to our surveys (we’ll shortly be publishing our findings in South Africa and Ireland), Shopper Marketing teams believe they lack the capability to deliver even against today’s shopper marketing challenges. The introduction of massive data sets is likely to make things worse not better.

I’m concerned about the extent to which organizations have started to consider the implications of this. For instance we’re working today on a relatively simple brand and channel prioritization project which requires managers to combine easy to access data sets and many managers are finding this challenging. As channels proliferate and micro targeting becomes essential, the data science requirements will far outstrip the abilities of these managers.

Greater volumes of better quality data and greater complexity will demand the use of the sort of data science that is currently in play in the financial sector. The practical implication of this is that a great deal of tasks will become automated leading to widespread changes in working practices internally and in the interactions between manufacturers and retail partners.

What is to be done?

It seems to me that change is inevitable (it always has been) so I’d urge leading marketers to actively plan ahead. If you’re in this space, here’s four things I believe you should be doing now:

  1. Learn more about the implications of big data and shopper marketing – understanding the potential opportunities that are at hand and the potential pitfalls ahead will help you plan for the impending change.
  2. Act as if the change has already happened – lead the organization towards embracing big data and shopper marketing as an imperative rather than waiting to be led by your competition.
  3. Recruit better people than you – if, like me, you are in your 40’s the chances are you will never master the skills needed in the future, so it’s time to bring people into your team who already have those skills, or could develop them quickly.
  4. Demand better service – Seek out those agencies who can demonstrate their ability to drive insight from data and can show how their creative responses to this have delivered actual behavioral change.

At the very least, marketing leaders should be provoking a debate within their organisation, if you want help with that, contact me.

Image accessed from

Shopper Marketing 101 – Product Availability

Which would you buy?
Which would you buy?

With all the talk surrounding advances in shopper marketing, many marketers might be tempted to forget that the biggest single influencer of shopper behavior is product availability. Put it this way, if a shopper can’t find the product, she won’t buy the product and chances are, she’ll buy a substitute instead.

With the vast majority of purchases being made on the home shelf in stores and off the regular page online, ensuring your product is present and visible is the first responsibility of the shopper marketing team. This might sound like a glib statement but ensuring product availability is surprisingly tough to get right and astoundingly easy to get wrong.

Here’s a few simple rules every shopper marketer should bear in mind.

Make sure it’s ‘there’

Ok, I know this is really basic but a shopper can’t buy your product if it’s not for sale where they are shopping. This doesn’t mean that your product has to be everywhere – I’m not suggesting that anything less than 100% distribution is a failure. What I am urging, though, is that brands understand who their target shopper is, what he wants to buy and where he wants to buy it.

This means that range and distribution targets should be set with the target shopper in mind and not just based on the efficiency of any given route-to-market. In today’s grocery markets the tectonic plates of retail are shifting; big-box, one-stop shops are giving ground to online outlets, discounters and convenience stores. Waiting for these channels to become significant for your brand may make your brand insignificant as the shoppers who are flocking to these environments choose your competitors and not you.

Shopper marketers are stewards of a brand’s future and their challenge is to always ensure that there’s a product available to the brand’s shoppers, wherever they choose to shop.

Just because it’s ‘there’ doesn’t mean it’s ‘there’

Be super careful of relying on inventory reporting for peace of mind. The fact that a product might be showing up as being in distribution doesn’t necessarily mean that it’s available for purchase. As a sales guy years ago a lot of the time I wasted in stores was spent hunting through stock rooms trying to find that box of Twix that had been delivered but hadn’t made it to the shelf.

In online stores, shoppers expect to be able to receive everything they want at the same time, so if your product isn’t in-stock, even when it’s on the page, there’ll be a bunch of folks who choose the other brand that is there.

As a shopper marketer, the only time you can relax is when you know your product is available to buy, in the right place and in sufficient quantity to meet your shoppers’ demand. (I know that means, like, never!)

Just because it’s ‘there’ doesn’t mean that it’s fit for purchase

Have a look at the pic I posted above, now have a look again – which bottle would you buy? The one full to the brim or the one that only looks part full? I’m guessing you and I would come to the same conclusion – the one that’s full!

As shoppers we always want the best, so apparent product quality is a must. Damaged and dirty goods turn us off and whilst a committed shopper might look for a perfect pack, others may just as quickly switch to something else. The same holds true online, perhaps more so, if the product imagery doesn’t look outstanding, some shoppers will go elsewhere.

As a shopper marketer, doing your level best to nail the quality of your presentation in store is a great way to win shoppers for your brand.

Just because its ‘there’ doesn’t mean I can see it

Shops are busy places and shoppers are busy people, in the average superstore, shoppers will browse a category for 30 seconds – that’s 30 seconds to find your product amongst the other 200 or so products on sale. In surveys we’ve done, shoppers often cite not being able to find a product on shelf as the key reason why they switch brands. Scarily, in many of the cases, the product was on shelf, just not in a place where it was easy to find.

On a website, particularly one that sells grocery products, getting visibility is going to get harder: Here algorithms determine what shoppers see. As these algorithms get smarter, so the pressure on shopper marketers will increase. But for shopper marketers, obsessing about how visibility can be constantly improved is far more likely to pay greater dividends than the next big thematic activity.

So what does all this mean?

An awful lot of ‘shopper marketing’ initiatives seem to focus on the short-term delivery of great communications gimmicks or super, shiny, new promotions. Indeed one team I work with currently spends over 80% of their time working on promotions alone.  Interestingly though, as we’ve worked through a re-organization process, the team has learnt the true RoI their efforts and it’s not pretty.

Uncovering the true value of product availability by contrast has had a profound effect on way this team thinks and on the way they will organize themselves. Their new plan is to focus over half of their resources on continuous improvement of product availability. I think this is the mark of a true shopper marketing team; one that knows that marketing to shoppers requires the use of the full range arrows in their quiver – availability, communication and offer.

In our book, “The Shopper Marketing Revolution”, Mike Anthony and I explore what it takes to make a great shopper marketing team and we talk extensively about getting product availability right. Incidentally, the book is available to shoppers globally, just click here!

Fixing Shopper Research


Shopper research
Market research

Over the last six months we’ve concluded a number of shopper research projects with clients and each one has left me more and more concerned about the way research is being conducted around the world. To be clear my ‘beef’ is not with the principle of conducting shopper research, which I think is essential. Rather I’m more frustrated with the process itself.

Here’s my top three peeves and what I think should be done:

Shopper research is too broad!

Have you ever sat through a research presentation? Wow, are they boring! Research presentations can run to hundreds of slides, many of which have very little practical value. In most presentations I read one chart in 20 has something useful on it and even then the data can be hidden or miss-presented.

It would be easy to blame the agencies who produce the presentations, but in reality it’s often the managers who commissioned the survey who are at fault.

Agencies in the main do a fair job of providing the information they believe the client wants. Often the client wants a lot. Many studies have objectives that are extremely broad (in the shopper space a common objective is simply “To understand shoppers”), few articulate clear hypotheses that have been evaluated before the brief and in many cases additional questions are added to make commissioning a survey ‘more efficient’.

All of this means that the agency tries to cover every eventuality and meet as many needs as possible. The end product? Ten charts out of 200 that tell you something useful.

Shopper research is too slow!

Big studies seem to take forever. Think about it, a major study can take up to twelve weeks to conclude. But that’s just the field work, add to this the time it takes to get the study of the ground: from internal approval, through briefing, into procurement then there’s questionnaire design, training and recruitment – all of which need to be done before you start field work. Accounting for data processing, ‘insight’ development (see below) and presentation it might take 24 weeks to conclude a study. That’s 6 months! Before you can do anything!

When one considers how much change there’s been in the last six months, surely there must be a way of speeding things up?

Shopper research is not insightful!

I remember a conversation with a client who’d just finished an extended piece of work into shopping behavior and when I asked how it had gone he said, “We didn’t really learn anything”.

“You mean you didn’t learn anything new?” I asked.

“No” he said, “we didn’t really learn anything at all!” Imagine the disappointment! Months spent conducting a study and you learn nothing! But the reality is that research presentations rarely do tell their recipients anything valuable. This is because the research presentation is not the end of the road, it just the beginning.

To drive real value from research, managers often have to combine the new findings with other pieces of secondary data to create insights upon which they can act. This a painstaking task which can add further delays to actually realizing business gains from the research that’s been conducted.

3 ways that make shopper research work

I believe there are three things that can be done differently to deliver better results, faster and at lower cost:

1)      Focus research on learning how to realize business opportunities:

Research projects should begin with the development of clear research hypotheses based on what is already known. For instance, we encourage our clients to focus on testing hypotheses that if true would enable teams to increase sales. These focus on learning how to drive new shoppers to the brand, how to encourage shoppers to buy more often or to spend more. By selecting only the most valuable hypotheses two things happen: 1) Research projects become more focused and therefore potentially cheaper and 2) The returns the company enjoys from acting on research can be much greater.

2)      Apply methodologies that deliver answers quickly:

With focused research hypotheses, it’s easier to apply methodologies that give accurate responses more quickly. By seeking out technical solutions that minimize the time lag between data collection and analysis teams can get into developing insights faster. For instance, we recently worked with a client who used a tablet-based app to capture traffic data in stores and to capture shoppers’ responses to focused questions. The data were instantly transmitted to a dashboard so our client could work on the outcomes of the survey immediately.

3)      Spend time and effort on creating business impact

Much of the time and effort put in by agencies after a study is directed at tabulating data and creating a presentation, which as we’ve seen above, no-one will use! It would be so much better if effort and time were spent on creating actionable insights instead.
For instance, in the shopper space, much of the work done in implementation is done by the sales team, working with customers. Sales people don’t need lengthy presentations on what the research says, they need pragmatic solutions they can discuss with their customers. Converting research findings into a compelling commercial proposition that illustrates the business benefits that your customers might enjoy helps you sales team realize business gains from research quickly.

If you’re contemplating your next research program and would like some useful tips to getting the most out of your investment, why not read our ebook “The Introductory Guide to GREAT Shopper Research” 

It’s time to integrate consumer, shopper and digital marketing

integration-puzzleAges ago I wrote a blog suggesting that digital marketing did not yet mean shopper marketing. Back then digital marketing was all about getting positive word-of-mouth whilst shopper marketing was about delivering the best experience in-store and both were very, very different to consumer marketing.

But since I wrote that commentary the world has changed somewhat: mobile makes constant communication a reality; it’s now well-accepted that an awesome digital campaign is not measured in ‘likes’ but in buys and retail has become ‘omnichannel’. Today it’s increasingly difficult to draw hard lines between behaviors of consumers and shoppers and it’s impossible to ignore the role of digital in influencing both.

Companies have also changed since I wrote my original article. Most consumer goods businesses we work with have invested in headcount to build shopper and digital teams. However, these teams often seem to be treated as entirely separate entities from the consumer marketing team and that, to me, is a mistake.

Consumer marketing and shopper marketing should not be separated

A marketer’s mission is to drive the consumption brand. This is done by tapping into consumer’s needs and desires, unlocking consumption occasions and constantly enhancing the usage experience. But no product can be consumed unless it is first bought by a shopper. This means that the requirement to change consumer behavior is inextricably linked to the need to change shopper behavior. Separating the process of developing consumer strategies and shopper strategies increases the probability that the link between the two will be broken leading to inconsistencies and inefficiencies.

Digital is media not marketing

I don’t get why ‘digital marketing’ needs to be a separate school of marketing. I see clearly the value of being able to direct highly targeted communication and the major benefits of measurability; I fully get the complexity of honing content to ensure the right messages reach the right people at the right times and I understand that there are a bunch of skills required to make this work brilliantly that I don’t have.

BUT this is just as true in traditional advertising.

I don’t call advertising “marketing” because I recognize advertising as a tool that marketers use to get results. So I’m confused as to why digital needs to be a separate function of Marketing and as to why it needs to be separate from traditional consumer marketing or to shopper marketing. To me digital tools are equally valuable in marketing to consumers as they are in marketing to shoppers, so surely treating digital as a separate discipline will ultimately also lead to incoherence too, won’t it?

Consumer, shopper and digital are all “Marketing”

I hope that it won’t be very long before the terms ‘consumer marketing’, ‘shopper marketing’ and ‘digital marketing’ cease to exist. Traditional consumer goods marketing is changing to take on a broader view of the discipline that recognizes that modern consumer brands must market not just to consumers, but also to shoppers and to retailers. None of these tasks is possible without the use of digital platforms.

Each of these tasks is of equal importance and all require both strategic consistency and executional specialization to be successful. However the requirement for executional specialization should not determine the structure of the marketing organization. As the world becomes more inter-connected, marketing strategies and organizations must also become more integrated. In short consumer, shopper and digital marketing must all become “Marketing”.

Integrating consumer, shopper and digital marketing

When Mike Anthony and I wrote our book “The Shopper Marketing Revolution”, our hope was to create a model that effectively integrates consumer, shopper and customer marketing. Perhaps it’s time we wrote a new edition to reflect the changes that have happened since we finalized the text early last year. However, I still believe that marketers that can clearly define which consumers they are targeting, what shopper behavior they want to create and where that behavior can be created have a fighting chance of creating a truly effective marketing mix which will drive financial returns.

I believe what’s now essential is that organizations embrace the ideas that consumer marketing and shopper marketing are simply “Marketing” and that digital is part of the marketing process. CMO’s should recognize that their teams are responsible for the ‘total marketing’ of their brands and that requirement for specialist capability does not necessitate the creation of organizational silos.

If you feel the same way (or if you passionately disagree!), please do share your thoughts here.