What Stores Want

Posted on by Chief Marketer Staff

Forget national sweepstakes, the Internet, and tear pads. Retailers would rather have your demos, shipper displays, and a few extra bucks for direct mail.

That’s the top line result of a Cornell University survey of 48 executives at supermarket, drug, and mass-merchandise chains representing 19,720 stores. The June survey asked execs to rate the effectiveness of 22 promotional tactics in boosting product movement and overall store sales.

Retail execs told Cornell that shipper displays, targeted direct mail, and frequent shopper programs are the most effective way to increase product movement (see chart). The best ways to boost overall store sales are targeted direct mail, frequent shopper programs, and in-store demos and sampling.

This is about more than just making store managers happy. The effect of in-store activity is heightened as packaged goods companies earmark more of their ad dollars to support consumer and trade promotions. If you’re spending $86 billion on ads to drive shoppers into the store, you better be ready with the punchline when they get there.

Packaged goods marketers spend 46 percent of their ad budgets on ads tied to consumer and trade promotions, according to Cox Direct’s 20th Annual Survey of Promotional Practices. They’re increasingly eager to follow through in-store, too: Of the 95 percent of packaged goods companies that use in-store promos, 46 percent deemed them “very important” for ’98, up from 31 percent in ’97, Cox reports. Thirty percent called direct-mail couponing “very important,” up from 10 percent in ’97.

So here’s a little insight to back up all those good intentions. Execs across food, drug, and mass ranked shipper-displays and targeted direct mail as very effective tools to move product. All channels, especially drug stores, prefer retailer-generated shelf-talkers to boost storewide sales.

Supermarket execs were more fond of frequent shopper programs and paperless couponing than their drug or mass colleagues, mostly because grocers use them more, Cornell concludes. “Retailers see huge benefits [to paperless coupons as part of frequent shopper programs] because there’s less handling, and they control redemption,” explains Tim Hawkes, president of Trade Zone, the Westport, CT in-store promotion company that sponsored the Cornell study. Drug chains also rated demos lower than food and mass execs did for product sales.

The least effective tactics were national sweepstakes, tear pads, Internet programs, and retail cross-ruffs, Cornell reports.

Retailers’ wish list Retailers like programs that are easy to execute as well as effective. Execs across all channels firmly support increased funding for co-marketing. (Cornell didn’t ask if they’d swap trade dollars to fund it.) Drug store execs were extremely supportive. That’s an easy mark for marketers to cover the country with fewer, bigger account-specific campaigns in drug chains than in supermarkets.

Nearly 90 percent of retail execs would like to negotiate more manufacturer funding for targeted direct mail, Cornell found. Fully 87 percent want manufacturers to spend more on in-store demos and sampling, and 70 percent would like marketers to pony up more bucks for shipper-displaysand co-op radio. It’s no surprise that those choices mirror top retailers’ strategies, Cornell says.

No one tracks manufacturer expenditures on retailers’ direct mail, but “with co-marketing, direct mail is one of the top two options for manufacturers,” Hawkes says. “Manufacturers like it because it has media value – they know their message is actually getting to consumers. It’s a more controlled vehicle than relying on retailers to put up P-O-P.”

Increased direct mail doesn’t necessarily piggyback frequent shopper programs (for which, by the way, 68 percent of retailers want more money). Retailers’ weekly direct mailings tend to target a wider audience than frequent-shopper missives, which go only to the top 10-to-20 percent of card users. The real issue for manufacturers, Hawkes says, is the content of a mailing. “We counsel clients not to just lie down and take retailers’ mailings,” he explains. “Retailers still think of it as free media, but the manufacturer needs to be sure his message is in there too.”

What tactics would retailers like to cut? They’d slash funding for national sweeps, premium giveaways, tear-pads, and manufacturer-generated shelf talkers. Retailers prefer the consistency of their own shelf-talkers to the clutter of manufacturers’ competing designs.

Consumers like retailers’ shelf-talkers better, too, because “they’re trained to know that when they see one, it means savings,” Hawkes explains. “It’s kind of Pavlovian: Retailers try to change consumers’ behavior through a consistent message. It’s less creative for the brand,” but more effective with consumers.

Cornell also asked retail execs to rank the most common tactics. The top seven: Demos and sampling; shipper-displays; promotion with a local charity; targeted direct mail; in-store coupons; co-op radio; retailer-generated shelf talkers. Cornell’s caveat: These are the easiest, most frequently offered tactics that best match retailers’ strategies, not necessarily the best. But the overlap is clear. For the most part, retailers like what works.

There’s more to Cornell’s research, but some marketers seem reluctant to listen – or to question grocers, at any rate. When the study was first presented to a crowd of about 300 at promo Expo in October, fewer than half stayed to talk with a panel of three grocery execs – a rare chance to ask grocers point-blank what they want. Maybe promo managers didn’t want to discuss their brands publicly, in case a competitor was in the room. Maybe the half that left were agency staffers who don’t ever deal with retailers. Maybe the morning coffee kicked in, or the airport rush had begun. Whatever the case, here are highlights of advice from Wayne Barton, director of category management at mid-sized chain Price Chopper, Schenectady, NY; Don Fitzgerald, group vp at Dominick’s, Northlake, IL (112 stores, $2.5 billion in sales); and Rich Niemann Sr., president of Niemann Foods in Quincy, IL (26 stores, $300 million in sales).

Value * “Recent research shows that ‘value for the money’ [positioning] is a death star,” Fitzgerald says. “Value is more than price. Customers are savvy to the deal. Quality and service set us apart.”

Sweepstakes * “If we build it together, we’re more invested than if you just bring us your entry box,” Fitzgerald says. Try a local charity, or detail specifically for the chain.

* Tailoring a national campaign is “the trick,” Barton says. “I’m not a national chain. I need a local approach.”

Health & beauty care * “Use the pharmacists we have in-store,” Fitzgerald says. “That also helps us as pharmacy care becomes more consultative. Counseling in-store is a significant shift from lick-and-stick prescription fills. [Helping us] capitalize on managed care modeling is a winning formula.”

* In-store pharmacies “add tremendous legitimacy to HBC offerings,” Barton says. “There are so many prescription drugs that have gone over-the-counter, it’s good to have a credible source for information. Also, the best HBC promotions involve groups of items,” Barton says. “Few HBC products can stand on their own.”

Execution * “I’d rather have a mediocre program executed 100 percent than a great program executed poorly,” says Fitzgerald.

Frequent shopper programs * Price Chopper is cautiously approaching suppliers to participate in mailings. “We’re walking a fine line,” Barton says. “We don’t want to turn it into just a coupon mailer, but we want to add more value.”

* Niemann Foods pegs all promotions to its Max Card. “We don’t ask manufacturers to drive the card, but to support it with money and programs,” Niemann says.

What promotion marketers should learn * “God gave you two ears and one mouth for a reason,” Fitzgerald says. “Listening too often becomes trying to make the sale. Listen first; then make the pitch.”

* “Too many people come to see me who haven’t been in our stores,” Barton says. “Walk through some, ask shoppers what Price Chopper means to them, think about that, and then come see us. Whatever you come up with based on that, you’ll do just fine.”

More

Related Posts

Chief Marketer Videos

by Chief Marketer Staff

In our latest Marketers on Fire LinkedIn Live, Anywhere Real Estate CMO Esther-Mireya Tejeda discusses consumer targeting strategies, the evolution of the CMO role and advice for aspiring C-suite marketers.

	
        

Call for entries now open

Pro
Awards 2023

Click here to view the 2023 Winners
	
        

2023 LIST ANNOUNCED

CM 200

 

Click here to view the 2023 winners!