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February 10th, 2011

Taking Shopper Marketing Digital

Brands are continuing to increase their investments in shopper marketing.  The opportunity to deliver these programs digitally is huge and largely untapped.  The question is which digital strategies can really drive sales and loyalty.

Manufacturers spend $35 billion a year on shopper marketing, according to Ad Age.  This figure has doubled over the past 5 years and is expected to expand at roughly 15 percent a year.  In a recent survey conducted by the Grocery Manufacturers Association (GMA) and Booz & Co., a majority of manufacturers ranked shopper marketing as their fastest growing area of advertising and promotions spending.  By reallocating spending to programs that are closer to the point of purchase, these manufacturers are seeking to better drive sales and develop deeper consumer relationships.

Digital shopper marketing, although a small percent of total spent on shopper marketing, is poised for rapid growth—driven in large part by changes in shopper behavior.   Shoppers are increasingly using the Web, mobile, and social networking to shop smarter.  According to the same GMA/Booz study, nearly two-thirds of shoppers engage in at least one digital deal activity for half or more of their shopping trips, including finding coupons and viewing online circulars.  And this figure is even higher for the nearly one-third of shoppers who actively use social media and own or plan to buy a smart phone.

With upwards of 70% of brand selections make in store, marketers have an unparalleled opportunity to use digital shopper marketing to reach shoppers and impact their purchase decisions.  Digital coupons and promotions in particular provide a rapidly growing platform to reach shoppers online, in store and on the go.  Here are a few ways CPGs and retailers can work together to drive sales and increase shopper loyalty:

  • Digital coupon sites and mobile apps.  Retailers are beginning to integrate digital coupons into their marketing mix.  Kroger is the clear leader in this space and today offers digital coupons online and through mobile apps for both the iPhone and Android phones.  Kroger is using digital coupons to provide a broad selection of CPG coupons and to promote its own private label products.  Simply creating a site with lots of digital coupons is fine.  However, it misses the larger opportunity to drive incremental sales by enhancing feature and in-store merchandising activity.  For example, late last year, Kroger and P&G used digital coupons to promote additional savings for items featured on the front page of the circular.  CPGs can use retailer digital coupon programs to support a range of shopper marketing programs, including launching new products, encouraging shoppers to try new brands or product categories, and supporting feature and display activity.  In addition, CPGs can follow the lead of P&G with its eSAVER site and use digital coupons to support their own CRM initiatives and partner with key retail accounts.
  • Digital merchandising events.   Retailers and CPGs should collaborate on digital merchandising events that extend and enhance the sales plan.  These events can include not only digital coupons but also digital games and sweepstakes and relevant content, such as recipes, that make it more fun for shoppers.  Kroger, for example, recently partnered with Kraft, Pepsi and other CPGs on a Game Day Great promotion that tied into its in-store Super Bowl merchandising.  The event included an instant win game (shoppers flipped a digital coin for the change to win free mac & cheese, ice cream, soda and other items), digital coupons for Kroger chicken wings and deli trays coupons, and recipes.  These events provide retailers and CPGs significant opportunities to collaborate across the promotional calendar to drive traffic and sales online and in the store.
  • Digital promotions. CPGs can create digital shopper marketing platforms to partner with one or more of their key retailers.  Campbell’s, for example, has partnered with several retailers on its eLabels for Education program, a digital version of its popular Labels for Education school donation program.   In addition, CPGs can create retailer-specific overlays to their national promotions to collaborate with key retail accounts while taking advantage of the existing marketing investments.  Mars, for example, leveraged its national M&Ms Vote for Savings promotion by providing exclusive digital coupon offers to one of its key retail accounts based on the shopper’s vote for her favorite color.

As digital shopper marketing takes off, CPGs and retailers need to tap digital coupons and promotions to drive traffic and sales today and develop the marketing and merchandising strategies to reach the “always on” shopper of the future.

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