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Among the activities at the Grocery Manufacturers Association's Merchandising, Sales and Marketing Conference in St. Petersburg, Fla. last month was the release of major research relating to CPG companies: "Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage" and the 2008 Customer and Channel Management (CCM) Survey: Doing More with Less: Winning Sales Strategies to Navigate a Challenging Market.
According to "Delivering the Promise of Shopper Marketing," a study conducted by Deloitte Consulting, LLP for the GMA, 73 percent of participating consumer packaged goods manufacturers and 86 percent of retailers placed shopper marketing programs among the top four activities that deliver meaningful return on investment.
The study additionally found that the percentage of manufacturers and retailers with significant shopper marketing organizations grew dramatically from 6 percent in 2007 to as high as 60 percent in 2008. Respondents expect shopper marketing investments, as a percentage of the overall marketing mix, to continue to rise for at least three years.
"Nearly every major manufacturer and retailer in the industry is dedicating resources to shopper marketing," noted GMA director of sales and sales promotion Brian Lynch. "This report outlines lessons learned to date and puts forth a game plan to help companies become more sophisticated in their operations and thus more fully realize the enormous potential of shopper marketing."
Successful shopper marketing programs have a three-stage lifecycle, according to the report. While many companies have allocated resources and established pilot programs (stage one: incubating), they often fail to develop the capabilities needed to perform with scale (stage two: scaling), and rarely, so far, succeed in culturally embedding this new way of thinking and working (stage three: embedding).
"Retailers and manufacturers who are embracing shopper marketing and executing against a core set of principles are growing 50 percent faster than the categories in which they participate," said Deloitte's shopper marketing practice leader, Rob Holston. "This speaks to the promise shopper marketing holds for those who do it well."
Key to the long-term success of shopper marketing across the industry will be the development of tools to gauge performance. There are many perceived resource and constraint obstacles to measurement, but 60 percent of retailers said that insufficient technology is their biggest roadblock, while 70 percent of manufacturers said the cost of data collection and analysis is their greatest obstacle. Regardless of the specific challenge, companies have to plan for and work around these problems to ensure they don't retard overall shopper marketing progress.
The study is based on the input of over 100 CPG companies, including interviews with more than 40 shopper marketing executives and an online survey of over 100 shopper marketing managers and executives. The two entities earlier collaborated on "Shopper Marketing: Capturing a Shopper's Mind, Heart and Wallet," which came out in 2007.
Meanwhile, the 2008 Customer and Channel Management (CCM) Survey: Doing More with Less: Winning Sales Strategies to Navigate a Challenging Market, released the day after "Delivering the Promise of Shopper Marketing," found that leading CPG companies experienced 3.6 percent sales growth over and above category average while reducing their sales costs as a percent of sales by 6.1 percent over two years.
The survey, which has been conducted annually since 1978, links companies' self-reported practices with financial performance and in-market results to pinpoint winning practices across the industry.
"This comprehensive report serves as a valuable tool that helps CPG makers identify gaps and opportunities in their customer and channel management practices, as well as gain insight into important industry trends," said Lynch. "What's interesting about this year's results is that top performers varied widely in terms of size, distribution models, go-to-market models, and their brands' market position, suggesting that there are valuable lessons for every type of company in the sector."
This year's survey concentrated on four aspects of customer and channel management: sales coverage and execution, pricing, trade promotion, and shopper marketing, and categorized companies by three performance tiers in each realm: the "best of the best," "winners," and "others." Detailed quantitative benchmarks on coverage and service models for retailers such as Walmart, Target, Kroger, Costco, Walgreens, CVS, and 7-11 were also incorporated into the 2008 survey.
"The key theme that emerged from the CCM data is that companies can reduce costs and still grow, despite the challenging economic and retail climate," added Lynch. "For example, by carefully prioritizing and holding retailers accountable, top performers in the trade promotion category reduced trade investments but grew sales. Under the sales umbrella, we found that winning manufacturers build fewer but stronger account teams to service key customers."
The report is based on survey responses from over 450 executives at 45 large and mid-cap manufacturers from across the food, beverage, personal care, and home care categories, as well as point-of-sale data from Information Resources, Inc. A complete copy can be downloaded at www.gmaonline.org/publications/index.cfm.