ORLEANS -- Retailers and manufacturers are enthusiastic about the ability of electronic marketing programs to increase sales volumes, identify top customers and sell specific products.
But retailers are cautious about manufacturers' involvement in such programs, especially when it comes to identifying their customers individually instead of through group characteristics.
These were among the key findings of an exclusive national survey of supermarket retailers and brand marketers. The study, conducted earlier this year by SN and Brand Marketing, was done in conjunction with Retail Systems Consulting, Naples, Fla., and the Grocery Manufacturers of America, Washington.
The survey was mailed to two groups: 200 retailers representing 4,621 supermarkets, and key marketing executives at 200 consumer packaged-goods manufacturers. The response rate for the survey was 25%. Results were presented at the sixth annual Global Electronic Marketing conference, held here April 6 to 8.
Respondents were asked to rate the effectiveness of a variety of electronic marketing vehicles. Among them: card-based frequent-shopper programs; purchase-triggered and at-shelf coupons; and in-store electronic kiosks, including kiosks tied to point-of-sale systems.
While less than half of responding retailers -- 44.7% -- offered card-based frequent-shopper programs, those who do use them gave extremely positive reviews: 44.7% rated them "very effective," 55.3% rated them "effective -- and none of the respondents rated the programs "not effective."
Manufacturers, if not quite as enthusiastic as retailers, nevertheless believe strongly in the power of frequent-shopper programs. Nearly 60% of manufacturers rate such programs "effective," with 12.8% calling them "very effective." Only 4.3% of manufacturers rate them "not effective."
These manufacturers are backing up their support with funds, according to the survey. More than half of manufacturers surveyed (52%) plan to increase their spending on all types of retailer electronic marketing programs in 1997 compared to 1996; none plan to decrease it.
Another area of agreement is in the specific effects of such card-based marketing programs. Eighty-five percent of retailer respondents said they saw an uplift in sales of items that were part of a frequent-shopper program; nearly as high a percentage of manufacturers (80%) said they noted such increases.
Where the two groups part company to some extent is in regard to the degree of involvement of manufacturers in retailers' frequent-shopper programs.
Only one-third of retailers felt manufacturers should be involved in the planning of retailers' electronic card-based programs, but the vast majority of manufacturers -- 87.3% -- felt they should be involved in developing such programs.
"If I were a retailer, I wouldn't involve them [manufacturers] too much," said Barry Kotek, managing editor of In-Store, the newsletter published by Retail Systems Consulting, who helped present the survey results. "The retailer owns the customer and will make the most on the program by determining how to increase the net profit on each customer. That means moving customers into perimeter departments and private-label, items where they can attain higher margins."
RSC president Carlene Thissen, who co-presented the survey results, presented the manufacturers' point of view. "This focus the retailers have on just using the manufacturers for money is a mistake," she said. "The things manufacturers offer in addition to money are very significant. Manufacturers have excellent marketing skills, systems expertise, databases and analysis capabilities."
Another area where retailer and manufacturer attitudes diverged was in relation to the names and addresses of frequent-shopper club members. The vast majority of retailers (85.7%) said they would not sell these names to manufacturers.
However, approximately a fourth of manufacturers said they would buy such lists if they were offered at a "reasonable price." A slightly larger percentage (27.3%) said they would not buy such lists; the remainder were undecided.
Responding retailers indicated they perform fairly sophisticated analysis of the data from their frequent-shopper programs. Frequency of customer transactions was tracked by 90% of respondents, as well as total dollar spending (tracked by 80%), department travel (65%), UPC code level (55%) and customer profitability, tracked by 30% of respondents.
The data are used by retailers primarily to increase sales: 94.1% of retailers with frequent-shopper programs indicated this as one use for the data they gathered. Other uses included developing marketing tactics (88.2%), rewarding loyal customers (82.4%), acquiring new customers (70.6%), regaining lost customers (70.6%) and increasing the profitability of customers (70.6%).
Usage and effectiveness of other types of electronic marketing programs, or what Thissen calls "technomarketing," were also analyzed in the survey. Purchase-triggered coupons are used by 44.7% of retailers. Of this group, 66.7% rate them "effective," with 9.5% calling them "very effective."
Nearly two-thirds of these retailers use such purchase-triggered coupons to promote store brands, and 70% use them to promote in-store departments.
Even more popular among retailers were at-shelf distributed coupons: 59.6% of respondents offer them. The vast majority of users (85.2%) rate such coupons "effective."
Stand-alone electronic kiosks have not achieved a very high penetration in respondents' stores. Only 14.9% of retailers offer such devices. With this relatively low level of experience, the highest percentage of responses (44.8%) was "too early to tell."
Retailers' experience with kiosks tied to their point-of-sale systems was even more limited, with only 11.1% housing them in their stores. More than half of respondents (56%) indicated it was "too early to tell" if these kiosks would be effective parts of marketing programs.