Store Power

The power of the store as a marketing medium continues to grow as manufacturers place more promotional efforts at the store level, a proprietary SN survey shows.

When asked which media types most effectively support their consumer promotions, 55% of manufacturer respondents said in-store media like floor decals and at-shelf signs, according to the 2008 SN Survey of Manufacturer and Retailer Promotional Practices.

In written responses, manufacturers pointed to the fact that most consumers don't make up their mind about what they want to buy until they get to the store.

“Consumers make their buying decisions at the point of sale,” one manufacturer said.

“In-store is clearly the most effective and has the highest [return on investment],” said another.

Likewise, nearly two-thirds of respondents (65%) said they are focusing more on account-specific marketing now than in the past.

“Retailers provide more support when you do an account-specific program,” one manufacturer said.

“We find that account-specific programs have solid ROI and measurable results,” said another.

The online survey, conducted in August, yielded 71 manufacturer and 79 retailer responses to email invitations sent to subscribers of Supermarket News and recipients of SN's daily e-newsletter.

The findings come at a time when in-store marketing is getting heavy industry attention. The Nielsen Co. is preparing to launch a new tool that will help retailers and manufacturers understand which in-store media types drive consumer behavior and sales.

The tool is the result of the PRISM (Pioneering Research for an In-Store Metric) initiative that has been piloted over the last few years.

By combining technology, sales data, insights from in-store auditors and other tools, PRISM will create a set of metrics for assessing the effectiveness of in-store media programs.

Indeed, SN's survey showed strong reliance on in-store marketing. But brand marketers also voiced support for other promotional tools.

One-third said they're focusing more on Internet marketing now than in the past, while nearly one-third said the same about joint promotions with non-competing brands; one-fourth said joint promotions with sister brands; and 20% said ethnic marketing. (Respondents could choose more than one response.)

When asked to describe the status of their brand marketing budgets for the 2009 fiscal year, 32% said they expect it to remain the same, while 17% said it will increase and 18% said it will decrease. One-third did not answer the question.

More than one-third (38%) said they expect their consumer promotion budgets to remain the same, while 21% said it will increase and 17% said it will decrease. Twenty-four percent had no answer.

Marketers are also exploring new ways to market their products, including blogging, mass emails, discount promotional codes, and cross-promotions with bakery, deli, meat and seafood.

COUPONS STILL EFFECTIVE

At a time when many question the efficacy of traditional mass-marketed coupons, 51% of marketer respondents said they are still an effective promotional tool because they: encourage product trial (80%); increase brand awareness (42%); and boost retailer support (39%).

While overall coupon redemption is way down from its 4.7 billion coupon high in 1998, some marketers said they've had good response to their coupon programs.

Among the written comments:

• “We are seeing increased use of coupons and corresponding higher redemption rates.”
• “In undeveloped markets, coupons are great for consumers.”
• “I've always had my doubts about how/whether it positively influences consumer behavior, but we do get support from retailers. The combination of [freestanding inserts] and trade events does spike consumption.”

Respondents also noted that the weak economy is spurring more interest in promotional offers.

“When times get tough, people gravitate back to coupons,” one marketer said.

More than half (57%) said they are using more targeted forms of coupon distribution, including leveraging retail loyalty data to target specific offers to specific consumers (66%); handing out coupons at targeted events, such as ethnic festivals, baby expos and athletic events (46%); and using loyalty card data or other information to provide personalized coupons either in-store, by direct mail or in another way (44%).

Other popular couponing methods include Internet coupons (55%), direct mail (50%), circulars (48%) and coupons distributed with samples (45%).

Along with couponing, the majority of manufacturers point to the benefits of in-store sampling, as nearly two-thirds (62%) said they used the promotional tool last year.

While more than one in five (21%) marketers said their company has increased its involvement in targeted consumer promotions involving supermarket frequent-shopper data, and more than one-third (38%) said retailers are more likely to share information with manufacturers than in the past, 39% said the biggest hurdle to using the data is the amount that retailers charge for it.

WHAT RETAILERS SAY

That's not likely to change anytime soon, as just 1% of retailer respondents said they are charging lower fees for frequent-shopper data. One-fifth (20%) said their charges remain basically the same now as in the past.

Despite the fees, retailers recognize the value of the data, as more than one-third (37%) said their company is more likely to share information with manufacturers now than in the past, and more than one-fourth (27%) said their company has increased its involvement in targeted marketing involving the data.

When asked what types of in-store media they are requesting more of from manufacturers, nearly two-thirds (63%) of retailers said displays. This was followed by electronic media such as coupon dispensers and electronic signs (47%); shelf signs (46%); and themed displays like wedding, baby or holiday (44%).

But manufacturers can't blanket stores with in-store media, as clean-store policies that limit or ban the use of promotional materials are still alive and well. A strong majority (85%) said their store has a clean-store policy, and more than half (57%) said their clean-store policy rules are stricter now than in the past.

Retailers are exploring new forms of marketing. More than two-thirds (67%) said they are using Internet marketing, while nearly half (44%) are using personalized coupons. Also listed were mobile devices (19%) and new shopping cart technologies (15%).

Support for traditional marketing methods remains sound, as more than half of retailers (57%) see in-store sampling as a valuable promotional tool and are doing more of it.

However, in written responses, some retailers discussed the financial hurdles to sampling.

“The cost is difficult to justify in difficult economic times,” one retailer said. “It's hard to have a sampling program break even, much less be profitable.”

“With the minimum-wage increases and trying to hold costs in line, we are doing less sampling. We see it as valuable, but not something we can afford.”

When asked to describe the greatest change in their promotional activities over the past year, the majority of retailers pointed to health and wellness and pricing initiatives.

Among the retailer responses:

• “We're increasing the price promotion and 10-for-$10 offerings.”
• “There's more focus on prices due to increasing inflation rates.”
• “With the changing economy, we're creating offers and promotions to best meet the needs of our customers while providing genuine value and real customer service.”

RETAIL REWARDS

Nearly two-thirds of manufacturers said promotions customized for specific retailers are growing in importance.

Which of the following types of consumer promotions are you focusing more on now than in the past?*

PERSONALIZED PROMOTIONS

Two-thirds of manufacturers are using retail loyalty data to get the right offer to the right consumer.

What forms of targeted coupon distribution are you using?*

CUSTOMIZED COUPONS

Along with the Internet, personalized coupons are becoming a major promotional tool among retailers.

In what new ways are you marketing products?*

*Figures may reflect multiple answers
SOURCE: 2008 SN Survey of Manufacturer and Retailer Promotional Practices