By John Karolefski
Through a special arrangement, what follows is an excerpt
of a current article from CPGmatters, a monthly e-zine, presented here
for discussion.
Schering-Plough Consumer Healthcare aims to maintain the loyalty
of shoppers by developing special promotions for them with the help of retail
partners.
As part of the process, the firm wants to take trade relationships beyond transactional conversations about price to a higher level discussion about total value to the shopper. Aggregating data from new sources would also be part of the new shopper marketing for the maker of Claritin, Dr. Scholl’s, Coppertone, and a host of other over-the-counter (OTC) brands.
“Americans shop everywhere. Most retailers recognize that it’s a lot more expensive to steal trips from somebody across the street than it is to increase the value of the trip they already have. So they ask manufacturers what special offers or programs they have to create a unique shopping experience in their stores. Anybody in manufacturing can imagine the challenges that places on operations, strategy and budgets,” said
Mark Reynolds, director of category management and shopper marketing for Schering
Plough Consumer Health Care, Summit, N.J.
In working with trade partners, Reynolds
and his team of six managers focus on three key areas:
- Changing the conversation
with retailers - Data aggregation and interpretation
- Targeted shopper programs for retailers
Mr. Reynolds outlined this approach as part of a panel presentation at a recent category management conference hosted by the Institute for International Research (IIR) and officially supported by the Association for Category Management Professionals (CPG CatNet).
“The conversation with retailers has changed over the last 20 years, especially regarding the last 10 feet of the marketing plan,” said Mr. Reynolds. “In the ’80s, we were called Sales Planning. In the early ’90s, Trade Marketing. In the middle ’90s, we called it Category Management, then customer marketing. Now we’ve added Shopper Marketing.
“All these are attempts to describe the conversation we are having or desire to have with our valued retail partners,” he explained. “It’s really about providing value beyond just the product and the price.”
Mr. Reynolds acknowledged the new sources of data today such as loyalty marketing programs. He singled out the first-class program managed by Dunhummby for Kroger’s frequent shopper program. “The challenge is aggregating that data,” he said.
Another challenge for Schering-Plough and other manufacturers, he said, is the persistent request by retailers to make their stores different and special by deploying custom programs and promotions.
“It’s a notion that I hear from our customers all the time, particularly at the higher level of their organizations,” he said. “What could be? I’d love to see the day when my team could have conversations with our retail partners where we talk about some great offerings targeted only at their shoppers.”
Discussion Questions: What do you think of Schering-Plough’s push to work
closer with retailers on “the last 10 feet of the marketing plan”? What are
some of the challenges of moving vendor/retail conversations towards “total
value to the consumer” over “price?”
BrainTrust
Discussion Questions
Poll
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This is a great idea–in principle. And, as with all great ideas, the Devil is in the details.
As an aside, I always get a tad nervous when a manufacturer wants to change the retail dialog away from price. Makes perfect sense for them, but somehow never seems to make as much sense to the retailer.
It takes a special sort of brilliance to come up with a (1) retailer-specific creative plan to engage shoppers that’s (2) not price-driven and that’s (3) profitable to both the retailer and the brand. And if it was profitable, what would keep it from being copied 500,000 times? I hate to be a pessimist, but great marketing ain’t easy.
Bravo! My suggestion is to expand the group to include an agency with deep competencies in retail. An agency can be your best “bridge”…And help accelerate results!
After attending the National Association of Chain Drug Stores Conference for years and seeing what the vendors go through, this sounds like a great idea and could be a tremendous win/win.
Let’s face it; there is only so much time and a lot of vendors. Many merchandisers are waiting for the vendor to come up with the promotional ideas and creative ways to make their job easier and more efficient. This will assist Schering-Plough in getting more exposure, premium locations and better data. It reminds me of the old saying, “The squeaky wheel gets the grease.”
This is an interesting idea that opens up a whole lot of possibilities along with a number of caveats.
I can understand why manufacturers want to team up with retailers to both build a marketing partnership and reach more customers. Ultimately, it is the retailer who has the customer’s attention at the point of purchase and any influence they can extend will impact their choice. Building a strong partnership with the retailer can only improve the manufacturer’s position with the retailer. If it means a shopper uses a particular retailer for additional categories, that is even better. That’s the good part….
The other side of this whole thing is “who is the retailer meant to serve?” If the retailer really regards the consumer as their customer, then do they risk a loss of independence by collaborating with certain manufacturers? At what point does the consumer simply regard the retailer as a “manufacturer’s outlet” and no longer look at them as their agent?
This kind of moves into my pet peeve with retailers and manufacturers who agree to pack the “don’t bring this back to the store if you have a problem” slips inside product boxes. If I did not want a local contact where I can resolve problems, I would have bought the item online. I will often make the decision to use a brick and mortar location based on my follow-up concerns. Those slips defeat my whole objective.
There is another issue in this whole thing although I don’t know whether it could be legally fought out. Robinson Patman says the manufacturer must offer the same prices to everyone. Could this be applied to marketing services? If the same services must be offered to all retailers then I am not sure where this will go.
It’s very easy to talk about adding value–but not very easy to do. Good plan– it’ll be interesting to see if S-P can create ways to bring more value to the consumer at the point of purchase, thereby improving sales/profits and providing retailers with a point of differentiation.
“Changing the conversation” is nothing new, and gets tiring quickly.
The biggest opportunity is to aggregate and interpret the data. The low hanging fruit is to use an intelligent forecast (one that handles lost sales, promotions, and new items) in place of historical data, such as P52W, when planning your in-store activities.
OK, we all agree this is a great idea that is tough to execute. But is it really? Here’s a counter thought. This is really easy to do IF YOUR BRAND POWER WARRANTS IT. We do a number of “customer equity assessments” every year and two things are usually true.
1. The importance of shopper marketing prowess is rising in terms of building equity with retailers (customers);
2. Brand power always trumps that (and every other attribute) in terms of total customer equity versus your competitors.
Clearly, both I and our firm are big proponents of building shopper marketing capabilities. Several other aspects of the vendor/customer relationship are critical as well–including excellent customer service/fulfillment and professional account teams with multi-functional capabilities. But you have to have a truly meaningful consumer brand franchise first. Period.
As several above have commented, it’s not exactly a new idea and it’s tough to do…or it used to be.
Both physical and online communication has advanced quite a bit, allowing different communications to differing consumers, but more importantly, allowing communications to occur ONLY to certain consumers. An example of this is the Aquafina product launch Pepsi did last spring using a variety of online behavioral components aimed at specific consumers.
This example bypassed the retailer, but it seems as if consolidating consumer targets across retailers, and then finding a common communication that can be transfered onto them through the retailers might be a viable approach.
Looking at new data sources is key. Every entity that has a touchpoint with the consumer looks at the interaction with the consumer for that touchpoint and forgets that it is only one dimension of the consumer’s entire consumption behavior. If you want to increase your share of the consumer’s wallet, make sure you are looking at the entire wallet and not just a couple of pockets.
I applaud S-P for advancing this concept. They are the latest in a string of CPG companies that are working with retailers to improve the shopping experience and therefore increase sales.
As Ryan said, the devil is in the details. Untold programs have died due to poor execution at retail. Will this be one of them? Only time will tell.
“The last ten feet” are always critical whether they lead to the retailer, the consumer, Wall Street’s approval, or the electric chair. So you always want to make the most of that trip. But when a manufacturer wants to change the dialog from price to value it frequently means the objective is to improve margins not necessarily to serve customers better.
Schering-Plough knows that natural forces always prevail. It would benefit more by innovating discernibly superior products.
Then value would supersede price in the customer’s equation and the retailer could concentrate on supplying customer wants.
I thought the quote about how we called this effort various names over the past few decades was something of an admission that this isn’t actually new, we just may have better data to help drive it. If there is a breakthrough, it may be in the manufacturer and the retailer sharing data about customers to jointly figure out how to better market to them.
At the retail level the consumer needs and wants will change per the RTA. Customizing programs to segment the consumer, gain stronger brand loyalty, and increase purchases will be of tremendous benefit to the retailer.
As the business evolves and it becomes easier to track data, it is only natural to refine marketing approaches. I feel it is a very smart approach.
Great plans, but is this not the kind of approach that happens on a daily basis on the internet? Go talk with any internet marketing platform and they already empower retailers, brands and most of all consumers.
This is the future formula for success and S-P seems to be recognizing the important role influencers and true shopper-driven decisions at retail can make to the bottom line. We have been watching this trend to engage retailers unfold both in the US and through the eyes of our UK operation (e.g., the “Boots Experience” and other examples). Retail shelves have to be much more than simply a place to store items that have to speak to the customers!