Manufacturers of food and beverage products are expected to start investing more in shopper marketing strategies, which are widely thought to increase sales and competitiveness, and build brand loyalty, according to a GMA report.
Released last week, Shopper Marketing: capturing a Shopper's Mind, Heart and Wallet reveals that food firms' budgets for shopper marketing are growing at 21 percent per year, compared to the two percent growth seen by overall marketing budgets.
This, it says, reveals that manufacturers increasingly believe that effective shopper marketing initiatives will generate a competitive advantage and are realigning their strategies accordingly.
Although there is significant debate and disagreement surrounding the exact definition of the term "shopper marketing", GMA identifies six main definitions, and combines them into its own broader definition.
This type of marketing, it says, includes all varieties of marketing stimuli that build brand equity and have the potential to influence a shopper to make a purchase. These are developed based on a "deep understanding" of shopper - or consumer-in-shopping-mode - behavior.
According to the new report, the store is a "compelling and ideal marketing canvas". Some 70 percent of purchasing decisions are made in-store, and 68 percent of in-store purchases are impulse. This, it said, leaves marketers with a "tremendous opportunity to reach consumers".
The report was conducted by Deloitte Consulting on behalf of the trade body GMA (Grocery Manufacturer's Association), through interviews with leading manufacturers and retailers between June and September 2007.
According to their findings, companies are making "real change" happen in their organization in terms of shopper marketing, and they are backing this up with projected increases in funding.
In 2004, manufacturers spent some 35 percent of their marketing budgets on traditional avenues (TV, radio, print), 34 percent on trade promotions and 20 percent on consumer promotions. Forecasts for 2010 place these figures at 33 percent, 28 percent and 17 percent respectively. Shopper marketing in 2004 constituted only three percent of marketing budgets, whereas in 2010 it is forecast to make up eight percent.
"Building shopper marketing capabilities will require a significant transformation of the status quo in marketing and sales organizations. This transformation will include, but is not limited to, how insights are generated, how much is spent on insight generation, how segmentation is performed, how budgets are developed, how teams are structured, what skills are required, and how execution happens in-store," writes the report.
There are five things that differentiate manufacturers in the eyes of retailers, according to the findings. Leading manufacturers are considered to be those: who are best aligned with their marketing plans and strategies; with whom retailers have highly productive and cohesive relationships; who possess advanced shopper marketing competence; who develop unique and exclusive programs; and who can deliver powerful insights on the consumer and the shopper.
"The GMA Sales Committee initiated this project to gain a deeper understanding of shopper marketing and enable senior executives in our manufacturer member companies to maximize the ROI of their marketing strategy," said senior vice president of industry affairs Stephen Sibert.
"These results demonstrate that manufacturers and retailers need to be adaptable in an increasingly shopper-centric marketplace."
"What retailers told us and what market leaders have figured out is that manufacturers can differentiate themselves in the eyes of their retail customers by demonstrating advanced shopper marketing competencies and offering unique opportunities for collaboration," said Nick Handrinos, partner at Deloitte, and lead author of the study.