1. INTERNAL MEMO TO THE CEO
DATE: APRIL 15, 2011
SubjEcT: YOuR FuTuRE Is YOuR sHOPPER MARkETINg ORgANIzATION
You know that business is getting more complex. Competition is growing,
and the stakes are getting higher. CEOs like you need the marketing staff to
step up. But how? And more importantly: Who?
Eighty percent of CEOs says growth is the No. 1 priority, but fewer than
20% of you are satisfied with their organization’s marketing efforts. CMO
life spans are short, and structure is ever-shifting: 70% of marketing
organizations reorganized within the past three years. How long has your
CMO been in place? When did you reorganize last? And when is the next
reorg planned?
For your marketing department, it’s tough to know what you want. Fewer
than 25% of marketers say that information flows freely within their
organization, and over 75% of decisions, once made, are second- (and
third-) guessed. Only about one-third of marketers believe that strategic
decisions are quickly translated to action in their organization.
Where is your company’s new “center of gravity”? Customer service?
Resource allocation? Brand-building?
As you navigate the shifting landscape, one constant remains: Success is
ultimately measured by sales results. The transaction is still the linchpin. For
brands that do business at retail, Ground Zero is the cash register . . . and
the cash register should inform the corner office.
The most direct impact on sales comes through Shopper Marketing: 73% of
CPG manufacturers and 86% of retailers rank shopper marketing as the No. 1
activity that delivers meaningful return on investment. (1)
Shopper Marketing is the only discipline where it all comes together –
advertising, promotion, customer service, consumer insights, R&D, trade
relations – all focused relentlessly on driving sales.
1

2. RECOMMENdATION
It’s time to promote your best shopper marketers into senior
management roles, asap!
Who better than Shopper Marketers to understand the growing
complexity of business and navigate it successfully, in a collaborative
way? Who better to bring the cash register into the Corner Office? Who
better to help the CEO and the CMO do better marketing?
“Results are only in the marketplace.”
– Sam Walton
Like a jack of all trades, Shopper Marketers are the only ones in the
organization to touch all aspects of marketing and coordinate with all
stakeholders – brand management, sales, retailers, shoppers. Shopper
Marketers work closest to consumers, with a unique vantage point and
authentic insight that comes from working in the trenches.
The expertise of Shopper Marketers matches the current – and coming
– needs of general management as businesses adapt to changes in
consumer habits and attitudes; heightened expectations for brands; and
increased competition from all sides, in every avenue of communication.
EvoluTion of MArkETing DynAMicS AnD EMErgEncE
of ThE ShoppEr MArkETEr
Marketing has evolved, and with it come new goals and strategies.
The locus of marketing has spent
Art + science science + Art
the last 15 years shifting from
Awareness Activation the TV screen to the store aisle.
Products Experiences Business structure and culture are
Brands Consumers still catching up. (Maybe that’s
why so many marketing orgs get
Activities Accountability
restructured every three years.)
Mass Targeted/Tailored
Incremental Breakthrough The biggest growth has been in
Processes Best Practices Shopper Marketing, and for good
reason: It suits the way consumers
Buying Building
shop now, and the way business is
Few Tools Many Choices done now.
Volume ROI
2

3. ShoppEr TrEnDS
GMA and Booz & Co.
“The Purchase Funnel has been replaced by the decision
Ecosystem, a cloud of information from all sources, available say the rapid growth
anytime” (2)
of Shopper Marketing
83% of shoppers make purchase decisions before entering
the store – up from 60% four years ago (3) has been “fueled
81% of shoppers conduct research before they shop, by the need to shift
typically for an hour or more (4)
Online search for deals is up 288% (5)
spending further down
62% of shoppers engage in at least one digital deal activity the purchase funnel,
for half or more of their shopping trips (6)
get beyond price and
73% of shoppers make a rough/mental shopping list (7)
24% of purchases are unplanned … and 75% of shoppers inject more equity into
plan to make unplanned purchases (8)
in-store marketing,
66% of smartphone owners use them in the grocery store
and develop greater
By 2014, 53% of all u.s. retail sales will be influenced by
e-commerce retail intimacy.” (12)
40% of u.s. shoppers are ‘trading down’ in household goods
to save money (9)
67% of retailers say shopper loyalty to a specific store is
waning (10)
Two-ThirDS of touchpoints during active consideration
are consumer initiated (11)
MArkETEr TrEnDS in SpEnDing
• CPG companies spent about $38 billion on Shopper Marketing in 2010 (13)
• Between 15% and 20% of CPG marketing dollars are earmarked for
Shopper Marketing
• 83% of CPG companies will increase shopper marketing budgets (14)
• 55% will boost spending 15% or more by 2013 (15)
3

4. MArkETEr TrEnDS in SpEnDing conT.
Expected growth in cpg Manufacturers’ Advertising & promotions Mix
(Average Annual Increase or Decrease over the Next 3 Years)
Social Media 41% 52%
internet brand Advertising 45% 41%
Shopper Marketing 28% 55% ShoppEr
MArkETing
Mobile Marketing -3% 45% 38%
iS ExpEcTED
owned Media -3% 34% 24% To hAvE
ThE highEST
paid Search -10% 34% 24%
AnnuAl
consumer promotions -3% -10% 28% 3% growTh
other paid Media -7% -17% 24% 7%
Increase >5%
Television -14% -14% 17% 7%
Increase 0-5%
print Media -17% -24% 7% 14%
Decrease 0-5%
Trade promotions -7% -24% 10% Decrease>5%
Note: Neutral data was excluded
source: gMA/Booz & Company survey of CPg Manufactureres and Retailers, summer 2010 (manufacturer responses only)
The growth in Shopper
Marketing spending outpaces
ADvErTiSing: ExpEnSivE, AnD ignorED Ad spending growth, and with
TurnED up good reason: You’d have to
double your ad spend to get
It takes a 100% increase in ad spend to add 1%-2% in sales (16)
a 1% to 2% bump in sales. The
Only 18% of TV ad campaigns generate positive ROI average return on $1 spent on
advertising? Fifty-four cents.
54 cents: the average return in sales for every $1 spent on
(That’s a ‘loss’ of forty-six
advertising
cents!)
TV ad costs (CPM) jumped 256% in the past decade
“We are convinced that shopper
It took 117 prime-time spots in 2002 to reach 80% of adults
Marketing is the way in which we
. . . in 1965, it took just 3
will achieve our growth objectives
TunED ouT in a depressed market. We are
equally convinced that we will
Consumers are exposed to 3,000 ad messages a day
have to dramatically overhaul
Only 14% of people trust advertising information our business model to activate
shopper marketing.”
90% of people who can skip TV ads . . . do
56% of people avoid buying products from companies that they – CEO of a Fortune 500 consumer
think advertise too much goods company (17)
65% of people believe they are “constantly bombarded” with
advertising
4

5. DEMAnD: Do bETTEr MArkETing – ToDAy AnD ToMorrow
A holiSTic
pErSpEcTivE
The expertise of Shopper Marketers matches the current – and coming
– needs of the CEO as businesses adapt to changes in consumer habits
Much work has been and attitudes; heightened expectations for brands; and increased
done to streamline and competition from all sides, in every avenue of communication.
integrate the supply
chain: procurement of raw Former CEO of P&G A.G. Lafley said, “Effective marketing is the
materials, manufacturing, key driver of future cash and shareholder value.” In the emerging
inventory-keeping, marketplace, Shopper Marketers are the orchestra conductor of
shipping, order fulfillment, effective marketing. Shopper Marketers are the key drivers of future
inventory cycling, cash and shareholder value.
warehouse expense
reduction, IT upgrades, Shopper Marketers are closest to consumers and best-positioned to
make to order, lean talk, listen, and observe shoppers . . . then build that insight for the CEO,
practices, R&d to design, the CMO and the full organization to do better marketing.
forecasting and more.
Peter Drucker said, “The final question needed in order to come to grips
The next opportunity is with the business purpose and business mission is: ‘What is value to
to calibrate the demand the customer?’ It may be the most important question. Yet it is the one
side – all the elements that least often asked. . . What a company’s different customers consider
stoke Consumer demand: value is so complicated that it can be answered only by the customers
themselves. Management should not even try to guess atthe answers; it
• Customer service should always go to the customers in a systematic quest for them.”
• Pricing
• R&D As Shopper Marketing expands beyond the aisle, past the First Moment
• New-product of Truth, to embrace the Shopper Mindset whenever and wherever it
happens – the Shopper Marketer will continue to be the vanguard of
development
consumer insight and retail relations, integrating all marketing elements
• Market research
to crystallize the moment of transaction. That, in the end, is the best
• Retailer relations way to do marketing.
• Ad strategy and
schedules I welcome your thoughts and ideas and questions, anytime, in any of
• Promotional calendars the multiplicity of communications vehicles!
• Account-specific
Jim Holbrook
marketing
• Package design
jim@dobettermarketing.com
• Sales jim@neighboragency.com
• Development of new
distribution channels twitter: @jimholbrook
linkedin: Jim Holbrook
Businesses that refine their slideshare: jimholbrook
facebook: Jim Holbrook
demand components will
be in the best position
to compete as marketing
dynamics continue
to shift.
5

6. dECAdEs OF CHANgE CREATE THE HIgHLY EVOLVEd sHOPPER MARkETER
1962: The first Wal-Mart, Kmart and Target stores open
1970s 1970s: MASS MArkETErS rulE
rElATionShip: Brand g Consumer: Dictation. “The consumer isn’t a
moron. She is your wife” – David Ogilvy
DATA: GRPs; shipment data by geography
EnAbling TEchnology: TV, print, radio – mass media
Brands control the message; retailers are passive. Consumers are the
Captive Audience.
Few brands, national scope. Many retailers, local/regional scope.
MArkETErS MASTEr: The dispersion of brand messages
MAnAgEMEnT bEnEfiTS: Clear brand messaging, mass reach
1972: Wal-Mart goes public (with 15 stores)
1977: Kresge becomes Kmart Corp.
1980S: TrADE MArkETErS EvolvE
rElATionShip: Retailers g Brands: Pay for access
DATA: Warehouse withdrawals, chain-level sales data
EnAbling TEchnology: Scanners at checkout
proliferation of Stores: as Retailers build out, their clout grows.
proliferation of Skus: Brands flood the market with unprecedented level
of new products, spurred by Howard Moskowitz, whose 1986 research
on Prego spaghetti sauce quantified consumer preferences for choice.
As Brands fight for shelf space, Retailers leverage new-found clout (and
shift financial risk to Brands).
“Promotion” = trade allowances, case discounts, slotting fees
Brands begin to evolve “Account-Specific Marketing” (mostly promotion
menus) to direct at least some trade dollars towards consumer
marketing
MArkETErS MASTEr: The balance of Retail demands and Brand needs
MAnAgEMEnT bEnEfiTS: Marketing addresses two audiences at once
1980: Wal-Mart sales hit $1 billion. CPGs label the chain “Non-Grocery” or
“Alternative Channel”
1983: Sam’s Club launches
6

7. 1989: Wal-Mart is national, with 1,402 Walmart stores, 123 Sam’s
Clubs – and $26 billion in sales
1990s 1990s: cATEgory MAnAgErS gET ShArpEr ToolS
rElATionShip: Brands court Retailers with promise of Efficiency
DATA: Store-level sales data; primarily used for stock-keeping
EnAbling TEchnology: Hand-held scanners, store-level data, UPCs
Brands, Retailers strike Partnerships
Just-in-Time Replenishment
ECR (Efficient Consumer Response): Retailers and Brands streamline
inventory, then rethink product assortment, pricing, merchandising,
balance of trade/consumer promotion
SKU Rationalization favors the No. 1 and 2 brands – and Private Label
Private Label explodes with premium Store Brands: President’s Choice
EDLP vs. promotional: Retailers with “Every Day Low Pricing” hobble
Brands’ sales-price tactics and discount-based displays
Brands embrace Category Management to keep a seat at Retailers’
table
Category Captains leverage their Brands’ research to keep shelf space
MArkETErS MASTEr: Management of the category, not just the Brand.
Evaluate, prioritize, justify SKUs. Drive traffic
MAnAgEMEnT bEnEfiTS: Supply-side efficiency; fewer, stronger SKUs;
promotion strategy replaces widespread discounting. Strategic insights
improve competitive stance
1995: Amazon.com launches
1997: 18.6% of U.S. homes have Internet (Dept. of Commerce)
2000: Broadband launches
7

8. 2000s 2000s – in-STorE MArkETErS bring cATEgory
MAnAgEMEnT To lifE
rElATionShip: “Consumers” become “Shoppers.” Retailer fg Shopper
DATA: Household, then individual purchase history; shopper data; loyalty
EnAbling TEchnology: Shopping basket analysis, shopper
segmentation, RFID tags, reward cards – and also YouTube, Facebook,
cell phones, SMS
CRM (Customer Relationship Management) – the “Customer” is really
the Shopper … not the Retailer
Frequent-shopper programs proliferate
Rewards cards gain a foothold with shoppers, then morph from general
discount cards to data-based club cards a la Tesco (Kroger taps
dunnhumby in 2004-05 to test cards with demographic and purchase
data)
Shoppers defined by type – and later, by individual – via store-level
demographics and household purchase history
Marketing activity revolves around the Store: “The Last Ten Feet”
Retail = Community: “The Third Place”
Mass Customization (design your own Nikes)
Social Conscience emerges: Consumers want to make the world better.
They think brands should make the world better, too.
Consumers = Active Community (not Passive Audience)
Consumer-Generated Content: Brands initiate CGC to engage
Consumers in conversation.
1) Consumers like being creators of content (YouTube uploads, 2009:
20 hours of video per minute), want the stage that brands offer
(backed by media budgets and grants) for their own voice and
ideas: Pepsi Refresh; AmEx Members’ Project
2) Brands increasingly take their cue from consumers, adopt more of
consumers’ values … and cede the floor to Consumers.
MArkETErS MASTEr: Reading consumer cues; granular shopper
research; engaging Shoppers based on their interests/needs; refining in-
store elements; providing resources for Retailers that benefit the Brand
MAnAgEMEnT bEnEfiTS: Closer, authentic connection to Shoppers.
Collaborative strategy with Retailers. Research/insight/trend analysis
chops. Speed and decisiveness
2001: U.S. online sales hit $65 billion
8

9. 2004: Facebook launches
2005: YouTube launches; 8 million views/day
2009: 68.7% of U.S. homes have Internet – 63.5% have broadband (Dept.
of Commerce)
now now: ShoppEr MArkETErS
rElATionShip: Shopper g Retailers and Brands: Give me what I want,
when I want it.
DATA: Individual purchase and browsing data; on-demand shopper
research (price, ingredients, reviews, availability)
EnAbling TEchnology: Wireless, smart phones, social networks, GPS,
QR codes, 2D codes, Google Maps, “Amazon.com recommends”
Digital freedom: Shoppers are no longer tied to the store. Retailers and
Brands have to work harder
Instant research = Retail-agnostic Shoppers
Brands walk the full Path to Purchase
“First Moment of Truth” = the Holy Grail
Great Recession: Shoppers re-focus on price, plan ahead, do more
research, search out bargains, wait out Retailers (holiday sales became
a game of chicken)
Digital accelerates Participation: “Perhaps the coolest thing about the
web, social media and the multi billion-dollar infrastructure … is that we
can actually do things of value. We can effect positive social change …
by uniting like-minded people, inviting participation, understanding the
appeal of extrinsic rewards and leveraging the communities we join and
build.” -- Edward Boches
MArkETErS MASTEr: the building of community; evaluation of new
digital tools; value-add strategy to ameliorate price-shopping; nimble
adaptation to Shopper cues
MAnAgEMEnT bEnEfiTS: Channel-agnostic equity; self-determination;
responsive demeanor; stronger customer service
2010: YouTube exceeds 2 billion views per day; 24 hours of video
uploaded per minute
2011: Wal-Mart has 4,400 U.S. stores including Wal-Mart supercenters,
discount stores, Neighborhood Markets and Sam’s Club warehouses
9

10. 2011: Facebook = 500 million users
2014: U.S. online sales = $249 billion (Forrester)
53% of all U.S. retail sales will be influenced by e-commerce
TbD: shopper marketers move into senior level positions at
manufacturers and retailers, based on their real-world training and
holistic view of demand creation
fooTnoTES
1 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/2010
http://www.industryweek.com/articles/shopper_marketing_is_a_supply_chain_partners_
next_marketing_frontier_20781.aspx?ShowAll=1
2 - McKinsey, “The Consumer Decision Journey,” 2009
3 - IRI, “CPG Purchase Decisions,” 2009
4 - GMA, Booz & Co., and SheSpeaks, “Shopper Marketing 3.0 Survey”
Google, “Path to Purchase” presentation
5 - Google, “Path to Purchase” presentation
6 - GMA/Booz & Co., “Shopper Marketing 4.0,” 2010
7 - GMA/ Booz & Co., “Shopper Marketing 3.0,” 2009
8 - Journal of Consumer Research, “Planning to Make Unplanned Purchases?” 2010
9 - Booz & Co., “Forever Frugal,” 2010
10 - Food Marketing Institute
11 - McKinsey
12 - GMA/Booz & Co., “Shopper Marketing 4.0,” 2010
13 - In-Store Marketing Institute
14 - Booz & Co.
15 - Booz & Co.
16 - Advertising Research Foundation
17 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/2010
18 - Industry Week, “Shopper Marketing is a Supply Chain Partner’s Next Frontier,” 1/18/2010
10