Over the last few years everything has become focused on ‘the now’, with little long term planning or priority given to longer term projects.
Over time, resources (people and money) have moved from category growth initiatives that require time (category development) to short term tactical shopper marketing that delivers immediate return. The concept of ‘grow the pie’ has been left behind in favour of ‘win today’. The drive to change shopper behaviour, has lost out to ‘get volume now’. Some of this behaviour has been created by the growing presence of the ‘disruptors’. The ‘normal’ order of things has changed and been challenged. Category Development or Management is today’s orphan child.
This short term focus is of course unsustainable. The costs for the immediate gain of ‘win today’ cannot be maintained, nor is it a sustainable approach for future business growth and it’s certainly not ‘ownable’. Whatever you do today can be copied by someone else tomorrow.
Talking to a client recently, who works in a global category team, we lamented on the lack of focus in category management and development. We agreed that in the past category as a whole, was seen as a role where any employee could benefit from a great enriching commercial experience. Unfortunately it has become increasingly difficult to move staff into this discipline and to recruit. Internally the category team is seen as the dumping ground for tasks that others refuse to do. Also funds that had previously been available are being diverted into ‘shiny’ shopper marketing initiatives. Category management skills are deteriorating and retailers are picking up the mantle and doing more for themselves, further distancing the supplier from the customer allowing the customer/ manufacturer value added relationship to deteriorate.
This is not to say that shopper marketing hasn’t a valuable role to play. It has a great contribution to make, but it is only one of the many tools that are available.
So what are we going to do about it? We need to refocus on longer term plans and redistribute resources.
This image identifies the four key activity areas for a business. Areas that we believe any business needs to be active in, in order to be successful, reduce risk and grow.
So what are the four boxes?
Let’s start with the red box – tactical shopper marketing. Probably better called tactical promotions. These deliver short term spikes in volume, but don’t deliver against changing shopper behaviour long term.
The green box – strategic shopper marketing. Activation focused with a key business issue at the heart of it. An understanding of who we are trying to influence and what we are trying to achieve (what behaviour we are trying to change), customised for a specific customer.
The yellow box – category management. A historical review of what has happened to inform range selection and fixture led activation.
The blue box – category development. A forward looking view of the category tomorrow, based on an understanding of the trends that will affect it – lifestyle, shopper, food, environment, consumer etc. A way to ensure that a category is on the ‘front foot’, able to address the trends and maximise opportunity.
Activities are currently all focused in the “red box”. Our contention is that for long term growth and business health, focus needs to be shared across all four quadrants. All 4 boxes have an equally important role. How an organisation spreads its resources depends on its situation, however it is key that a business finds the right balancing point.
We need to move resources, increasing our strategic focus and prioritising category growth plans.
Businesses thrive when both category management and shopper marketing are working well – category management driving an impartial category agenda and shopper marketing a brand led process. Both need to deliver on a strategic and tactical basis, with long term shopper behaviour change at the heart of the strategic role and more short term wins at the tactical end. Let us not forget that an overarching category vision identifies category enhancing activity for both category and shopper by delivering more homogenous solutions with increased ROI.
So let us review each of the boxes in turn.
Category Development, the blue box
To quote Henry Ford – “If you always do what you’ve always done, you’ll always get what you’ve always got.”
This is a quote I love and for me highlights the output from category management.
To quote our website – “Whilst others settle for Category Management, at Big River Solutions we drive for Category Development.”
Our belief is that category development delivers more, and has a greater effect than just taking the purely historical view produced by category management. We acknowledge that a review of the past has a part to play in creating a level of retrospective understanding. However, predicting and anticipating the trends that are approaching allow us to help you ensure that your category retains its relevance. Aligning expectation to market conditions, which are shaped by the customer, shopper, consumer and the environment, allows clients to identify new opportunities, including NPD, brand extension opportunities, and shopper marketing.
The problem with this is that it requires a business to take a long term view and for all departments to be signed up to it, it is not only the responsibility of the category team. It can also take a long time to gain some of the benefits (though technology and appropriate processes can speed this up), and this can be seen as a deterrent.
The cost of data or research, and an organisations capability at mining it to provide real insights, can challenge some companies, but this shouldn’t be a barrier, you don’t have to buy all the data that is available, you can undertake category development, whoever you are. It is not just for the big companies, smaller companies can play a valuable role too.
At the same time shopper marketing has become a focus area for businesses, understandably trying to maximise the returns from shopper activation, but this too has been put under pressure as the need to see volume today has led to less ‘shopper behaviour changing activity’ and more ‘selling lots of volume activity’.
Recruiting good quality category managers is hard, you only have to look at how many jobs there are on LinkedIn and speaking to recruiters, there is just not enough talent in this area, as employees have succumbed to applying for ‘sexy’ shopper marketing roles, rather than category manager roles.
In these times of disruption and change in the marketplace, it is easy to become short termist, but this only causes problems later on, when we have no plans that deliver growth or deliver against evolving shopper and consumer needs. Lack of development of channel or customer plans lead to missed opportunities and concentration of dependency on specific customers.
As we say on our website predicting and anticipating trends from three points of view is required, and having elevated insights and plans that deliver in the sweet spot at the centre is what delivers significant business and brand growth – that’s Category Development.
Category Management, the yellow box
In February I did my usual monthly store checks. I avoided doing them in December as the stores would be full of Christmas stuff and going around stores in January, they were still full of Christmas items. I thought that in late February they would be back to ‘normal’.
I visited the big 4, plus discounters and Waitrose, and was astounded by what I saw: empty shelves everywhere, poor quality srp, no logical layouts (in many instances) and little or no effective signage and sku’s that should be adjacent, at opposite ends of the fixture or even opposite each other.
This begs the question – are we engaged in category management, which is designed to deliver efficient layout and range instore? From what I saw, I would challenge maybe not.
Category management has been evolving since its inception, with the longwinded 8 step approach becoming less manageable for many suppliers. The change in shoppers, the addition of the channel disruptors, technology advances and lifestyle changes have meant that traditional shopping occasions have changed, but the basics of CatMan are still needed. Delivering against shopper needs of ease of shop, clarity of fixture and simple directional signage, delivers enhanced sales and at least delivers against shoppers most basic needs.
When shoppers have less time than ever to shop, online is a viable alternative, and loyalty for retailers is reducing, retailers need to make it as easy as possible for shoppers to complete this task and even make it pleasurable, a task which is not onerous, but requiring some thought.
And lack of data is not a problem, in fact we are now drowning in data, in so many forms. Yet it seems as though this increase in data does not lead to an increase in insights that are being reflected instore. I have had many conversation over the last few weeks about a general difficulty in changing data into actionable insights. As a result of this, we have just created a training module to help develop skills for a client. Also remember technology can be an enabler, helping develop insights, faster.
In addition let’s create a specific approach for online. With more shoppers (who are younger, with higher income), buying their main shop online, it is not acceptable to just do what we do instore, online. We need a specific solution. How do we help our customers thrive online and create growth strategies and tactics to deliver in this vastly different environment?
So let’s get back to basics. Dust off the shopper research you commissioned, create some action plans from this, engage with customers and deliver instore or online (which is in itself, an article for another day…). Let’s reflect shoppers’ needs on fixture: simplify our offering, optimise range, lay it out correctly and promote in the right way. By doing so we will convert more shoppers into buyers. Don’t think that this is the only preserve of the big suppliers. All manufacturers have a role to play, with smaller suppliers potentially having a key role in niche or growing segments.
When c.70% of decisions are still made in store, this is where shoppers’ needs are fulfilled. Let us not forget to do this most basic work, well.
Shopper Marketing – Tactical, the red box
In the third article in this series we turn our focus to the red box, which is all about what is happening ‘now’. Since we first published our ‘Rebalancing Resources Matrix’ in August last year, it would appear that the emphasis is starting to shift away from the red box, which we believe will only be beneficial.
Below we have identified the key characteristics of those who operate in the red box, namely:
- A short term focus on promotions to drive volume (definitely not value) to defend against the disruptors
- Category initiatives losing out to shopper marketing
- Value enhancing, long term shopper marketing initiatives converted into short term promotions
- Conversion of promotions into value eroding price reductions.
Our belief is that this is an unsustainable approach to the current market conditions.
In a recent Kantar report * (which supports our findings first published in August 2016), over a third of all spend is now on items on offer and this has grown since 2007.
We need to accept that the consumer goods world has changed in the last 10 years and therefore we have to adapt our approach. The route to market is suffering from a significant change in circumstances. We must evolve to deliver against this new world, delivering what shoppers want, allowing us to prosper. This requires a change of approach, but also a need to be more challenging and discerning.
- What are the right promotions to use?
- How often should we promote?
- What will contribute to longer term growth?
- What activities deliver the behaviour change in shoppers we have identified?
Not forgetting there is a need to:
- hit our numbers
- deliver against our RTM needs.
We should remember that short term, tactical promotions are a part of the mix of activities and not the only tactic. We need to implement promotions that are worth doing and dare I say it, evaluate them afterwards and learn from it.
We should not forget that promotions play an important role in generating trial and up-weighting volume purchased. We should ask ourselves:
- How much of it would have been sold anyway?
- Does more stock in home encourage use/consumption or are you just pulling forward volume at a reduced price?
- Are you encouraging loyalty or switching?
From the perspective of an account manager, promotions can be part of the activities done whilst running to the next activity, with little thought or consideration of them (not always the case). The account has asked for a promotion and the supplier delivers it. How do we break this cycle?
In closing, consumer goods channels have changed their needs, in many instances converting promotions into price. Suppliers need to find a way to balance this with longer term initiatives.
We need to ask ourselves:
- How can we truly grow our category?
- How can we deliver value added options?
- What role do promotions play for us / our brand?
- How do we reduce our dependence on promotional volume?
* Kantar Worldpanel – Promotions do you know what you don’t know? Nov ‘16
Shopper Marketing – strategic, the green box
Shopper Marketing we define as:
- activation focused with a key business issue at the heart of it
- with an understanding of who we are trying to influence,
- what we are trying to achieve (what behaviour we are trying to change),
- customised for a specific customer/channel.
It is key that there is a clear focus on who you are targeting using the 5 w’s and 1 h – specifically who do we want to ‘talk’ to.
This is about implementing activation plans that seek to change shopper behaviour long term, to enhance overall brand health. It requires us to single-mindedly go after one shopper behaviour change either:
- more people – penetration
- more often – frequency
- or more packs – AWOP.
Trying to deliver against more than one objective is too scatter gun and implies that you are hedging your bets, not being targeted enough or not clear on what you are trying to achieve.
You also need to know where you are starting and what is your target – a ‘from’ ‘to’ measure, so we can evaluate the activity afterwards and ask ourselves, did it work? And why? We need to capture learnings for next time and share the good and the bad, particularly with customers, as ultimately in many cases they are the implementer.
Instore activation needs to include a mix of tactical price promotions and more strategic shopper marketing. Both have valuable roles to play, with significantly different objectives. A promotional solution that blends both activities, should lead to enhanced sales and a better long term outcome.
Our contention is that for long term growth and business health, resources need to be shared across all four quadrants. All four boxes have an equally important role. How an organisation spreads its resources depends on its situation, however it is key that a business finds the right balancing point.
We need to refocus resources implementing strategic and tactical plans, delivering for shoppers, consumers and customers.
Big River Solutions can help you develop strategies, tactics and actions to deliver category growth, shopper behaviour change and improve the shopper experience instore (and online).
Big River Solutions can help you understand capabilities and create a road map to address development needs.