The Point of Sale

Research shows there is a vast difference between what consumers enter a store to buy and what they come out with. Being able to reach out to a consumer when she is just about to pick up a product off the shelf is an attractive opportunity for marketers. The practice is gradually gaining ground in India

Retailing is one of the largest sectors in most economies across the world attracting consumers from all socio-economic backgrounds and age groups. Buying is an essential part of consumers life. It could be need-driven, impulse driven or it may simply be buying for the sake of buying. Since most buying happens inside stores, the diverse formats notwithstanding, an increasing number of marketers have realised the importance of these points-of-purchase where the consumer finally converts her intent to buy into actual buying. Market research shows that more than 70% of consumers come out with products and brands that are very different from the ones they had meant to buy when they entered the store. The American humorist Erma Bombeck had, in fact, once said, “The odds of going to the store for a loaf of bread and coming out with only a loaf of bread are three billion to one.” This makes stores, or the points of purchase, a very crucial platform for marketers wanting to get a share of consumers’ wallets.

In the developed countries where retail is a far more organised industry with large formats offering a range of products and brands under one roof, shopper marketing or retail marketing, has emerged as a mainstream marketing stream. In India, where 90% of retailing still happens at small, neighbourhood stores (according to estimates there are more than 8 million small retail outlets across the country), shopper’s marketing has proved to be a tough nut to crack. Many marketing communications group and independent experts have begun exploring the platform and have set up dedicated divisions such as DDB Mudra group, which along with its restructuring, announced a partnership with TracyLocke, a US-based shopper marketing agency or TBWA that launched its retail marketing agency The Integer Group in India last year. The other main agencies in this space include Saatchi & Saatchi X, G2 of Grey group and Ogilvy Activation, among others.

The mushrooming of dedicated agencies is premised on the fact that retail marketing has a huge potential for marketers to woo consumers at the last minute of their purchase decision. Says Sunil Taldar, director, sales and international business, Cadbury-Kraft Foods, “The concept of shopper marketing is relatively new to India and there is a huge potential to reach out to the masses given the diverse demography associated with it. There is immense scope in the fact that the Indian retail sector is well spread out, with over eight million stores .”

Being a novel concept a large number of marketers, however, are skeptical about the efficacy of retail marketing. Most of the time, they club the retail marketing strategy with their mainline marketing initiatives whereas the agencies dedicated to retail marketing say it needs different orientation, and independent resources. Says Amit Ajwani, managing director, Saatchi & Saatchi X, “This happens mainly because the clients already have a mainline agency on the retainer model and are already paying them their fee, so they do not want to add to their cost. Our pitch is that mainline communication cannot be adapted into shopper communication.” Ajwani, however, says attitudes are changing. “Our few early clients were P&G and Diageo. Then Cadbury gave us one project which was a huge success and now we are their agency on record. The Diwali campaign we did last year for Cadbury helped them grow their sales by 18%.”

From a brand’s perspective, a huge challenge is the lack of comprehensive shopper’s insight or research, according to Taldar of Cadbury-Kraft Foods. He thinks that shoppers’ insight or research can help service providers in planning activations. Backing of industry body such as Point-Of-Purchase Advertising International (POPAI) India has also helped agencies in converging myriad voices in the industry. POPAI has initiated Outstanding Merchandising Achievement awards to recognize best shopper marketing initiatives in many sectors including FMCG.

But since India is still dominated by a large number of small outlets attracting millions of buyers, is shopper marketing a relevant concept here? Rahul Saigal, vice president ? retail, OgilvyAction, thinks that marketers mustn’t always chase the largest channel; they must go after channels that are likely to have the highest impact in aiding category and brand adoption and switch. He says, “It has been proved time and again that modern trade stores are more likely to change shopper perceptions and behaviour. This happens on account of shoppers being more open to discovering new products or new news about existing products, the format of self service (which leads to higher empowerment and choice) and finally the physical space that allows programs to be implemented in an impactful manner.”

?Also, over the last few months, modern trade has grown substantially and contributes to anything between six per cent and 15 per cent for large FMCG players. Given this context, shopper marketing, if used strategically, can have a significant impact for brands, despite the large penetration of general trade,” he adds.

Ketan Desai, VP and head, retail, activation and shopper marketing, Grey India is of the opinion that shopper marketing is even more relevant when it comes to traditional trade, where lack of brand interaction and visibility are key problems but brands will still want to win in this environment. “We must remember that the shop owner has always been someone we trusted to give us the best product. Also, we must find ways to leverage his ability to influence shoppers. Executions that help brand, retailer and the shopper to benefit will win in this environment,” he says.

In terms of sectors, FMCG is the main sector that has embraced shopper marketing in a big way but that is not unusual when compared to global markets. FMCG is a category which is heavily dependent on impulse purchase and that is where shopper marketing comes into play. Even globally, 90% of the shopper marketing revenues come from the FMCG sector, as Ajwani points out. He also says that shopper marketing divisions are trying to rope in new categories but for now FMCG makes most sense.

?It is not easy to convert consumers for categories like Consumer Durables if they have decided on a particular brand but there are huge chances of conversion in FMCG,? he adds. Shopper marketing offers a lot of advantages to the FMCG sector. Says Taldar of Cadbury-Kraft Foods, ?There are several advantages of shopper marketing since it runs through the distribution channel, the merchandising division and at store off-take. Shopper marketing is a very profitable tool to make inroads into the shopping basket. It helps brands create a stronger connect with the shoppers by enabling us to create in-store brand equity.?

Cadbury Kraft Foods has taken several shopper marketing initiatives like the Purple King programme where they hire display space in retail stores for their products. For instance under the Purple King programme, they had placed ?Visicoolers? which are primarily chocolate dispensers placed at select retail outlets. ?We also undertake several store activation programs through the Modern Trade (MT) and Traditional Trade (TT) routes during specific seasons like Diwali. Cadbury Kraft Foods has tied up with global retail chains such as Tesco for the Tesco Confy boutique, an exercise carried out for confectionaries and the Metro Cash & Carry (MCC) where we have the MCC ship which serves the purpose of display as well as promotional activity. For our employees we are creating a ?shopper marketing academy? that will impart cutting edge skills and behaviours that are required to become a skilled shopper marketing practitioner,? says Taldar.

Another category which could potentially use shopper marketing is telecom. Says Ajwani, ?We have been talking to a lot of telecom clients. If you go to a multi-brand outlet today, it is so cluttered. Everyone is talking about 3G but how does a brand stand apart from the clutter? It is all about shopper marketing. We have been talking to brands like Idea, HTC etc and I am confident that we are just a day away from converting them.?

Globally, digital has started playing a crucial role in shopper marketing practice. However, in India, digital is yet to influence shopper marketing in a big way. The shopper marketing professionals believe that digital definitely holds a great future and potential for shopper marketing practices in India. Saigal says, ?I strongly believe that digital shopper activation will emerge as a highly effective tool to influence shopper behaviour.? Adds Taldar, ?The digital space is rapidly growing in India. Unlike the West where the digital platform is more effectively used, here in India we are somewhere limited to SMSes, site banners and Facebook alerts. But with dynamic shoppers demography we are definitely bound to see the digitization of shopper marketing practices pickup.?

Giving the example of his own agency, Ajwani says that their agency has already started investing a lot of efforts in the digital space. ?Today, globally, 22% of the revenue of shopper marketing work is from digital shopper marketing. In India, we just picked up our first project on Cadbury Five Star, which is completely digital. We believe that as shoppers (youth) are spending a lot time on Facebook, we need to develop applications and do certain things to talk to them on a one-on-one level.?

However, the same challenge of clients accepting digital shopper marketing as different from digital marketing comes along. ?Shopper marketing digital is absolutely different. We have created tools which are specifically for digital, so that we understand the cycle as to how people are thinking when they are buying. Clients are not listening to us right now but they will. It will take some time,? he says.

It sure looks like a positive time for shopper marketing and things could only get better from here. With the advent of all the agencies and a slightly better response from the clients, shopper marketing could actually bring about the idea of consumers as shoppers to the limelight. Interestingly, recently, GSK called for a shopper marketing pitch which is a sign of things to follow.

Jim Sexton, global chief marketing officer, TracyLocke says that investment in shopper marketing has doubled in the last five years and it is expected to grow at an annual rate of 15%. He thinks that India is an important market for shopper marketing as it is a gateway to Asia. ?There is a shift in thinking: media centric to human centric. Marketers have become more ROI oriented and shopper marketing gives you that. You can get real time data on sales and smart marketers realise how important that is.?

Says Ajwani, ?The market is expanding and it is helping all the players. When so many people are shouting, clients would take us seriously. Of course, as the market grows, challenges will be more, but the business is going to grow. We are the leaders and we are happy with competition coming in.?