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How CPG and Retail Companies Can Collaborate for Promotions

How CPG and Retail Companies Can Collaborate for Promotions

By Brian Ross, Precima

Sure, double coupons have their place in the aisle and in the wallet. But when it comes to reaching today’s smart, time-strained shopper, it is the two-for-one force of retailers and CPG companies, partnering to understand the whole of her needs, that delivers the most effective campaigns.

Think about it. What worked last year may no longer hold sway with today’s mobile-reliant, social-networking shopper. Trends in health, cuisine and even childcare come and go. What appealed to “foodies” in 2009 may be passé in 2011.

Shopper data bears this out. To reach this desirable shopper, retailers and CPG companies must move beyond promotions as one-time specials, and think of campaigns as solutions to shopper demands. Bundle the key brand with other products and information that support her current lifestyle. A new mother may require diapers, but she also is hungry for articles on how to manage time and for self-indulging beauty products.

Through such promotional partnerships, CPG companies and retailers can:

• Benefit from greater sales and profits,

• reduce their individual costs, and

• add greater value for the shopper.

That last point cannot be emphasized enough. For example, a key trend among consumers today is healthy eating. By fully understanding the lifestyles and interests of these health-conscious shoppers, retailers and CPG companies can promote items that resonate in a way that is fast, easy and sure to drive cross-category purchases. Instead of merely promoting fruit juice, they can create a display in the organic produce section that includes juice, healthy-living magazines, vitamins and low-sodium soups. Suddenly, that shopper trusts that retailer, and those brands, as the answer to her needs.

A Central Path Across Categories But to reach such a beneficial collaboration, retailers and CPG companies have to be willing to share their ideas. The issue is that sometimes, the two can be at odds. As much as they require each other, the goals of CPG companies and their retailers are typically misaligned.

Retailers want first and foremost for shoppers to choose their stores. The brand manufacturer, meanwhile, wants the shopper to choose its products. Shopper-centricity unites the objectives of both by addressing that shopper’s needs, how she shops and what complementary products she buys.

Consider the budding “foodie” shopper. Through our shopper data, we know the top 10 items she is most likely to purchase on a big shopping trip – from red wine to fettuccini. A good collaborative promotion might involve a display in the pasta aisle that includes olive oil, pine nuts, a few branded recipes and even high-end colanders. And remember: Price is not always a motivator.

Our analyses shows that shoppers are not the least bit price sensitive to as many as 50 percent of the items on a grocer’s shelves. Retailers and CPG companies can improve margin by including in their promotional displays these price-resistant items (fettuccini), while the marketing investment is allocated to items that priority shoppers are likely to try (olive oil). In the end it is all about identifying who are the key shoppers, what are their needs and then how certain brands fit those needs – not just within a product category, but across all categories.

Combining promotions to meet shopper necessity is not simply a big idea, it is among the biggest opportunities for enhancing the shopping experience among retailers and manufacturers. Selectecution: Equal Opportunity Through Execution But shared ideas can only be arrived at with shared data – a critical element to true collaboration. In the realm of purchase behavior, both retailers and CPG companies bring much to the table, so they must overcome any past hesitation about sharing their research findings. Retailers, for instance, offer a wealth of information through loyalty cards, shopper data and their incredible access to shoppers through flyers and other targeted marketing.

Manufacturers, meanwhile, not only can fund promotions, they provide a breadth of insight from their outreach programs. They can offer in-depth analysis of the categories that matter most to different segments – new mothers, for instance – and can share unique, proprietary insights collected from their primary research, such as the impact of promotions on the shopper’s path to purchase. Keep in mind that there is no reason to limit such collaborations to two parties.

The power of numbers multiplies when non-competing CPGs partner for promotions – a phenomenon that is occurring with increasing regularity. Our research shows, for instance, that healthy shoppers often buy fiber-rich foods, but also are prone to bottled water, fruits and products that are low in fat. Thank You, Please Come Again True, a joint approach to promotions is a departure from traditional campaign planning, when retailers drove the category and CPG companies focused on driving the brand.

But the increased complexity of today’s average shopper, combined with her knowledge, require equally sophisticated campaigns. Shopper centricity requires both parties to determine what trends are driving shopper choices and how to meet those demands – not for a specific purchase or brand, but across categories. The goal is not simply to get that best shopper to come in for an advertised sale – because the chances are high she will pick up just the desired item and leave. Rather, by bundling across categories, with an eye toward solutions, retailers and CPG companies can design promotions that generate full shopping trips, while reinforcing the value of the store and the brands. And that leads to long-term shopper commitments.

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