Tuesday, May 18, 2010

Shopper Marketing – are our banks in or out?

As discussed in previous sharketing posts, shopper marketing is a philosophy that recognises the difference between consumers and shoppers. It is based on an understanding of shopper behaviour and motivations as well as a focus on the retail channel. Where did it all begin?

Shopper marketing originated in the FMCG environment where the supermarket isles are packed with branded products and the principals of category management, in store displays, shelf space, packaging and retail promotions are obvious.

Recognising the opportunity to gain a competitive advantage through shopper marketing, the philosophy has spread from FMCG and consumables to less tangible industries such as telecommunications, financial and other services.

In a service offer, the typical FMCG marketing principals are not as obvious. The type of shoppers and the tools required to understand the shopper’s behaviour differ from traditional marketing. The product itself is intangible but the theory of shopper marketing is the same. This is because shopper marketing is about marketing in a purchase environment, whether that is a retail store, a website, a wholesaler or even a bank.

The first bank that comes to mind when you think about a real shopper marketing approach or channel focus in Australia is BankWest.

BankWest, now owned by CBA, commenced an aggressive assault on the Australia’s big four banks in 2007, when they announced the expansion to the east coast with 160 new branches, slashing bank fees and extending trading hours.

The new BankWest doesn't look like a bank

But we’ve heard all this before, an aggressive expansion plan, the promise of lower fees, more convenient hours and lots of cleaver advertising. What made BankWest standout for me? Why was this the first financial institution that came to mind?

The answer is simple. They stopped thinking like a bank and started thinking like a retailer. BankWest realised the power of the retail channel and focusing their marketing efforts on the shopper and on their customers. In the process they have revalutionised retail banking in this country.

Actually, that’s not accurate. The larger banks began the process of making their branches more customer friendly a few years ago. I remember when the CBA removed all the little pens tied up with chains and did away with the deposit slips that you had to fill in. I was amazed at the time. But how will they know how much I want to deposit? Then the ANZ put seats in the branches so you didn’t have to stand for half an hour to get served. But lets face it, as exciting as they were at the time, these were small, incremental changes.

BankWest however, made a statement. They wanted to give the east coast stores a very retail look. The store design turned the normal bank fitout on its head. Shoppers and customers were given priority and were encouraged to move around open spaces. Meeting areas were designed with modular walls for privacy.

BankWest 'store' design is comfortable and warm

New customer friendly initiatives were integrated into the store design, including, a cappuccino machine with free coffee, a coin counting machine, comfortable couches, plasma TV with entertainment for the kids, teller cash recyclers which allowed increased mobility around the store for staff and even retail product for sale.

Unique customer initiatives - cappuccino machine, coin counting machine, comfortable couches, phone banking, modular meeting spaces

Following this retail model, BankWest opened many of its new stores in shopping centres, with stores opening the same as any other retail store in the shopping centre.

As I write this, I realise that I have been referring to the BankWest branches as ‘stores’. To me they are more like stores than bank branches. We have come a long way since the pens were tied down by a chain. G-D forbid you should need to borrow a pen!

It will be interesting to see how the big four respond to the BankWest retail model based on the principals of shopper marketing.

Enjoy a free coffee and happy banking (I never thought there was such a thing)

Monday, February 22, 2010

Is there a science to shopper marketing?

Shopper marketing is now a mainstream marketing practice. In fact one study showed that 60% of brands are now investing in a shopper marketing focus. Another study showed that marketing budgets devoted to shopper research are growing by 21% per year. Companies who actively engage shoppers reap the rewards.

Shopper marketing is difficult to define because it is intangible by nature. As such deciding on the right approach to shopper marketing is complex. Various tools and technologies have been developed and adapted to study the shopper.

What are the tools available to better understand shopper behaviour? Is there a science to it and a way to make shopper marketing more tangible?

Following is a list, not a complete list by any means, of some of the shopper marketing tools available; traditional shopper interviews, intercepting shoppers in store, retailer interviews, analysing shopper blogs , Internet surveys, household data analysis, shopper segmentation, trip mission analysis, face to face interaction, covert shopper analysis, neuromarketing , eye-tracking research, using EEG technology, video communities, virtual shopping trips, psycho-sensory research, focus groups, exit surveys, anatomical sensory sensitivities, psychology and research blogs.

Personally, I haven’t used neuromarketing or EEG technology to analyse shoppers. I am sure that there is a benefit to the use of such technology to better understand shoppers. However, I believe that fact to face interaction with shoppers provides the best insight into their behaviour.

There are a few tricks to effective shopper and retailer interviews. You need to have an interest in people. You need to watch people and notice the subtle way they do things. You need the ability to walk up and talk to complete strangers. You need to ask open ended and non-leading questions. Your questions should not lead the respondent to a certain response.

The best interview technique will allow you to get into a shoppers mind in a way that neuromarketing, eye-tracking, EEG technology and other sciences could only dream.

Wednesday, January 27, 2010

Shopper service or shopper disservice?

A shopper marketing focus follows the shopper journey all the way to the critical final purchase. What happens along this journey, what motivates the shopper and how the shopper behaves and interacts with others is crucial.

One could argue that these interactions become more important as we get to the actual purchase. Customer Service staff are the last line of defence. So what is the standard of 'customer' (meaning shopper) service and does it provide a service or a disservice?

I don't believe that the retail sector is attracting or retaining 'A grade' staff. Retail staff in Australia tend to be lower paid, part time, after school jobs. Most retailers view employees as an expense rather than an investment. Low paid, poorly trained front of house service staff says a lot about an organisations culture and priorities. The result is clear shopper disservice.

At the most crucial stage in the purchasing decision, brands and retailers are making a colossal mistake.

Well established consumer brand loyalty and shopper purchasing intentions developed throughout the shopper journey are simply wasted. And the reason? Brand and retailers on behalf of the brands want to keep staff costs low. Shopper service quickly becomes shopper disservice. And the loser is the brand, the retailer, the shopper and probably the 17 year old kid who never enjoyed his job anyway.

This is possibly why some brands have taken control of this crucial last step of the customer journey. These brands recognise the importance of Shopper Marketing at the retail level. They have taken shopper service to a new level with well trained staff who are motivated and passionate about their brand. The staff are not only advocates of the brand, they are the brand.

The best example I can think of is the Apple Store. There would not be many people who have had a bad shopper experience in the Apple Store. Apple currently has over 250 retail stores which contribute to more than a quarter of the company's profits. The iconic stores and 16,000 employees give Apple a public face and serve as training centres as well as retail outlets. The branded stores have been so successful that Microsoft has announced plans to dive into the retail business with its own corporate-branded stores to take on Apple's growing visibility among consumers.

The Apple Store in Sydney reflects the brand

The staff at the Apple Store live the brand

Other brand entering the retail the retail channel are Nike and Adidas, where the store and the staff in the store clearly reflect the brand. It is a consumer branding campaign broadcasting from the retail channel. Shopper marking is now affecting overall brand recognition.

Nike Store in Germany is all about Nike

Adidas Store in Tokyo takes brand to the streets

There are also some retailers who are doing a great job with shopper service on behalf of the brands they sell. I don't think this is the norm, but those retailers that do it well, use their service offer as a point of difference.

The staff in JB Hi-Fi are probably not paid a premium, but they do appear to be advocates and passionate about their products.

JB Hi-Fi may be positioned as a low cost retailer, however...

there is investment in staff who are advocates of the products and it shows

The Apple Store, Nike, Adidas and JB Hi-Fi are extremely successful brands and retailers. Today Apple announced a 50 per cent increase in quarterly net profit to $A3.74 billion.

Perhaps their retail led branding and shopper service culture is paying dividends. Literally.

Monday, January 18, 2010

How to sell air to shoppers - Telecommunications in retail

When Alexander Bell invented the telephone in 1876, I don’t think he realised that his invention would create an industry worth of $1.2 trillion USD per year or account for 3% of the gross world product.

The Telecommunications industry is a giant, impacting on every sector of the economy as well as playing a significant role on social and cultural relationships.

Telecommunication companies in Australia have built a massive empire, but there is also a massive problem...

How does such a huge industry remain relevant and communicate with you and me – the shopper?

I was in a shopping centre on the weekend and noticed a few Telecommunication retail stores that are attempting to develop a better shopper focus. The three stores I visited all have modern, bright fitouts and contain a number of shopper initiatives, which are positive, relevant and clearly based on shopper needs.

These include;

  • Areas to sit down – to discuss plans and products with staff
  • Well trained, helpful staff - some stores do much better than others here
  • Dummy product devices - allowing customers to physically touch and feel the products
  • Devices that actually work - which do an even better job than dummy devices, until that embarrassing security alarm goes off because you’ve detached the device from the wire
  • Well themed service areas – a good idea as long as there is staff there to help you
  • Interactive TV screens to play with the products and investigate plans - silent sales displays areas are a great way of keeping shoppers busy if there is a wait for a real human to help you.
  • Displays segmented by customer – segmentation is important because these stores carry a large range of products across segmented customer uses
  • Hang-out zones for kids – keeps kids busy while parents decide which toy to buy for themselves

While each store incorporated some of these initiatives, there was one stand out for me. Can you identify which of the following stores was my standout and why?

Optus Store

Telstra T life

Vodafone store

Vodafone store

For me Vodafone is the clear winner. This is because of the clever use of customer/product segmentation by colour.

Colour blocking is a tool that is used to make it easier to shop due to a logical layout based on colour and visual consistency. Fashion retailers use colour blocking as a matter of course.

The Vodafone store I visited uses colour in the fitout design, fixtures and point-of sale to effectively segment their products. Products for Business shoppers are themed green, Special Offers are red, Prepaid is purple, Cap Plans are yellow and Mobile Broadband is blue.

It is interesting to compare Vodafone to the Telstra Store and Optus shop who don’t use any colour segmentation.

One clever initiative based on shopper insights has made all the difference for Vodafone.

Alexander Bell would be proud!

Monday, January 11, 2010

It doesn’t matter what we think, it only matters what the shopper thinks.

Welcome to Sharketing.

Sharketing = Shopper Marketing.

I recently scored a great job with a forward thinking marketing agency called The Marketing Store. My position - Channel Planner. The role - To implement the Shopper Marketing phenomenon for the agency and their clients.

Actually to be fair the word 'implement' is not quite accurate, because I believe the agency has always had a terrific retail focus, but maybe not a formal, defined one. Which brings me to my first question. One of definition and language.

What exactly is shopper marketing? What language should I use when developing a shopper marketing focus? Who are we talking about and is the consumer the same as the shopper?

Shopper marketing is an emerging field, it's the new 'online' or 'social media' of marketing. All you need to do is google the term and see the revolution for yourself.

There doesn't however appear to be a standard accepted definition for Shopper Marketing. This may be due to the fact that there are different approaches to marketing in retail, heaps of products, channels and retail outlets, and infinite ways that customers behave.

To me Shopper Marketing is part of the natural evolution of marketing. As mass brand advertising shifts to online and to social media, the interaction, dialogue and permutations with the 'customer' has increased in complexity. In much the same way the science of traditional branding and of the 'consumer' is evolving into a study of the 'shopper' in a retail environment, where infinite permutations exist.

Shopper marketing also has a lot to do with the definition of the customer and the distinction between the customer and the shopper. The ‘customer’ is a person who has purchased a product in the past or may purchase in the future, while the ‘shopper’ is someone who is engaged in the act of purchasing the product, typically in a retail environment. Consumers are relatively simple while shoppers are extremely complex. To put it another way the customer is the product companies 'customer' while the shopper is the retailer's 'customer'.

Coming back to a definition of Shopper Marketing that I am comfortable with:

Shopper Marketing is the research of all relevant stimuli to uncover insights into how shoppers behave, in order to convert them into customers.

My plan is to continue to explore the language of shopper marketing in a theoretical framework.

But don't be worried, I also plan on spending a whole lot of time in market (retail market of course) gaining real examples of trends and insight and having lots of fun Sharking along the way.