The last frontier Advantage Magazine Nov - 07 - 2008

Both local and foreign case studies prove that by communicating with consumers when they are in a buying mood in store can increase sales and brand awareness. We profile the South African pioneer of in-store promotion, Primedia InStore

Your design and research departments have come up with a great new product. You research it amongst the target group to find out if it is equal, if not better than the competitive brands on the market. You ask the market whether it will take to another brand in the category. The answer is positive. You write your marketing strategy, and set sales target. You get management approval to go ahead. You commission your ad agency to design an advertising campaign. While they are doing that you liaise with sales and distribution. You get listed because of the picture the research painted, and the promotional budget you plan to spend. All is in place. D-Day arrives, and the campaign breaks. You wait anxiously for the public to respond. The reaction you expected is not in line with the glowing picture you were hoping for. What went wrong?The problem is usually at retail.

When a new brand moves into retail it is facing reality for the first time. This is the real marketing frontier where your brand rubs shoulders with competitors with a shelf space that is much smaller than theirs. The shopper facing this array of brands is confused. She has an urgent need to make a decision. Your brand is trying to get her attention, but it has no history. Her natural reaction is to reach for the brand she knows and uses. Into her shopping trolley it goes, and she moves down the aisle for her next purchase. Mass media advertising support is essential in the battle for consumer attention, and if the advertisement sends the right message, the chances of it intriguing the shopper enough to give a new brand a chance of being selected, are high. However, marketers tend to forget that consumers build relationships with brands that serve them well.

They normally only use one brand in a category but this doesn’t mean they are totally loyal to it. Shoppers are often curious and with a large range of brands competing for their custom in their local store they have, over time, tried many of them and found that there is no difference in value and function, so they see no reason to change. Should the local store, however, be out of stock of their regular brand, they will buy a substitute.

The next time they buy the product, if the regular brand is on the shelf, they then go back to their normal routine.

This behaviour highlights the necessity to watch distribution and availability. If a product is out of stock too often, the shopper’s loyalty will change to the substitute brand because they have had time to use it and discover it does the job just as well.

Marketers in this country generally spend too little time watching consumer behaviour when they are actively shopping. Media advertising can only do so much, and no more. It can alert consumers to the availability of a brand, but it cannot make the sale. That moment happens when the shopper faces the product on the retailer’s shelf.

It all happens in the store
Shoppers generally make a list of what they need before they go shopping. Research conducted in supermarkets across the world has shown that the brands that shoppers intend to buy, as noted on their list, differ from the brands they have in their trolley when they leave the store. Why the difference? It differs because of the activity in the store while they shop, or because their favourite brand is not in stock.

This research indicates that on average over 70% of the shopper’s first brand choice is substituted because of the promotional activity happening while they shop.

One of the most famous and most admired examples of store growth in the world is that of the Tesco supermarket chain in the UK. Within a space of 10 years, this company has become the number one supermarket chain in the country. Today, the chain takes one pound in every 7 pounds spent on household products in the UK.

What are the reasons behind its success? Its management realised that when people are in its stores they are in a buying mood. It rationalised that with this attitude there could be no better time to talk to them about buying the products on its shelves. The chain has the usual loyalty card, but if offers more than that. It realised that shoppers also buy things other than household products. So it offered them a wide range of products and services they would have had to go elsewhere to buy, such as life assurance, car and home insurance and travel packages. In providing this service, the chain took the hassle out of shopping and shoppers have responded by making Tesco their favourite store destination.

But in addition, its growth has come from in-store promotional activity that range from plasma screens and shelf advertising to demonstrations, coupon dispensers and a host more.

If any marketer wants to read a case study in action of how to market their brands, and build relationships with consumers, they should go to the UK and see for themselves what happens at a Tesco store.

The South African scenario
Marketers in this country tend to believe their selling job is over once they have signed off their advertising campaign. Many things happen between cup and lip, and one of them is lost sales opportunities because of not interacting with shoppers while they are in a buying mood.

Sadly, the marketing title in this country is a misnomer. People who hold down this position are often more concerned about the media advertising they approve than with what happens at retail level. Generally, mass media advertising has a minimal effect on motivating sales. Its primary job is establishing and building the quality of the brand.

For this to be effective, media advertising has to be supported by in-store promotional activity.
While marketer slackness is partly to blame for not using the local retail environment as a promotional arena, the retail industry in this country is still way behind seeing the value of in-store activity compared to what stores abroad are achieving with this tool. Marketers and retailers need sales volume and to achieve this they both have to woo the shopper. There is a need, therefore, for retailers to become more open and co-operative in their relationships with marketers. The gains which can be achieved by working together and facilitating brand promotion are obvious. When consumers are in the mood to spend, by using the right incentives, they can be persuaded to put their hands in their pockets to buy more.

For the marketers of new brands, it is in-store activity that will encourage shoppers to reach out and put their brand into their trolley. A win-win result for both.

There are many tools which can heighten consumer interest while they are in the store, and a company that is well versed in this activity is Primedia InStore.

Launched in 1982, it is a pioneer in in-store promotion and, through innovative ideas, it has assisted most of today’s top selling brands to reach the status of being the No.1 choice on the South African shoppers list.

The promotional ideas it uses are the same as those employed by leading marketers across the world. These ideas not only continually prove their worth abroad, they are doing the same job locally, which proves their value to marketers year in and year out.

Primedia InStore prides itself as being the number one retail promotions agency in this country. It reached this status by constantly monitoring developments abroad. Its top executives not only visit the world’s top trade shows, including the world famous Point of Purchase Advertising Exhibition (POPAI), it is also a licensee of News America Marketing (NAM), leading in-store operator. This licence enables the company to have exclusive rights to world-class innovations. It also has relationships with similar companies in Canada, Australia, New Zealand, Europe and the UK. In addition, it also visits the leading retailers in each of these countries, particularly Tesco.

The need to have its finger on the pulse of global innovations caused the company to become a member of instoremarketer.org. The company is also a member of the Unilever Institute. It is also a founder member of the South African chapter of POPAI and this organisation plans to boost South African point-of-sale idea invented locally.
Primedia Instore contracts its media to clients and ensures its installation and maintenance. Over and above organising in-store activity, Primedia Instore offers in-depth feedback on in-store campaigns through Out of Stock reports that also monitor competitor activity. Its Post Campaign Reports detail scanner data verification of recent campaigns compared to prior period sales or stores where campaigns were not installed. These two are essential documents that marketers need if they want to ensure effective marketing.

These reports are designed to report on sales by company sales as well. This information highlights what many marketers are often oblivious of in terms of actual sales performance. The one-size-fits-all approach to marketing in this country is inefficient simply because it misses opportunities for growth. Empirical evidence shows that brand consumption differs hugely from one metro market to another. Not only do consumers in Gauteng, Western Cape and KwaZulu-Natal buy different brands, they also buy them in different quantities. National media advertising does not have enough power to fix these imbalances. Besides the influences of lifestyle, cultural backgrounds and climate on consumer behaviour in terms of consumption, the relationships people have with national media on a usage level also varies by metro area. Therefore, its impact is uneven. It takes a well planned in-store promotional programme to correct these variances.

The type of in-store activity required to increase brand awareness will obviously depend on the need. The advantage of the tools in the Primedia InStore’s portfolio is that they can be tailor-made to correct area imbalances.
The company offers in-store activation in a wide range of formats. For example: through shelf dispensers it can distribute discount coupons (it has the sole licence to do this) or it can also place advertising on shopping trolleys, wobblers on the self, posters etc – whatever is needed to draw the consumer’s attention to the brand.
The more astute marketers have included a permanent place in their marketing strategy for in-store promotions. What is advisable is that marketers should look at designing specific promotions for each metro area. This is possible because Primedia InStore has a sales force operation in the Western Cape, KwaZulu-Natal and Gauteng. Their constant interaction with the retail trade in these metro areas means they are able to report on activity in each on a daily basis. With this intimate knowledge, the company is in the ideal position to give advice on what promotions are likely to generate the best response in each area.

As one would expect, the company has strong relationships with the major store groups because it is a pioneer in this industry. The stores attract traffic to the tune of 22 million customers a month and generate 57 million transactions.

Over the past five years, the retail environment has changed dramatically in this country. Shopping malls have opened to the traditional townships and this has had a huge impact on the shopping pattern of the black consumer. As a result, Primedia InStore has expanded its operation to include promotions in these shopping hubs. In addition, it has also extended its area of activity to bottom-end retail and wholesalers. This sector of the retail market currently accounts for between 40% and 60% of the sales for a large range of FMCG brands. The street vendors, taxi terminuses, small township retailer, and spaza shops buy their stock from wholesalers. The promotions in these outlets, therefore, will also have a huge impact on the brands this market sells. The individual small trader needless to say is continuously cash-strapped, and as a result they buy daily and only brands and products that offer them a quick turnover.

Case studies

The proof of the value of in-store promotions can be found in sales results generated by the companies mentioned below. South African marketers are extremely cagey about divulging actual sales performance. However, we have persuaded them to prove the efficacy of the medium by allowing us to publish percentage increases in sales volume.

Obviously, the value of the exercise is directly related to volume generated. Even without any indication of the actual sales generated, the percentages do verify that continuous promotional activity at retail is essential for brand sales and market share growth.

Unlike media advertising, which can only be measured on a likeability score with no verification in terms of actual sales, promotions tell the marketer immediately whether he is winning the sales race, and if he is not. In addition, it suggests where remedial action should take place.

Primedia InStore’s client roster reads like the register of top companies: Nestle, Johnson & Johnson, Unilever, Tiger Bands, National Brands, Reckitt Benckiser, Colgate Palmolive, Cadbury, Simba, Danone Clover, Bayer, GSK, Beiersdoff, General Mills, Kimberley Clarke, and more.

Tell the team the problem and they will give you an answer that works.

Case Studie

Snow Flake Task: Communicate competition details, generate purchasing, pull sales away from competitors. Result: The 6-week promotion caused a 48% increase in sales.

Danao 5 Fruits Task: To measure the impact of promotion in two groups of matched stores. One with the promotion, the other without. Result: Over a 4-week period the store with the promotion sold 37% more.

Dettol Liquid Hand Wash
Store comparison period-on-period
Task: To prove that in-store activity can increase sales.
Result: Compared to the same period in the previous year, using promotion increased sales by 82%. Stores that had previously not used promotion increased sales by 43%.

Mortein Target Task: Measure the impact of R2 off coupon in stores with promotion against stores without promotion period-on-period. Result: The total sales in all stores was up by 62% and the volume increase with in-store media advertising was 46%.

Conclusion
The above examples clearly illustrate that stores with supportive promotion activity outsold stores without any.
A communication strategy backing brands with mass media advertising is, therefore, far less effective than with brands where in-store promotion is added to the mix.

In-store promotions are usually used as a shock strategy to raise not only the awareness of brands, but also to get the consumer to take the brand home and prove its efficacy. Once the brand has proven its value, its chances of being added to the consumer’s shopping list improves exponentially. However, one-off promotional activity wastes a golden opportunity. It needs to be repeated at regular cycles to reinforce the relationship generated by the first encounter, which encourages the consumer to put the brand into her shopping trolley.
By John Farquhar

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