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18 unsettling thoughts about shopper and consumer marketing in the omnichannel era

One of the following thoughts will change your company’s view of shopper marketing.
Shopper marketing thinking dates back a decade ago, and is in need for a revamp. Right now, FMCG manufacturers and (most of) their agencies are “lost” dealing with a bipolar shopper marketing departments that are neither channel nor brand marketing areas. Worse, they seem helpless to integrate the new digital shopper journey into the old location-based shopper models brought to them by pop material design/research agencies. They see change, but don’t know how to proceed.

If the old shopper marketing journey is not exhaustive any more because the world has grown bigger and multidimensional with the smart phone mobile revolution. Can we as marketers integrate it all into the brand strategy again? Yes. But first let’s take a look at a list of the most annoying thoughts I found in more than 100 articles and lectures about shopper marketing in the last couple of years.

Please present your views, as I am about to present my solutions in a series of articles for Linkedin.

If you work in marketing for a FMCG company, you will probably identify with at least one of these puzzling themes and questions:

1) There is not such a thing as a unique shopper journey anymore! Digital shoppers start their decision process long before entering the store. Brands need to understand their shoppers need states in every decision touch-point to capture value in the end of the path to purchase.

2) One of the biggest concerns of consumer goods companies is how to integrate brand and shopper marketing in order to create a consistent experience that translates into incremental sales.

3) The last click is no longer the most important step in the path to purchase. With more and more sophisticated, complex products, brands are relying more than ever in influence marketing to drive the first click to their products while shoppers trust each other better than ad campaigns. Winning the zero-moment of truth seems to be the safe bet in the digital arena.

4) Shopper experience can create deeper connections without excessive budget (big activations for example), when it is in sync with the specific attitude towards purchasing that makes sense to shoppers in their specific mission and contexts.

5) New studies in neurosciences and behavioral economics are revealing the role of irrationality and cognitive biases in shopper behavior. These findings will have a profound impact in advertising and creative teams in the coming years.

6) Is big data getting in the way of good marketing? Information overload and more fragmented media options have created a massive frustration among good marketers that do not work for the Googles or Amazons out there. Designing comprehensive analytic models is the new “to do” for companies in general. Once this task is done we can all be back to focus on creating great campaigns and promotions.

7) Is grocery shopping online the next frontier of e-commerce? What is preventing shoppers to adopt online grocery shopping massively are the retailers themselves. E-commerce apps in Asia, and not supermarket chains, have a great deal to teach us about e-commerce experience.

8) Global branding strategies versus local shopper marketing don’t usually work in sync. What story telling and content marketing can teach us about the brand authenticity bricks that potentially create connection with consumers and shoppers locally?

9) Too many options do not translate into more sales. Instead, it may hinder basket growth and prevent shoppers from experiencing new products. Shoppers are less rational than they say they are. Although counter intuitive, behavioral economics teaches us not to trust in self-declaratory marketing research when it comes to understanding some shopper behaviors.

10) Building loyalty is very different than creating incentives for increased purchase frequency. However, a few retailers are setting themselves apart from the crowd to avoid promotional traps and price wars. Customer centricity is a mindset that seems to bring the right focus into innovative strategies to connect with shoppers and consumers in a deeper way.

11) No company controls what is being said about their brands. And every brand faces the risk of a PR crisis at any moment. However it is possible to extract good ready to deploy marketing tactics from data collected while trying to monitor social medias if one uses the right research gadgets.

12) IOT (internet of things), VR (virtual reality), beacons, mobile campaigns, video on demand, geolocation based promotions…After the Pokemón Go mania, what are the new technologies with real potential to transform the way we go shopping in bricks and mortar stores?

13) Traditional shopper research basic assumption is that there is a linear purchase model with an exact idea of how, when and why consumers use certain touchpoints at different stages. However, this often given image is an illusion….more frequently than not, people go shopping with only a self-defined attitude instead of a rational plan.

14) Brands that are cutting through the clutter of information overload usually become relevant by applying content targeted marketing and personalization along the shopper journey. There is no space for a “one-size-fits-all” approach anymore.

15) Data-driven marketing biggest problem is when finally one has a lot of information and don’t know what to do with it. The role of a marketing metrics area is to create actionable analytical insights from data, not to create a cute dashboards disconnected from the real action.

16) ROI in marketing must be redefined. There are so many variables that are intertwined along the decision touch points of consumers and shoppers, that the illusion of being able to isolate one is definitely hindering better analysis.

17) Is sensory marketing “a thing” worth paying attention to? What’s the role of our senses in creating stimuli to shoppers? I am convinced that there are some persuasive sensorial call to action messages that have been ignored so far.

18) Is the traditional path to purchase dead? No. But it is time to pop-material creators to realize that it is not enough just to increase shelf visibility with bigger, brighter, bolder, signs. In-store marketing agencies have to be more intelligent than that. They should create communication platforms that resonate with shopper need states for each channel.

Share your thoughts with us in English, Spanish or Portuguese.

about me: (Rafael D’Andrea)

I was probably one of the the first non-American authors that have systematized the shopper marketing overall thinking in 2010, turning it into a book with a couple of Professors (2011, ed. Atlas), and a discipline in my home country, where I wrote some of the best selling books about shopper and trade marketing. I hold a master’s degree from INSEAD and own a research/shopper marketing agency focused in emerging markets, based in Sao Paulo since 2005. Our biggest challenge? Breaking and entering (or altering) the global brand strategies to fit them into the Latin American shopper mindset, or as I call it: “tropicalizing the global guidelines”. It takes a lot of research, rationale, and insight to convince global brand managers that some parts of the world are just different, and need a different approach, but once they see that it works, they are usually fine with that.

For more info visit rafaeldandrea.com.br or toolboxtm.com.br

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The ten steps to successful trade marketing planning*

A guide to success in your “budgeting” for the coming year

Between August and November, the trade marketing office of Brazilian consumer-goods industries generally go through the planning period for the following year’s budget. The objective of this process is to have some prevision over the expenses, investments and potential return on the business. The final document of this process is a business plan, by brand, category and sales channel, that integrates into the marketing, logistics, production and financial plan that companies submit to their shareholders in Brazil and abroad.

This article is particularly directed to all those trade marketing managers who at this moment are pouring their efforts into mounting the business plan that will enter into next year’s budget. It is also a recipe for being happy all-year long in trade marketing – a method of planning and working that will allow trade to use just the best ideas in the trade marketing plan. Apart from this, it will facilitate the relationship of this area, with all the rest, by showing how to say “No”, without feeling guilty, to any proposal that does not integrate, reinforce or mobilize the strategic incentives of your company’s brands within the trade marketing plan for the coming year.

During the budget period, apart from very few hours sleep and all the stress among senior trade marketing managers, it is common to see these professionals accumulating the difficult task of disputing funding for its area with that of marketing (communication) and with sales (the so-called commercial funding). This requires an intense effort to prove the worth of your own proposals and, for this reason, only the best must be used.

The job of the trade marketing manager is really exhausting, as he/she must integrate into his/her proposals those from other areas, previously aligning his/her actions with the launches of new products, and actions from brand and product managers, dosing his/her actions in accordance with the capacity of sales, and implementing them in each of the channels

The absence of this type of pre-alignment creates situations in which the salespeople cannot manage to implement a large number of promotions, competitions and initiatives alongside the direct and indirect channels of distribution. This happens simply because the number of actions, when all added up, make the flow of the commercial relationship impractical. I have heard of cases of companies where a salesperson has had eleven actions in five different categories to present to his interlocutor in a large foodstuff distributor – something really non-viable.

We would like to make a contribution for trade marketing managers by presenting the 10 steps to a very successful trade marketing plan. A learning tool that integrates finance to the process of trade planning is also available (please request by email at contato@toolboxtm.com.br the file containing the learning tool in Excel).

The 10 steps to trade marketing planning:
– 1st step – Context research study;
– 2nd step – Inventory of opportunities (Gaps);
– 3rd step – Quantify the Gaps;
– 4th step – Analysis of the increases from actions;
– 5th step – Analysis of operational viability and prioritization;
– 6th step – Tactical plan;
– 7th step – Action ranking;
– 8th step – Balance of results from actions;
– 9th step – Integrated P&L with all actions;
– 10th step – Risk analysis.
See the macro-model below:

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Step 1 – Context research study
The items that the study comprises are:
• General strategy of the company;
• Market;
• Competition;
• Key accounts;
• Shopping and consumer behavior;
• Marketing plan and corporate targets;
• Social, economical, cultural and technological context.

Step 2 – Inventory of Opportunities
Group together all the ideas and good practices sent by Sales, Trade, and Trade and Shopper marketing agencies. As yet, there is no managerial evaluation of the actions, they are just grouped by either channel of category of products to which they refer.

There are 3 sources of opportunity that can be included in the annual plan:

• Channel opportunities: part of the analysis of opportunities(Gaps) for leveraging the brand’s presence in sales channels, where the category could be sold;

• Shopper opportunities: seek to increase the shopper conversion of the category toward your brand. In this point, the tools to make this happen are considered, in other words: visibility, extra points, promotions, price strategy, selection, category management, etc.;

• Opportunities of increasing trade marketing efficiency: this is to get more out of the same resources. A constant concern in this type of analysis is the traditional dilemma “do-it-yourself versus outsourcing” as a way of increasing the efficiency of the trade efforts. This point also covers sales incentives, variable remuneration, structure, cargo
description and automated systems.

Step 3 – Quantify the Gaps (or “development points” – to be politically correct)
Try to score the value of the opportunities, quantifying the financial gains from a “macro” vision. In this point, the trade manager must ask him/herself “How much is this opportunity worth?” If there is no numerical answer, in terms of profit margin, market share or sales increase, probably the idea should not be contemplated in the trade marketing plan.
Tip: In my experience, as a trade professional since 1997, the champions for sales increases are: reduction of rupture, followed by an improvement in the efficiency of restockers, salespeople or distributors and sales promotions.

Step 4 – Analysis of the increases from actions
In this step, try to quantify the creation of value (worth) of each action, in other words, the capacity to bring additional profit in a determined period – generally 12 months. To do this, one needs to know the necessary cost or investment in trade to carry out each of the presented proposals. Clearly, one is working with an estimate at this point, and for this, it is important to have agencies that can supply some notion of the costs, before making the proposal in itself. The creation of value – in a quite simplistic formulation – is measured by
equating the resulting profit of the increase in sales for the industry, or brand, and the cost or investment involved in carrying out this action.

Step 5 – Analysis of operational viability and prioritization
The aim is to avoid the trade marketing manager using just his personal opinion to evaluate the actions and, thereby, becoming susceptible to being taken by colleagues as someone who is subject to predilection and whim. It is therefore important to use a set of fixed criteria in both the analysis of viability and in that of prioritization.

The use of four analytical requisites, with weightings defined by the top management of the company, will facilitate the job in hand for trade. Each action will possess a type of scorecard that will help the decision-making of those which will go to the final trade plan or not. The higher the score, the greater the chance of receiving the funding to be allotted in the coming year, for example:

• Criteria 1: Strategic alignment – Weighting 4
• Criteria 2: Ease of implementation – Weighting 2
• Criteria 3: Non-financial impact – Weighting 1
• Criteria 4: Return on investment – Weighting 3

Step 6 – Tactical Plan
The tactical plan is a detailing of the actions that have been previously selected to make up the final plan. An ideal format for the tactical plan has the following well-explained points, either in a document or presentation:

• Context ( What is the problem or opportunity to be addressed?);
• Market (Where will it happen?);
• Aims of the action (What is expected from this?);
• Process metrics (How can the extension from its implementation be evaluated?);
• Results metrics (What is the criteria for success?);
• Region/Channel (Who will be the executor of the sales action?);
• Category/Client (Which products and which clients will be involved?);
• Mechanics (How is it going to work?);
• Financial results (What is the P&L of the action?);
• Non-financial results (Are there any positive collateral impacts?);
• Schedule;
• Risks involved.

It is important to understand that in trade marketing there are some standardized actions that serve all clients and others which must be customized for just one client or channel. This characteristic, however, does not stop the manager from previously creating them, thereby foreseeing emergency situations for the most common of problems, as, for
example, “counter-balancing the increase in the price list” by means of incentive promotions and sell-out (increase in turnover).

Step 7 – Action ranking: “The execution is the only strategy the shopper sees”
Actions with low scores should be excluded from the plan to be presented to the board of directors, and knowing how to calculate the ROI (Return on Investment) on trade marketing will greatly help the manager to prioritize these. Nevertheless, as the capacity of sales to execute many actions in the field is restricted, from the practical point of view, the strategy will only come to realization when the salespeople are capable of executing it together with some client. The brand plan, plans of clients and the capacity of sales executing proposals should be considered. As such, the prioritization is the key to profitable growth of mass consumer-goods companies.
Step 8 – Balance of results from actions
On this point, the manager must formalize the premises in order to calculate the results of each action, including how he/she arrived at the return presented, and the metrics of success of the proposal.

Step 9 – Integrated P&L
The ninth step is a continuation of the eighth. Here, instead of taking each action, one by one, presenting individual results, all the selected actions are added up in terms of their sales increase, costs and increased profit margins. This allows the manager to present an integrated budget proposal (investments and costs) and of the potential increase in sales (which will go toward the commercial target), apart from the potential gains in market share (to be considered in the marketing budget – products).

Step 10 – Risk analysis
Finally, the last step must be to present the points of attention or warning about organizations or factors that could represent a risk to the plan. Among the most often heard justifications in trade marketing for the failure of good proposals are the following:

• Reaction from the competition;
• Substitute products and new entrances;
• Changes in the market and in consumer spending;
• Internal factors and cultural organization;
• Bad suppliers;
• Relationship with clients.

“Plan B”

The analysis of risks is no safeguard against failure, just an evaluation that underpins the proposal of the so-called Contingency Plan, or “plan B”. This work foresees the difficulties of implementation and alternative courses of action, should these obstacles materialize throughout the process of implementing the trade marketing plan. A “plan B” is not
obligatory, but if it is made, and eventually used, it will demonstrate the degree of maturity of the trade team. The tip is to create an alternative plan with high-impact-on-results actions and ease of implementation, but which further have a score below the rest in requisites such as strategic alignment and non-financial impacts. Don’t forget that, in the hour of need, results will always speak louder. Particularly if the problem affects the company in the short term.

If you wish to know more about this process, read “Trade marketing – distribution strategies and sales execution ” – Ed. Atlas/ 2010 (D’Andrea e Consoli), or request the learning system in Excel by e-mail from: contato@toolboxtm.com.br.

*With Daniel D’Andrea and Luiz Sedeh
Originally published at Mundo do Marketing website in 12/20/2012

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“In & Out”: best promotion practices for manufacturers*

In & Outs, or “limited editions” are excellent tools to increase frequency of purchases, volume per shopper trip, and some times penetration. This FMCG tool brings not only the novelty impact to the points-of-sale, but also influences shoppers blurring their comparative price reference in the category purchased.
However, the use of limited editions of fast moving consumer goods may be pretty harmful if not planned and executed right. If mismanaged, In & Outs can lead to high inventories of unfinished goods and packages. They may get stuck in small shelf spaces if not supported well with promotion and merchandising. Or even worse, they may go rotten without ever leaving the storage room of a retail shop, killed by some Information
Technology (IT) parameter generating a replenishment error.

Therefore, the challenge to brand manufacturers is not to develop great strategies using promotions, but to manage them. To do so, it is fundamental to create the right set of performance indicators (KPIs). In fact, these KPIs should address both internal processes and market results with the use of previously established success criteria for comparison. Internal KPIs will tell if the company must introduce a new SKU in the market as a limited edition. Meanwhile, market KPIs will show if the manufacturer should keep it running.

Examples of internal (process development) KPIs are:
– Speed to market: to control this process three intermediary processes must be monitored:
– Listing process;
– Retail logistics;
– Indirect channel sell-in.
– Sales process: channels execution influence incremental sales as a response to:
– Sales promotion;
– Out of stock levels;
– Retail replenishment parameters.
– Incremental contribution margin: manufacturers should reduce these costs to a minimum possible in terms of:
– Listing fees;
– Unfinished goods and inventory;
– Losses caused by short shelf life.

Examples of strategies to increase frequency, volume of transaction and penetration:
– Frequency is obtained when current shoppers of the brand buy it more often. The use of In & Outs to increase frequency are commonly associated with the introduction of new packages (e.g. individual size of a regular SKU, promo packs with collectionable gifts, free-samples);
– Volume per transaction is increased by price or volume sold. The use of combos (bundles of products from related categories) and value packs is a common practice. Premium versions also bring extra revenues per transactions if price/unit sold is higher than regular SKU;
– Penetration is increased when new-to-brand shoppers try the SKU. The use of in & outs to increase penetration can be exemplified with the introduction of new flavors, imported or seasonal versions of one regular SKU;

Examples of market (result metrics) KPIs related to frequency, volume of transaction and penetration and should measure trial and repurchase:
– KPIs that serve as reference to measure trial and repurchase:
– sell-in (introduction in retail stores): # of points-of-sale with new SKU / # number of points-of-sale with the category;
– sell-in (repurchases from retailers): # of units ordered for repurchase / # of units of last order;
– sell-out (trials): # of tickets with brand before In & Out introduction / # of tickets with brand after In & Out introduction;
– sell-out (level of repurchase from shoppers): based on loyalty programs information it is possible to check the amount of shoppers who tried and repurchased the new SKU.

Other best practices per functional area of the company (FMCG)
– Controller – Check ROI (Return on Investment) of every In & Out project separate P&L).
– Merchandising – Use secondary placement to avoid shelf space constraints. Follow up out of stocks in store.
– Marketing – Build a table with all versions of category SKUs to check invisible opportunities and overlaps with competitors before launching new version. Synch media plan previous to launching.
– Supply – Lower packaging/labels purchase lot to a minimum size.
– Market research/Trade marketing – Hire incremental assortment studies from research companies such as Nielsen if available (they bring data of potential volumes and pretty accurate simulators).
– KAM – Create a calendar (of substitute In & Outs) with retailers so listing fees are paid only once in a life time.
– Trade marketing – evaluate the impact of the “paradox of choice” in-store using instore tests to check the impact of a new SKU in the overall sales of that category in the POS.
– R&D – Extend shelf life of the product, if possible.

Example of incremental analysis (assortment optimization)

Product D selling is less than product C selling in total quantity, however the incremental units sold in-store is larger for product D. That is the correct analysis using units sold to determine what is the most successful In & Out. (the one with less canibalization)

Conclusion

Sell-out is still a key source of information for performance but is not always a viable/available KPI. Retailer’s loyalty program data (or “tagged shoppers” data) can play a major roll in the decision process as it provides a reliable KPI of “repurchases” from shoppers of a category or brand. The problem is that this kind of data can be as hard to get from retailers as sell-out. So there are not many options of KPIs to manufacturers evaluation of in & outs.
However, by investing time and resources in creating a perfect product launching process they will leave fewer variables with potential to go wrong along the path to purchase. That practice leaves the success of a product in the market only to shopper’s preference, fashion or taste (something easier to infer from product-test research), thus avoiding failure by poor field.

* With Daniel D’Andrea and the collaboration of Betina Steinkopff
Originally published at Mundo do Marketing website in 11/13/2012

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Shopper marketing: Strategies on the up*

Technological innovations stay in the background at this year’s edition of Shopper Marketing Expo (2012)

Shopper Marketing Expo, the largest shopper marketing trade fair in the world ended on
Thursday, 18th October, in Chicago. We had three days of high level discussions and seminars that boasted the participation of CEOs and directors from the largest consumer-goods companies, retailers and American advertising agencies. On the agenda was
the reinvention of the business environment in order to conquer and maintain shopper loyalty.
The crisis permeated every conversation, of course. According to the Wall Street Journal, the worst is over. However, according to Wendy Liebmann, CEO & Chief Shopper of WSL Strategic Retail (who led the main panel of the day, alongside Michael Bloom, president of the popular retail chain Family Dollar), 80% of American shoppers believe that the recession is
still going to continue for at least the next four years.

This means that for another four years, at least, this shopper is going to maintain the new habits acquired with the start of the crisis in 2008: 75% put price first in their purchase decisions and 52% have money only for necessary items. Attitudes which, although for us, in Brazil, are very much a part of the day to day of a good portion of the consumer market, are a novelty for Americans: shoppers having to think and do their sums before buying anything,
sticking to shopping lists and changing stores in search of advantages. This is the new reality of the United States.

Thus, American retail has rapidly mobilized itself, and the search is now on to understand this new shopper. But one cannot know what he/she does simply through data and sectoral panels. The great challenge is to discover why the shopper is behaving this way, with the purpose of guaranteeing the delivery of the expectations of this shopper: i.e. value.

There is a general understanding that in order to deliver value to the shopper, one needs to create relevance, and one only manages to do this by means of an emotional connection. This is the definition of the new driver of growth, the bet of Family Dollar to increase the share of its current customers’ wallets and to win over new customers – those in
search of alternative cheaper stores, but also with stores which deliver convenience and leading brands, in other words, value. More than opening new stores, Family Dollar is betting everything on generating fidelity and more visits to its current stores. And it is asking its suppliers, especially leading brands, to adjust their channel strategies and start to serve this shopper. Why not put your brand into Family Dollar, instead of just Walgreens, if the shopper
is doing their shopping here?

What can be clearly detected is a mobilization of the American market in the same direction. The presentations, in general, focused either on tools that guarantee the deep understanding of the “whys and wherefores” of shopper behavior, or in shopper marketing strategies that deliver solutions to shoppers and generate emotional connections of these with their favorite brands. Today, these are the essential components of what we call the shopping experience: understanding the essence, communicating the triggers and making the connection.

And all of this happens at the point-of-sale (POS), where brands converse with shoppers through POP materials, environmentation, packaging. Today, when everyone wants to redesign this conversation, the design has become more important than ever, as it is through this that the communication strategies come to life inside the store. What changes is how the creative process happens: in the American shopper marketing market, the design is set by the discoveries of the research and has its efficiency evaluated by powerful tools, that extrapolate the financial return.

Technology = Tool

In difference to other years, in which technological innovations (QR Codes, mobile, APPs, etc.) were the center of attention during the fair and discussion panels, this year they remained firmly in the background and appeared like tools. Important, of course, as means for the delivery of experience. But they no longer caused the fever they had done before, and mainly because they don’t really reveal these “whys”.

Their role is clearer, and the expectations about results are more moderated. One example is the Peapod grocery chain, whose sales are exclusively on-line with rapid delivery. Following an important social trend, that of a search for convenience, the chain has just made virtual stores available in the subways of Chicago, the same as Tesco’s example in Korea. It is the mobile serving convenience.

This increasingly shows how there is less fascination for technology and more for strategy. American retail today uses technology at the service of its main objectives: to be more relevant to the shopper, deliver value and strengthen the connection. The chain-store Target, for example, has started to make lists of its price comparisons with those of Amazon (its great rival in the virtual world) directly available in the smart-phones of its shoppers. It was a response to the strategy that Amazon had created to eliminate an important purchase barrier for some of its categories – the delay in delivery – mounting a gigantic scheme of warehouses across the country to guarantee same-day delivery.

A battle of the Titans, in an immense market, which focuses its efforts on potentializing the relation between retail, brands and agencies, in search of common gain, and no longer in calculating the ROI of activation actions and materials at the POS, the phantom that had haunted many marketing teams for its immense complexity in measuring and low reliability of the results. What we saw here is the construction of an arena of collaboration, where targets, objectives, information and strategies are openly discussed. The result was a parade of success stories for their strategic focus, scientific rigor and creative assertiveness.

Brazil

At the Fair, we met Juliana Costa, national manager of Trade Marketing of DPA, refrigerated division of Nestlé, one of the few Brazilian women present at the event. According to her, Brazil has much to learn with the way industries and agencies manage to systematize thought, in order to direct the POS actions, taking the shopper as the focal point of strategy.

Companies in Brazil need to transform shopper marketing into the central link of its strategies in much the same way as they do consumer marketing today, which already has quite well structured tools and methodologies. She believes that this is the new road to conquering a shopper who, contrary to American shoppers, is passing the stage of “What I need” to the“What I Want”.

*Rafael D’Andrea and Juliana Nappo
Originally published at Meio & Mensagem website in 10/19/2012

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The new model of shopper marketing*

The challenge of integrating insights about consumer behavior with point-of-sale practices

It started on Tuesday 16th and ended this Thursday 18th, Shopper Marketing Expo, the principal Shopper Marketing fair in the world, which takes place in Chicago (USA). On the first two days of the event, the main debate centered upon the challenge of integrating consumer insights and shopper marketing, in order to define strategies which guarantee the maximum efficiency in communication with the shopper (the person who is effectively responsible for the purchase made at the POS) throughout the entire path to purchase, transforming intention into real conversion, and how to do this with operational efficiency; starting from a clear definition of the roles within companies, especially in respect to the creation and execution of points-of-sale actions.
On Wednesday 17th, the Shopper Marketing Best Practices panel – The Path to Purchase Begins At-Home: In-Home Insights that Drive In-Store Purchase Decisions – led by Art Sebastian, director of Shopper Insights and Development of Categories, from the American firm, Kraft Foods, discussed how his company is managing to integrate its communication strategies and transform the corporate marketing silos in order to tackle the opportunities in shopper marketing.

It’s a case which clearly illustrated how consumer insights can be transformed into marketing platforms to define clear shopper marketing strategies: Kraft identified three consumer behavior trends – People are cooking more and more at home, the sandwich is a constant presence in these “at-home meals” and making a quick snack is increasingly turning into a habit.

The data clearly indicated that there are three marketing platforms to work on: cooking, snacking and sandwiches. Here is where integration gains life: to attend to each platform, marketing and shopper marketing actions were conceived. For the “cooking” platform, the marketing strategy was to launch products that inspire and facilitate the lives of those preparing the dishes, such as sauces and easy-to-use but very tasty ingredients. Apart from this, the brand bought the sponsorship of culinary programs on TV and reformulated the site in order to offer recipes.

But how did the shopper-dedicated team use this insight to guarantee the conversion? Above all, it didn’t use in the store what was used on the TV or on the Internet. What the Kraft team did was to offer a solution to the shopper: it created special display areas for cooking products in the stores, where shoppers could find everything they needed to satisfy the motive that took them to the store in the first place. According to the director of Kraft, growth in sales was in double figures in all its test stores.

This example shows that an integrated vision generates solid results. When each link of the chain (in this case, marketing and shopper marketing) understands its role, the strategy is preserved without the tactical actions repeating themselves at each point of contact. This is because “to integrate” does not mean “to repeat”, but rather to understand which solution delivers at each moment of the interaction with the consumer or shopper.
This action by Kraft at the POS was only possible because there was collaboration from industry with their clients, the retailers. Furthermore, collaboration is yet another subject that is on the agenda here in Chicago, in the same way in which it has been strongly influencing the way in which industries and retailers are planning their actions in the United States and in Brazil. Collaborating with the client means building confidence, which presupposes the sharing of information, sharing the risk and a reaping of the satisfactory results for both sides. And retailers are open to this.

In the main seminar of the day, and open to all participants at the event, Joseph Magnacca, president of Walgreens and of Duane Read, showed how the biggest American drug store player sought an alternative, within the English model, in order to continue raising its sales by store. Basically, the recipe was to abandon the American model of “real estate”, in which the location of the stores and their enormous coverage seems to guarantee success. Following the British model, Walgreens stores are being reformulated, one by one, to attend to the needs and requirements of the shoppers of each neighborhood – a segmentation that has created standard specific stores for Latin quarters, Afro-American neighborhoods, for seaside towns and touristic places.

In the case of Duane Read, a partnership with the cosmetics industry created specific areas for looking after nails in New York and its vicinity, where it was noticed that, despite the crisis (or perhaps even because of it), women continued to be vain and to bet on nail polish to make themselves more attractive. Among the proposed actions, Walgreens relaunched its program “Web Pick up – Buy on line, pick up in store”, a convenience that proved to be very important in certain regions. The video (www.youtube.com/watch?v=Co4Lv2OkGP8) makes it clear that the solution responds to the needs of the shopper, and not the consumer.

Furthermore, based upon the understanding of the shopper, and specifically the main shopping missions of these in the chain store, Walgreens structured its in-store communication proposal upon three pillars, which also put the reformulation of the visual merchandising and store layout on the agenda: “What I need, How I feel, How I look”.

The examples of Walgreens and Kraft show what everyone is after: understanding the mind of the shopper, and revealing his/her inner world. The available tools are varied: neuromarketing, research applied psycho-analysis, eye tracking. In these, and in several other cases, shared here at Shopper Marketing Expo, these techniques were widely applied in order to help brands and to understand shoppers.

What the results quite conclusively reveal is that the mind of the shopper – our mind – functions in narrative, which means, for the strategy to make sense at the decisive moment of the purchase, the message has to be cohesive, and no longer the traditional model, that bets on bribing the customer with discount coupons, or that offer prices to generate the conversion, and which is based on the belief that the intention to buy – generated by a TV ad – can manage to knock down all other barriers that interrupt the path of the shopper to the checkout.

Here in Chicago, we took part in discussions that sought to create a new model which manages to conquer the true loyalty of shoppers each step of the way, taking into account that it is a feeling, rather than a behavior. But to feel, one needs to connect, and the connection only occurs when there is a real exchange of experiences, when there is satisfaction of the needs and, especially, when there is confidence, built in a relevant way, in each step along the path to purchase.

* Rafael D’Andrea and Juliana Nappo
Originally published at Meio & Mensagem website in 10/18/2012

Foto shopper

Breaking down the barriers in order to conquer the Shopper*

The barriers that the shopper encounters, from the moment in which they decide to purchase right up until the moment when they place the product in their shopping basket, is the object and focus of the study of shopper marketing. They start to interfere in the purchase process even before the shopper reaches the shop, for example, when he/she still knows little about a product, or is not even aware of the fact that it exists. In the marketing context, our task is to remove one barrier after another, thereby facilitating the purchase and, consequently, increasing the sales of the product.

Only by understanding how the shopper behaves during his/her journey towards making the purchase will a marketing professional gain the capacity to minimize such difficulties. The most common hurdle in the consumer goods universe are: access, product/ brand visibility, the attention of the shopper and doubts arising about the products.

Identifying the barriers or “purchase hurdles” is neither an easy or rapid task. Nevertheless, a trained shopper marketing professional has the skills and ability to map out all the stages of the “path to purchase” using, for example, such tools as the observation of the buying process (observing the purchase) and interviews at the points-of-sale (POS) to identify, from there on, the key questions involved that may hamper any decision in favor of a particular brand.

The first step is to understand how the shopper came to know about the product and, then, how he chose the channel in which to buy it. Knowing how the shopper interacts with
the brand before reaching the POS is fundamental for increasing the probability of their considering a particular brand during the decision process.

What, for instance, is the shopping mission of a shopper when he/she enters a supermarket? Has the purchase in this or that category been planned, or does it just happens on impulse? Understanding these points is crucial to defining what the right angle of communication should be at the points-of-sale. Sometimes, even when finding the product at the POS, in the right place, displayed quite correctly, the shopper may end up not choosing the brand, preferring another old favorite instead. Could it be a problem of price? Is the shopper in doubt over the advantages of the product for him or her?

At this point, the planning of the message, aimed at the target public, is of utmost importance: the right message has the power of reverting the doubts, transforming them into certainties in favor of buying your product; transforming intention into conversion.

This is where the purchase triggers cut in. These triggers are the motives through which the shopper decides that he/she wants to buy a certain product. Very often the true motivators are not clear and only a detailed investigation is capable of revealing what will (or won’t) activate the impulse to buy at the moment of truth. Using the correct trigger in POS material is a powerful shortcut that immensely shortens the path between the brand and the shopper.

To knock down such barriers to purchase is, therefore, to reduce the “regret about buying” perspective with each step of the path to purchase. Minimizing such possibility of frustration, will close the circle – the buying, the experience of using, and the returning to buy again.

One very recent and successful case of this ‘breaking down of barriers’ is that of Hellman’s. The brand, through its campaign “Tasty food can also be healthy”, managed to take to the point-of-sale an integrated-communication message directed at the shopper, at the precise moment of buying, that mayonnaise can also be part of a healthy diet, and further be consumed in other dishes beyond the traditional hamburgers and hot-dogs. Through points-of-sale material and (prizewinning) actions such as the “recipe on the back of the label”, Unilever managed to successfully demonstrate and incentivate new and healthier uses of Hellman’s traditional mayonnaise.


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*Rafael D’Andrea and Juliana Nappo
Originally published at Mundo do Marketing website in 10/10/2012

Vitrine da paris

Point of view: The window displays of Paris*

We are always amazed by the window displays in Paris. And I am not referring especially to those of fashion boutiques, but rather to those food store window dressings: the different bread, cheeses, oils, chocolates, sweets… always laid out so as to make the mouth of any passer-by water. True works of art that, apart from awakening interest in the product (and interest in buying), they are further and simply created for admiration’s sake. And this always poses the same question: why don’t Brazilians display their products with the same loving care taken by the French? It would be true to say that – when it comes to fashion – and,
above all, the top brands, and one or two other segments here and there, our window displays leave nothing to be desired; nothing wanting. They are just as capricious. But why not use the same care and attention to detail to setting out store of foodstuffs? Bakeries, sweet-shops and even butcher shops could be much more charming and attractive to the customer.

We suspect that the explanation is more down to cultural motives, as well as to certain paradigms. There are of course economic aspects involved, as the mounting of such window displays requires investment, as much in window dressing decoration and furniture, as in the training for the window dressers themselves. But, sincerely speaking, we don’t believe that these are the real barriers to a greater proliferation of the art. We prefer to believe that we Brazilians do not develop this tradition for the following reasons.

Firstly, because the Brazilian middle-class tends not to get around so much on foot, unless we are talking about inside the shopping malls, where it is less typical to shop for food (outside the supermarket) for the simple but sheer lack of options. Apart from that, there is a possible belief, on the part of some traders, that many shoppers feel embarrassed about entering a well decorated shop, as they judge the prices there must be higher (which could be true – a strategic error). Finally, we find that there is a lacking in the small Brazilian retailer toward the tradition, culture and, indeed, valuing of this practice which is further linked to the lack of trained labor in the window-dressing area.

The foremost function of a shop window is to display the products in a way as to inform the potential customer of what is being traded, and further awaken and attract their attention and interest towards buying – this is the so-called “stopping power”. This “stopping power” (in shopper marketing terms) is the start of the process that goes on to become “holding power” (the power that the display has to make a person pick up a product) and which ends with the “closing power” (the power of the conversion into sales – the power of persuasion) – the prime objective of any consumer product display.

In this context, retail specialists believe that well-dressed window displays are responsible for up to 50% of sales. Added to that, up to 80% of brand decisions made by shoppers are taken at a point-of-sale, and a window display with high “stopping/holding/closing power” certainly has an influence in such decisions. In other words, there is an enormous opportunity here to be explored, without any need for great amounts of investment, and which could bring significant returns for retail (and retailers), not to mention that it simply makes the shop environment more elegant (without necessarily becoming too sophisticated). For all this, what is needed is some training, a little good taste (which doesn’t cost a cent more) and that some attitudes and beliefs – those old paradigms – are finally broken.

*Rafael D’Andrea and Daniel D’Andrea
Originally published at Mundo do Marketing website in 8/2/2012

Slide2

The “P” of placement in the management of the four “Ps” of marketing*

In the past, when we referred to the four “P”of the mix of marketing, we tried to translate to “praça”[market] what in English is placement, in reality it is something more like the “placing” of products and services or making them “available” to the consumer.

Such a great difference in meaning generated certain confusions, as much when people
made the original mistake as when they tried to correct the mistake by interpreting placement as “distribution channels”. Currently one uses the term “marketing channels” simply because it is more encompassing than “distribution channels” (logistic concept) or “sales channels” (a partially correct concept). The term “marketing channels” is more appropriate because it presupposes that, along with the product, a whole set of two-way communication initiatives would reach the consumer, or shopper. In my view, the very package is, in itself, a marketing
tool for the shopper and the Customer Service Inquiries a marketing and fidelity tool for the consumer.

Take the example of the beverage industry, in which the fragmentation of the product into more than one million points-of-sale in Brazil makes it the category with the greatest retail penetration among consumer goods. The penetration in retail is what allows it easy access to households, which in turn expand the consumption and consequently the market share of whoever works their channels best.

But who looks after the channel strategy of your business?

In general the sales area is the area responsible for defining the channels through which the products will reach the shopper and consumer. It is the responsibility of Sales to “open new client accounts” and discover new distributors in regions that are still not attended. But what does this mean for the business from the strategic point of view? I mean, what does it mean to have the Sales Dept. as a guardian of the channels of the business?

It means that the more they are pressured for results in the short term, the more the salespeople and regional managers are going to make the channel strategy “flexible” in order to reach their targets. This autonomy for making decisions in a decentralized and very often a discoordinated way about the marketing channels of the company ends up creating conflictive situations between intermediaries, or a price war between retailers.

We analyzed the case of Louis Vuitton. They do not sell their products in the famous American discount “outlets”, unlike the best part of their direct competitors. This kind of channel strategy is highly efficient in protecting “brand equity” (the value of the brand).

The channel strategy is fundamental for guaranteeing the success of the products in the market. I am not saying that some level of conflict between channel members – wholesalers and distributors, for example – is not useful. It is. At times the distributors are so inefficient in attending potential demand from the region they serve, that its is recommendable to stimulate a certain healthy level of conflict to increase the saturation of the market – mainly in cases of low-cost products of low complexity, such as lighters and ball-point pens, for example.

Unfortunately, the opposite also occurs. Some companies see the distributor as a mere delivery boy – an old-fashioned and out-dated view of the role of the intermediary. These manufacturers force their distributors into price wars, which results in taking many serious agents out of the market, and stimulating companies that are “fiscally flexible” in their
territories; a disservice to both the consumer and the State.

The channels strategy is a discipline that is generally subject to great attention from the high management – or board of directors. In the majority of consumer-goods companies, the area is led from the intellectual point of view by trade marketing, which looks after the B2B aspect, in other words, the strategic relationship between manufacturer/brand and its distributors, sales representatives or sales staff and retailers.

If you don’t belong to the area, you must be asking yourself – at this point – how it is that the channel strategy is made in your company. In some companies the planning for channels is under the responsibility of “sales administration”. This option denotes a more operational approach, in the sense of making the channel “work”, rather than really planning its strategy. In others – the most evolved – apart from trade marketing, which looks after the performance of the brand alongside the shopper at the point-of-sale – there is the figure of “Manager of Channel Development”, a great name for the manager that plans the activity of the areas of Sales and Commerce along with the intermediaries. In beverage, tobacco, potato chip and other such companies where there is a need to increase distribution, this professional is indispensable.

The Channel Development Manager works together with the Commercial area establishing the “how”, “where” and “how much” each channel of the company will represent in the difficult task of making the products available in an economically viable way for the intermediaries and the shoppers of the brand. He or she must think about aspects, such as: the operational logistics and taxation. However, it is in the aspects of commercial competitivity and in the business model of the intermediary agents and process facilitators that this manager spends most time.

Think of a franchise, for example. Franchises respond well to the dilemma of all Channel Development Managers: how to obtain control over the execution that the channel provides for my brand without being the owner of the channel. In the past Zara was the owner of all of its stores – it had total control over execution – and encountered difficulties in
expanding at the speed at which the demand grew. This would require a lot of capital tied up in stores. Whereas Subway – the largest chain of restaurants in the world (in number of stores) has enough control to guarantee the same standard of sandwiches and buying experience in all its shops, without having to put its own money into each new unit. The franchise system responds well to the chain, and this was certainly an important channel marketing decision
taken in the past. If Subway had decided to sell its products in supermarkets, as Bob’s did, they might have had problems guaranteeing the quality of their products. This is just one of the risks of expansion in channels controlled by third parties.

Below, I have presented a schematic model of marketing channels for consumer goods, that was developed by myself in order to facilitate the learning / understanding of my post-graduate students in channel management (it is merely a teaching model) but one which greatly helps us to understand the responsibilities, inputs and results of the work in channel planning.

Note how the channel decisions start in the external environment, particularly under the auspices of the competitor. When Chilli Beans started, certainly its largest competitor was Fotóptica and other neighborhood opticians/glasses stores. The company modeled its marketing channel (the stores and kiosks) so that they spoke the same language as their target public and, through this, achieved amazing success, even at an international level. Certainly their marketing area thought as much about their stores as about their products and communication. They understood the weighting of the “channels” variable in their business and were outstanding in innovating both in channels, as well as in products.

How do marketing channels work?

Basically, there are two types of agents that execute channel strategies: the intermediaries (in a generic way) and the facilitators. Intermediaries are all those agents who are directly involved in the sale or resale of products between companies and consumers. Facilitating agents make things happen, they are the financiers that provide credit for the new car, the transporter that takes the products to the retailer, the “Cielo”s and “Redecard”s of this world, that deal with the means of electronic payment, and so on, and so forth.

Slide2

The intermediaries and facilitators carry out activities related to the marketing mix. These activities are called “flows” because they make up part of a chain of events that culminate with the product being consumed. As one can see, there are several possible activities, of which the most important are the negotiation, the buying, the resale, the stocking, the delivery and the payment.
Nevertheless, there are many flows that occur so that these may happen, such as the exchange of information and, obviously, the exchange of money. Everything must be well coordinated in order for it to work and generate value for all those involved, especially the consumer. It is said that the real competition happens between the “value chains” and not
between the product brands. Just look at how many players are involved in the marketing process, after the product leaves the factory! The entire chain must function well, it is no good having a new product that is competitively priced, if retail, for example, is going to mark it up so high that it makes the increase in penetration non-viable beyond the niche and “early adopters”.

Truly, the success of the introduction of new products is intimately linked to channel planning. It is not for nothing that more than half of the products launched this year will have failed in such a short time. Apart from differentiating themselves in the POS in the middle of other SKUs, price, promotional support, delivery and ….would you believe it … the stocking of shop shelves are the main causes of the demise of new products.

To guarantee the success of both new products and old, the channels manager must constantly create stimulus for the members of this chain to prioritize your brands. Competitions, variable remuneration, commission, gifts, and all types of relationship activity serve as tools for increasing brand “recall” among the sales staff of wholesalers, distributors,
representatives and even company re-stockers.

If, on the one hand, too many incentives create the so-called “incentive over incentive” (something that reduces its impact within the channel), on the other, the absence of incentives acts as a barrier. Worse than this, the existence of too much conflict between channels hampers the growth of brands. Conflict is different from competition, which exists between different brands and chains of distinct manufacturers.

Conflict is something that happens in-house, and in general, forces members of the channel to spend more than they should, fighting among themselves, when they could be using these valuable resources to directly combat the competition. This becomes more complicated in channel management as it involves commercial contracts with large retail accounts foreseeing redress of losses through “mark-down”; in other words, the lowering of prices to keep up with the other chains. The same happens when it is necessary to administer clauses that foresee processes for falling profits and other questions concerning franchisers or distributors. Many large fast-food chains have had large losses due to this.

Finally, the management of channels must seek expansion opportunities in both the actual and new points-of-sale. This process, carried out by the commercial area, should not be too flexible, and could be closely followed with an indicator apparatus that will measure the progress of the plan and its results. Creating the appropriate metrics is the main part of the work of the Channel Development Manager before defending their own projects.

To monitor the execution in all the points of contact of the brand, the organization must have an adequate structure. Information systems, people, processes and sufficient technology in order to monitor channels is necessary. From a simple monthly audit of retail points-of-sale or franchises to the installation of cameras in one’s own stores, with
sophisticated systems of control of the flow of shoppers, traffic and sales conversions, is worth everything in order to increase the control over the execution on the shop floor. In the end, as the president of a large consumer-goods multinational said: “The execution is the only strategy that the consumer sees” and at the end of the day it is from there that the profit for the shareholders comes. So, now, have you imagined what could change in the “P for placement” of your company?

Channel management for services

In difference to the consumer-goods area, in service companies, the “P” for channels is normally managed from the strategic point of view for the marketing area, which could be under the responsibilities of the products area, or of the clients/market segment (responsible for a determined group of clients or market segment). Depending on the complexity of the channels used, there could still be the figure of the commercial planning area, generally subordinated to the marketing area, which has, as its mission, to coordinate all the commercial effort and adequate the strategies to the resources, in order to attain the objectives, further being the interface between sales and marketing. Normally it is used in companies that offer massive services, such as telephony, banks, credit cards, among others.

The following scheme of working is common: the segment areas detect a determined need upon the part of the clients, whereas the products area develops a product/service for this target. In the client/market segment the commercial policy to be applied to that product/service is defined (price levels and discounts, offers, levels of service, fidelity and retention policies, unit sales or in bundles, etc) and also in which channels it will be commercialized. The sales area (generally call centers, stores or sales personnel) and the technical area (when appropriate, as in telephony, for example) operationalize and tangibilize the delivery of the service. This whole process is retro-fed almost instantaneously.

The fact that the marketing area generally defines the mix of channels to be used is important for guaranteeing the correct implementation of the strategy, given that there could be different levels of prices/services, different costs and different levels of risk (churn, bad debt, etc) for each group of clients approached in each channel.

In massive services, very often all the “Ps” of the marketing mix appear simultaneously: advertizing on TV shows the product/service and often directly presents some kind of promotional offer (price, term, gift, etc), directing the consumer to a sales 0800, which is very often the the same service-attendance channel and, as such, creates a need for
implementing a tightly-woven strategy. In such cases, the essential and foremost function of the Sales Area (the call center, in this example) is to guarantee the best sales conversion possible, by means of the perfect dimensioning of the operation, of the application of the correct incentives to salespeople and of the existence of winning sales scripts. In these massive and large scale operations, it is the responsibility of the commercial area to guarantee the maximum efficiency within the entire process, and is, therefore, a vital factor for the success and profitability of the business.

Offers directed through email marketing, active telemarketing, sites and social networks, among others, are also commonly used and treated as channels. The working dynamic basically follows the above example, with the policies being defined by the marketing areas and their execution by the commercial and technical areas.

Thus, in service companies (mainly massive) it is of fundamental importance that the marketing and commercial areas work both very closely together and further in a coordinated way. As such it is no rare thing to find a certain crossover of professionals between these two areas.

*With Daniel D’Andrea and Luiz Sedeh, and  the collaboration of Karine Liborio
Introduction originally published at Mundo do Marketing website in 12/6/2012

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Entropy in Trade Marketing

The trade marketing area was the great hit of the 1990s in the world of consumer goods marketing. It grew in importance by concentrating the responsibility of channel management – which had been forgotten by Sales – and communication with the shopper (funds) – something that had been badly developed and conducted by marketing at that time.

As an academic discipline, trade marketing never found the same backing that it enjoyed in the “real world” of consumer-goods companies. This was due to one simple reason: trade did not fit perfectly into the “4Ps” of marketing (product, price, promotion and placement). That’s right, trade marketing ends up adding together two disciplines: marketing, based around and aimed at the shopper (the “p” of promotion) and channel management (in other words, the “p” in placement). For this reason, trade is neither simply “B to B”, nor just “B to C”.

The area attends both because it seeks to attain results through the shopper at the point-of-sale – the channel. This has always created a lot of confusion. Particularly so in the academic world, which tends to believe that on classifying an activity – giving it pre-established labels – this tends to dominate it somewhat. Businesses, on the other hand, have never worked this way. For them, what counts is the bottom line and, for this reason, trade marketing has become very successful.

Trade marketing has its origins in consumer-goods companies and then migrated to service companies, and even to within the retail sector, covering activities that range from commercial planning to “visual merchandising”. One of the main faults of trade marketing today is exactly the fact that it is so expansive – all embracing. Don’t get me wrong. I am an author of books on the matter and only pointing out the faults precisely to discuss their possible solutions.

Brazil, Spain, France, the United Kingdom and Latin America in general were regions that embraced the idea. Unfortunately, the entire world did not follow the move. And this is a further problem for those companies with global structures!

Trade marketing, as a corporate department, is going to grow a lot in Brazil. And then, it will disappear; at least, in terms of the form it exists in today. The area is inevitably going to be fragmented and divided into more specialized areas. Personally, I believe that the activity of trade marketing will not end, but rather, it will be directed towards the planning of marketing channels and the marketing for the execution of actions that lead to the conversion of the shopper into a buyer. The task of communication with the shopper at the points-of-sale and prior to this (mainly on the Internet) will be carried out by the shopper marketing area.

In certain international companies, this new area known as shopper marketing has already incorporated an entire generation of insights through the studies of the buying behavior of shoppers, taking on part of the legacy of Category Management. Its objective will be that of redirecting the dialogue of brands with the shopper throughout the shopping process, aimed at stimulating sales conversion, or reinforcing the brand image in the marketing area.

The current marketing area will gradually take over this “slice of the budget cake” for two main reasons: the need for integrating the communication with the shopper and consumer, and the need to coordinate the use of these resources, in order to optimize and reinforce the branding actions as a whole.

After investing in marketing on the Internet, the investment in shopper marketing is what is growing most in American consumer-goods companies. According to reports from international consultants, the area further presents an overlaying of marketing, sales and trade marketing. The discussions about the dominion of action are far from over. Nevertheless, it has certainly steamrollered the similar agenda about the role of trade marketing in this context. Hopefully, all this will serve as a warning to trade marketing professionals that are still not alined with the subject of shopper marketing.

My advice to trade marketing managers is the following: make yourselves the first to bring
the concepts applied to shopper marketing into your companies. Only by doing this will they
facilitate the coordination of area initiatives with a focus on multiple channels of action. As such, it is possible to guarantee that the collaborative vision with the channel (retailer, distributor, representative, wholesaler, etc.) prevails in relation to the communication of the product, which otherwise would represent a return to 20 years ago, to prior to the “Era of trade marketing”.

Certainly, the debate is not going to stop here and the world is going to change radically. I will even go so far as to suggest that the debate is going to be particularly hot between marketing, sales and trade marketing, mainly about attributions, structures and internal resources. However, it is not exactly for this – for the intrinsic dynamism of the area – that we fall in love with trade marketing? Therefore, let whoever brings the best results prevail, as long as they have the most significant facts and figures to demonstrate it!

Slide1
Originally published at Mundo do Marketing website in 5/2/2012

The application of Neuroscience in Marketing*

The objective of neuroscience is to understand the mind – how we perceive, how we move, think and remember. Its study describes as much the physical mechanics of the processes that occur inside the nervous system, as its capacity to alter the functioning of the motor system and perception in relation to changes in the environment. In short, the objective of the studies carried out in this field is to understand the relation between our human functioning, the medium we are placed into and the form in which we respond or adjust ourselves to such stimulus.

In marketing, the innovation arises from the combination of several recent areas of science and technology which are very important to the economy, such as nanotechnology, biotechnology, Information Technology (IT) and neuroscience (or the cognitive sciences). These are the main areas in which we observe scientific production in neuroscience in Brazil.

How does research in neuroscience work?

Research in neuroscience is nothing new in the country. It was begun way back in the middle of the last century by study groups formed in Universidade Federal do Rio de Janeiro (UFRJ), Universidade Federal de Minas Gerais (UFMG) and Universidade de São Paulo (USP) / Ribeirão Preto. During the 1970s, other institutions began research in the area, such as Escola Paulista de Medicina (EPM – UNIFESP) and the Universidade de Brasília (UnB). These institutions remained as some of the main centers of research in neuroscience in the country and others, with considerable scientific production in the area, came later on to join these. See Table 1.

Research in neuroscience associates the traditional method of investigative, quantitative and qualitative research with the use of structured questionnaires, brain imaging generated by magnetic resonance and the study of the electrical properties in cells and tissues that, in neuroscience, includes the measuring of the electrical activity of neurons and particularly the potential action activity, using electrodes to stimulate and record the reaction of nerve cells, or of the larger areas of the brain.

Neuromarketing, neuroeconomy, neuroengineering and other “neuros”

“Neuroeconomy” is the term that describes the association of the theories of economy, psychology and neuroscience, in the attempt to better understand the decision making mechanisms of individuals. The first studies were initiated during the 1990s. Since 2011, the Fundação Getúlio Vargas (FGV) has had a research center where they use tools that analyze brain reaction and cross-reference this analysis with research data. Using electroencephalograms (among other resources) communication actions are buoyed between supplier and consumer (as described by the Foundation).

Another line of research is neuroengineering, a discipline within bio-medical engineering which uses engineering techniques to develop neural prosthesis used in the rehabilitation of patients that suffer from corporal paralysis, with significant work published by the Universidade Federal de Pernambuco (UFPE), taking as an example the research of professor dr. Miguel Ângelo Laporta Nicolelis in the field of organ and systems physiology, in the attempt to integrate the human brain with machines (neuroprosthesis or brain-machine interfaces), as yet without any application to marketing, but with great potential.

Neuromarketing?

The study of decision processes and of how the mind makes its choices will allow us to understand the conscious and unconscious patterns of consumer spending and buying, as well as the processes of negotiation and even risk analysis, thereby suggesting new paradigms in the realignment of advertising, merchandising and shopper marketing and, thus, its importance for current marketing practices as tools for persuading the public.

The application of neuroscience in marketing is one of the vectors of research in the world. What has already been published on the functioning of the brain is still a very small part in comparison to the scientific production underway on this matter. Nevertheless, little has moved forward in the debates over the moral limits and ethical barriers in context with society. Using such knowledge to boost purchases and influence decisions tends to raise questions as yet not touched upon by the publicity segment and marketing services, which basically self-regulate the industry. Our role is to discuss and debate the issues with responsibility.

For those wishing to delve deeper into the the debate on the subject, “The Decisive
Moment”, by Jonah Lehrer, published in Brazil by Best Business(publishing) is well worth
reading.

Centers of Excellence and Research in Neuroscience in Brazil

Subject Department University
Memory BiochemistryPhysiologyExperimental Psychology ICB -USPUFRGSICB-USPIP-USP
Psycho-pharmacology(anxiety, depression, animal models for mental illness, pharmacological properties of natural products) Psycho-biologyPsycho-biologyPharmacologyExperimental PsychologyPhysiology UNIFESPFFCLRP-USPUFSCIP-USPFM-USP

UNICAMP

Visual System(development, neurochemistry, morphology, electro-physiology, behavior in animal models, human psycho-physics NeurobiologyPhysiologyExperimental PsychologyPhysiology/MorphologyPsychology

Psychology

Neuro-immunology

IBCCF-UFRJIBC-USPIP-USPCCB-UFPAFFCLRP-USP

UFPE

UFF

BehaviorAnimal and neuroetology Experimental PsychologyZoologyPsycho-biologyPsychology IP-USPUFMGUFRNUFSC
Epilepsy Physiology, NeurologyPsycho-biologyPsycho-biologyPhysiology UNIFESPUNIFESPFFCLRP-USPUFPR
Morpho-functional organization of the nervous system(development, morphology, plasticity) NeurobiologyAnatomyPhysiology/Anatomy/HistologyPhysiology/MorphologyNeuro-immunology IBCCF-UFRJIBCCF-UFRJCB-USPCCB-UFRJUFF
Sleep and chrono-biology Psycho-biologyClinical PhysiologyPhysiology and Biophysics UNIFESPFM-USPICB-USP
Nutrition PsychiatryPharmacology UFPEFFCLRP-USP
Mental IllnessSchizophrenia, panic syndrome FM-USPCB-USP
Computable Neuroscience Electricity EP-USPIF-USPIF-UFSC

*Rafael D’Andrea and Eduardo Marques
Originally published at Mundo do Marketing website in 3/2/2012