Part 1 - Path to Purchase Institute

As seen in
RETAIL INTIMACY
Part 1:
Winning
at Target
In collaboration with:
By Michael Applebaum
This is the first installment in a five-part series examining best practices
for shopper marketing collaboration. In this article, we examine
successful CPG initiatives at Target, a chain known for being highly
selective in its choice of partners and proposals. Brands can and do
break through, however, if they follow the right path.
W
hat do a chic first-aid kit, a customizable set of crayons, a seasonal mash-up of iconic figures
and an Asian cuisine-inspired frozen meal
solution all have in common? Each item was
the centerpiece of a deftly conceived shopper
marketing program – from Johnson & Johnson, Hallmark Cards’ Crayola, Mars Inc. and
ConAgra Foods’ P.F. Chang’s, respectively –
that won over Target’s merchant teams and
that is currently thriving in its stores.
The success stories behind these and the
other programs described in this article contain lessons for all manufacturers that hope to
strengthen their relationships with Target. The
Minneapolis-based chain, an elite and highly
discriminating retail customer, is so strict with
its clean-store merchandising policies that many
CPG brand managers simply assume that getting their programs into the chain would be an
impossible dream. It’s quite possible, however,
that these marketing execs have not directed
enough of their energies toward truly under-
standing what it takes to clear the hurdles and
ultimately succeed at Target.
There is a duality to the Target philosophy
of “wants” vs. “needs” – a set of core beliefs
about how its “guests” (the chain’s preferred
term for shoppers) build a trip around luxury
items and essentials. Those beliefs are summed
up by the “Expect More. Pay Less” brand promise. Target shoppers seek value in high-quality
products that add to their lives, especially in
terms of style and convenience, and this ethos
spreads across the entire organization. It dictates not only how Target treats its customers
but also what it requires of vendor partners.
Those who work closely with Target on
“guest marketing” programs say that it is not
just a question of what is in those plans, but
how the ideas are presented.
“How you go about building relationships
within the Target framework is extremely important,” says Heidi Froseth, senior vice president and Target team leader at Minneapolisbased Catapult. While Froseth cautions against
taking a “one size fits all” approach, she says
that brands can at least improve their chances
of getting programs through by adhering to a
set of guiding principles (see the “Five Keys to
Success” sidebar on page 3).
“You have to bring a different mindset
to Target,” adds Joe Robinson, president of
Catapult. “You cannot simply check off a box
along with the rest of your retail customers.
Find where the synergies are between the two
shopper marketing organizations and you’ll be
able to create something great.”
J&J: Form Meets Function
in a First-Aid Kit
A few compelling words come quickly to mind
when one thinks of first aid: Safety. Injury.
Series Schedule
Part 1:Target
Part 2:CVS/pharmacy
Part 3:Kroger
Part 4:Walmart
Part 5:Dollar General
© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of
any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.
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special Report
Prevention. For Johnson & Johnson, a stroke
of genius arrived in the form of another word:
Emotion. By tapping into the emotional states
associated with giving first aid and looking
deeper into usage occasions, the company
elevated its summer-time “First Aid Kit” promotion at Target stores into a “Be prepared
everywhere” marketing platform that could be
leveraged at any time of year.
The partners first introduced the stylish firstaid kit in 2009 as a way to bring innovation to
the increasingly commoditized first-aid category. Consumers were encouraged to “Build your
own First Aid Kit” and received the bag as a
gift with purchase of three or more qualifying
J&J brands. J&J has since been able to expand
the original exclusive Target program to other
retailers nationwide.
Thus, the challenge this year was to find
a distinctive value proposition for Target. “It
was important to our buyers that we go beyond an anniversary program or endcap,” says
Heather Campain-Robish, director of shopper marketing and category insights at J&J.
“Target owned this promotion and needed to
remain the leader.”
A full year prior to the summer 2013 launch,
J&J’s cross-functional team began conducting brainstorming sessions with Target’s buyers, insights teams, category managers, sales
teams and other marketing leaders. The “Be
prepared” messaging arose from these meetings and spoke to a more comprehensive strategy to engage the Target “guest” – who is
said to over-index on many social activities
and active lifestyle pursuits – as well as to an
expanded product assortment, in-store merchandising and digital marketing.
“We know that some occasions require
products that are complementary to the firstaid category,” says Campain-Robish. “We can
help people be prepared in ways that they may
not have thought of.” She cites, for example,
the happiness that comes with being able
to relieve foot pain for guests at a wedding,
hence the addition of Band-Aid Friction Block
to the promotional basket.
The concept of “family” was also broadened
to reflect the way people live – going to soccer
practice, taking a camping trip or spending a
day at the beach – thus the participating products are featured on camping and weddingrelated pages within Target.com. At J&J’s brand
page, Target promotes the “First Aid Kit” with
brands such as Neutrogena sunscreen and Neosporin anti-itch cream with more typical first-aid
remedies like Band-Aids.
The kit’s style quotient too has been elevated
each year. Working with Nsight Connect (a
shopper marketing unit of Catapult), Target
and J&J this year introduced a mini travel case
inside the water-resistant thermoform red bag,
which is embossed with an elegant cross design
to evoke the universal symbol for first aid. Additionally, a waistband includes a QR code that
directs smartphone-equipped shoppers
to tips, tools and other first-aid ideas on
Target.com.
Crayola: Color Me Creative
with ‘Pick Your Pack’
The typical Target mom is said to be confident that her kids will receive a good
education. So when she steps into the
arts-and-crafts aisle, her primary concern
is fostering her children’s creativity and
2
self-expression. That is the premise of Crayola’s
“Pick Your Pack” product line, now in its third
year as an “only at Target” exclusive.
“Pick Your Pack” allows shoppers to create
their own custom tins of up to eight original
eight-pack Crayola crayons, whose colors have
been arranged by themes and given names
like “Secret Agent,” “Glitterati” and “Fire and
Ice.” The box designs are geared toward both
boys and girls, sporting characters such as a
monster, superhero and princess. The product
line is based on the idea that, as with most
art supplies, kids use crayons as a means of
self-discovery.
“It’s about the individualization of color:
Here’s who I am, here’s what I can create,” says
Jason Eastman, customer business and Target
team leader at Crayola.
Eastman says kids like to create their own
figures (similar to the way they interact with
Legos) vs. sticking to what is shown on the
box. Hence the colorful characters are meant
to inspire new ideas. “Moms also want something different for their children, but they want
it at a great value,” he says. “When you partner with Target [on exclusives], you want to
give them something really special. But it has
to be reasonably priced and address a clear
customer need.”
The product line originated during a top-to-top
meeting in 2011 in which Target challenged Crayola to boost foot traffic and profitability in the
arts-and-crafts category. The strategic approach
to apply customization to crayons appealed to
both sides, since crayons are one of the category’s
largest segments and Crayola’s core strength.
Crayola’s insights, product development and
creative teams presented Target buyers with
30 to 40 theme concepts (new
themes are rotated in about every six months). Target vetted
the list down to 24 final SKUs.
Pricing for the eight-count box-
special Report
es was set at 99 cents, which is higher on a
per-stick basis (a 24-count box retails for about
$1.39) but deemed a good value in the context
of a compelling product. “We’re taking our
core crayon and charging a reasonable price
for something that’s special, exclusive and fills
a consumer need,” says Eastman.
During a test run at 50 Target stores, Eastman says product flew off shelves. The original
product featured cartons that could be filled
with higher multiples of eight-packs as a way
to promote increased basket size. Target later
suggested the move to tins, which has been
very successful.
“Pick Your Pack” is now being expanded
to other segments. For the upcoming back-to-school season,
Crayola is rolling out a customizable marker line (in Target stores
as of this month), backed by instore marketing and an updated
packaging design. Unlike the
separate crayon-themed characters, the markers will be depicted
with arms and legs and given
accessories such as a cowboy or
Viking hat. “At Target, success
in one category can often drive
innovation in other areas,” says
Eastman.
Five Keys to Success at Target
1. Begin with your merchant
Target’s buyers play a uniquely vital role in the retailer’s
total business, and this is where the dialogue begins, says
Heidi Froseth, senior vice president and Target team leader
at Catapult. A regular, healthy and actionable relationship
is fundamental to reaching goals at Target. This relationship is complemented by the merchants’ other business
partners (business analysts, merchandise planning, operations, category marketing, insights, segmentation and
digital). These are all important relationships for a vendor’s shopper marketing resources to foster, she says. Understanding the division, category and segment objectives
and strategic marketing pillars are essential to meeting
these mutual goals.
growth, positioning and opportunities is crucial to meeting these goals during the year, Froseth adds. “Put as much
effort into prioritizing and developing thought starters for
discussion during your collaborative planning sessions as you
do in building the rest of your plan. Lastly, meet monthly to
track progress against your aligned plans.”
4. Be thoughtful and strategic
With a nearly 18-month planning process, it’s important
to build a plan that optimizes past learnings and demonstrates innovative thought leadership. Be keenly aware of
Target’s merchandising,
marketing, operations, instore marketing, coupon
and digital calendars.
“Don’t try to get the sale
in one day,” says Froseth.
For example, it usually
takes 42 weeks before a
“Home” location or an
endcap goes into market
and, for most programs,
about three months to
get to the stage of presenting color concepts.
2. Collaborate and elevate your
relationships
Establishing an actionable relationship with numerous
business partners within Target will aid in meeting your
goals and help you identify white space opportunities, insights to research, concepts and campaigns to create, and
category and aisle reinventions to explore.
However, be mindful that of all these opportunities include the sponsorship, approval and continuous alignment
with your merchant partner.
3. Conduct annual collaborative planning
meetings
5. Develop ideas in the context of
collaboration
It’s important to evaluate your successes and opportunities
through a rigorous advanced analytics score-carding process. “Don’t just annualize something because it’s easy,” she
says. “Review all metrics: sales, share, category growth, ROI
and softer result metrics – remembering the guest is loyal
to Target and your brand at Target because you provide
inspirational, fresh and unique products and ideas. Work
together with your internal team to prioritize your total
portfolio and brands within each category to ensure these
priorities meet your aligned goals with your total merchandising team: divisional leader, senior buyer and buyer.”
Taking stock annually and conducting a collaborative
planning session together with key stakeholders to evaluate
“Manufacturers should come to the table,” Froseth says,
“prepared with a full category review complete with
insights and a proposed plan that inspires the guest and
solves several identified needs and wants.” However, she
adds, any concepts, creative and campaign ideas should be
presented as “inspiration.” Full collaborative brainstorming should be developed in a question/discovery/answer
approach, and in a cross-functional forum.
“It’s nearly always a misstep to bring in a national promotion and believe that you’ll wow the guest,” she says.
“Respecting the process is an integral part of understanding how Target stewards its brand.”
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P.F. Chang’s: ‘Asian with a Flair’
Wins in Frozen
Convenience has long been the driving force
behind meal solutions. With that in mind, Target sought to draw more time-starved shoppers to its frozen food department this past
spring through a “Meals Made Easy” endcap
destination. When Target buyers approached
ConAgra with the opportunity, the manufacturer turned to its recently acquired portfolio
of P.F. Chang’s frozen foods to fit the bill.
ConAgra estimated that the restaurant quality of P.F. Chang’s – dubbed “Asian with a Flair”
– would be a natural fit for Target’s discerning
shoppers. The company had a P.F. Chang’s frozen fried-rice product already in development
and pitched that item as an exclusive offering
to Target’s merchandising team.
“One of Target’s strategic focuses is the busy
family segment. It’s been supported heavily in
grocery but less so in frozen,” says Evan Cross,
director of shopper marketing at ConAgra.
“Target loved our initial creative concept but
challenged us to go further with our value
proposition. Since fried rice is typically an ingredient or side dish, we wanted to create a
total meal plan.”
As part of the solution, ConAgra developed
a recipe for a spicy peanut dipping sauce,
which it promoted along with an offer for a
free package of Target’s private-label Archer
Farms frozen vegetables with purchase of any
two P.F. Chang’s appetizers, fried rice SKUs
or entrées. In stores, the six-week program
(which ended mid-June) featured a two-door
freezer display, easel cards, tabletop handouts and a cooking demonstration using the
frozen rice and vegetable products. ConAgra
also blanketed Target.com with a P.F. Chang’s
brand page presence, mobile coupons, direct
mail support and circular ads.
ConAgra drew on previous experience in
developing meal solutions at Target around its
premium Bertolli line of authentic Italian frozen
foods. (ConAgra acquired both Bertolli and P.F.
Chang’s from Unilever in August 2012.) The
idea to bring the “Meals Made Easy” concept
to frozen foods had arisen from discussions
between ConAgra’s insights team and Target’s
frozen foods buyer group over ethnographic
research conducted in the spring of 2012.
“We went into people’s homes and talked to
them about the role that frozen food plays in
their lives,” recalls Tim Olson, national account
manager for ConAgra. One issue was overcoming the perception of frozen foods as bland
and texturally challenged. Plus, moms often
reported feeling guilty having all the cooking
done for her. “She wants ideas to make the
meal her own, but also seeks products to make
her life easier,” says Olson.
The program underwent several iterations.
For example, ConAgra took the proactive step
of including Archer Farms on mockups of the
collateral materials, and Target further suggested adding pictures of the frozen appetizers on the back of the cards/handouts along
with the dipping sauce recipe. “The concepts
got better and better through each of the ideation stages,” says Cross.
M&M’s: Easter Means Taking
Candy from a Bunny
Target has extensive stylebook guidelines and
adheres to a strict clean-store policy. So when
a marketing partner manages to get one of its
brand assets clearly visible on Target’s shelves,
they’ve done something right. That credit goes
to Mars for its charming M&M’s “Red” character, who was depicted wearing a bunny suit
on a seasonal endcap promotion at Target this
past Easter.
Mars’ relationship with Target dates back
many years, and the company knows it can
continue to secure display – if it delivers. The
Easter solution: an endcap display filled with 9
oz. and 12 oz. laydown bags of white chocolate M&M’s in pastel shades of pink and blue,
available only at Target. “We’ve been able to
strengthen our relationship by going beyond
the fundamentals to deliver something that’s
truly unique to Target,” says Lisa Moes, shopper marketing manager at Mars.
4
Mars unveiled the white chocolate M&M’s at
Target the previous year, based on the insights
that half of U.S. households use candy for Easter
decorating and 91% include chocolate in their
Easter baskets. These same insights on this core
consumer supported the idea that this unique
flavor offering would be conducive to gift giving.
During the 2012 holiday season, “Red” was
introduced into Target stores dressed in a festive hat. Target executives noted “a positive
guest reaction and emotional connection”
upon seeing the character in the store and
wanted to continue the momentum for this
year’s “It’s Time for Easter” seasonal displays,
says Moes. “Red” was prominently featured
on endcap headers and shelf strips, in coupon
books and online at Target.com/mms.
Being able to deliver a unique property to
Target may lead to other opportunities in the
same category, adds Matt Kipling, national
account manager for Mars Chocolate. Based
on this year’s success with M&M’s, Mars offered a special Easter egg-shaped version of
its Snickers and Twix brands. “You might find
that item in other stores on a [standard merchandising unit], but we were able to come
up with a unique offering by presenting it in
a shipper that fits within Target’s clean-store
requirements,” says Kipling.
As seen in
RETAIL INTIMACY
Part 2:
Getting Personal
at
CVS
In collaboration with:
By Michael Applebaum
This is the second installment in a five-part series examining best
practices for shopper marketing collaboration. In a revamped
approach, CVS/pharmacy is using its loyalty card data to forge new
brand partnerships and target customers based on how they shop.
T
he spring 2013 allergy season was a
bountiful period for shopper marketing
at CVS/pharmacy. Yet the messaging
was not confined to the pharmacy and OTC
areas of its stores. In cosmetics aisles, for example, Allegra made a bold pitch to become
part of a woman’s daily beauty routine. Allegra-branded displays and signage were placed
alongside makeup products – suggesting, for
instance, “You can avoid puffy eyes, not just
conceal them.”
That CVS believed it could convince its core
female shoppers to buy allergy medicine during a trip to the cosmetics counter was no
coincidence. An analysis of CVS loyalty card
purchases showed that many women were
already doing just that. Armed with that
knowledge, CVS made a calculated bet on this
unlikely connection and generated incremental sales during its seasonal allergy program.
Sanofi-Aventis’ Allegra, meanwhile, drove traffic to CVS stores by launching an entire marketing campaign (from email blasts and direct
mail offers on CVS-exclusive Lumene skincare
products to an online allergy makeover game
on Allegra’s Facebook page) around the idea
that looking good and feeling good go hand
in hand.
That example illustrates an ongoing shift
in how CVS approaches shopper marketing.
Over the past 12 to 18 months, the retailer
has largely dispensed with what some experts
consider to be the outdated practice of segmentation by demographic profiles. The chain
instead is using purchase data from its ExtraCare loyalty card program (which now has 70
million active members, per CVS) to target
high-frequency customers based not on who
they are but on how they shop.
“CVS’ efforts to personalize its shopper
communications is one of the key reasons
we partner so strongly with them,” says Roy
Benin, chief consumer officer, Mars Chocolate North America. “In addition to marketing
Mars products in stores to a broad audience,
the ExtraCare data and customization tools
like email, direct mail and affinity partnerships
allow us to customize our messages and offers
to make the best use of our marketing dollars.”
Here, in a simplified example, is how the
system works. At the single-category level, a
customer who has purchased soft drinks every
two weeks for the past six months might receive a Coke or Pepsi coupon dispensed at the
ExtraCare kiosk at the front of the store. Similarly, the program might identify a purchase
“affinity” across two or more categories. If
nine out of 10 customers who buy M&M’s
also purchase a 20-ounce beverage, even if
it’s not a Coke or Pepsi, they might receive that
same offer based on their likelihood of future
purchase.
This behavior-driven model is having a profound impact on how CVS communicates
with its customers, says Jessica Campbell, a
research analyst with Kantar Retail in Boston.
© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of
any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.
5
special Report
“You’re going to see a lot more smaller, targeted promotions going forward,” she says.
“Instead of, say, 10 email offers a month, you
might get only one, but it will be much more
relevant to what you purchased in the past.”
Campbell says CVS is continuing to reduce
the circulation of its printed weekly circular as
it moves toward a more customized digital version with unique savings for ExtraCare customers based on previous purchases. “If CVS could,
it would get rid of the print circular tomorrow,”
says Campbell, noting, however, that many
older customers still rely on the Sunday publication to comparison shop the drug channel.
Personalization and New
Partnerships
These changes are all part of CVS’ evolving
“personalization” strategy. The retailer uses
that broad term to describe everything from
its marketing communications (e.g., “My CVS
Pharmacy” at CVS.com) and receipts with
ExtraBucks reward offers based on past pur-
chases to the “clustering” of stores using differentiated product assortments that cater to
the shopping patterns of specific groups. CVS
stores located in major cities, for example, may
include features such as a Grab & Go refrigerated section with prepared meals, smaller sizes
of household products and self-checkout lanes
in order to meet the convenience or fill-in trip
needs of urban shoppers.
The personalization concept also aligns with
CVS’ current business priorities. Following a
lengthy period of acquisitions capped by the integration of Longs Drugs in 2008, the company
today is concentrating on generating organic
growth at its retail stores. Thus, CVS targets its
most profitable customers – both in the pharmacy and at the front of the store – and seeks
shopper marketing programs that increase basket size and conversion rates. The more “personal” a program is tailored to the way in which
customers shop, according to this theory, the
more likely it is to meet those objectives.
“The ability to leverage ExtraCare data and
marry that information with outside insights
enables CVS to customize offerings in a way
that makes sense to shoppers, whether that’s
through cross-category affinity partnerships,
bundled offers or brand messages that speak
to shoppers in the way that they will listen,”
says Alysia Margiloff, account director and CVS
team leader at Catapult.
Many CVS shopper marketing programs today begin with a “cross-purchase” analysis of
ExtraCare data to identify selling opportunities
in multiple categories and brands. Not surprisingly, the vast majority of shoppers who purchase allergy medication also buy tissues during
the same trip. That correlation led to a natural
partnership earlier this year between Allegra
and Kimberly-Clark’s Kleenex brand. The eightweek program, which ended in July, included a
co-branded endcap display at 7,000 CVS stores
and promotional support on CVS.com.
“We’re driving conversion of allegry shoppers
by targeting them with a hot Kleenex offer, and
if a consumer has bought Allegra before, we will
target her with a direct communication,” says Gia Cyrier,
shopper marketing manager,
CVS team, at Kimberly-Clark.
“This is personal to her. Maybe her kids at home are suffering with allergies – there’s
Children’s Allegra on the display – and she doesn’t have
a lot of time to shop. So she
comes into the store and sees
these two together and feels
that, in some small way, we
just made her life easier.”
For their part, major CPG companies work
with CVS to leverage ExtraCare data with actionable category insights. “CVS relies on its
suppliers to tell a story that brings the data to
life,” says Kantar’s Campbell. Colgate-Palmolive, for example, has brought its understanding of Hispanic consumers to an ongoing partnership with CVS and Kimberly-Clark. This fall,
CVS will be conducting a “Pick up the Values”
campaign that encompasses Colgate’s toothpaste, SoftSoap, Palmolive and Speed Stick
brands along with K-C’s Scott toilet paper,
Kleenex, Kotex and Depend.
The program’s key insight: Hispanic moms
tend to purchase sample/trial sizes during a
mid-month fill-in trip because they cannot always afford the full-size products.
Thus, CVS will be running promotions at
high-volume Hispanic stores, offering $10 in
ExtraBucks on purchases of $30 or more during the first week of the promotion (and an additional $2 during the second week) for participating Colgate and Kimberly-Clark products.
CVS RECEPTIVITY TO
IN-STORE TACTICS
A-boards
Aisle Violators/Fins/blades
often
Balloons
rarely
Base Wrap
often
Ceiling banners/signage
Checkout Ads
Checkout dividers/separators
Circular rack ads
Counter cards
often
sometimes
rarely
often
sometimes
Demonstration/Sampling kits
rarely
Digital signage ads
rarely
Employee apparel
rarely
Endcap signage kits
sometimes
Floor Decals
sometimes
Header Cards
often
At-shelf product demo/sample
rarely
In-line/category headers
sometimes
In-store radio
often
Inflatables
rarely
Outdoor signage
Neckhangers
rarely
sometimes
New item showcases
rarely
Pole toppers
often
Printed materials/handouts
often
Placeholders, on-shelf
often
Price-label messaging
often
Security pedestal ads
often
Shelf Blockers
Shelf Strips
Shelf Talkers
Shelf Danglers/Wobblers
often
sometimes
often
sometimes
Shopping Cart Ads
rarely
Side Panels
often
Standees
sometimes
Take-one dispensers
sometimes
Tearpads
sometimes
T-stand posters/stanchion signs
often
Wall banners
rarely
Window clings
sometimes
Window posters
rarely
Endcap Displays
often
Shelf trays/PDQs
often
Pallets
sometimes
Floorstands/shippers
often
Dump bins
often
Power wings/sidekicks
often
Category management systems sometimes
Spectaculars/lobby displays
Source: Path to Purchase Institute Analysis, May 2013.
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often
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Collateral will communicate with shoppers in
both English and Spanish, with tactics running
the gamut from national FSIs, ExtraCare coupons and multi-branded endcap displays, to
e-mail, direct mail, online ads and social media.
From Health & Beauty to Baby
Health and wellness, beauty and baby care are
among the most active and vital categories
today at CVS. Seeking to bolster its positioning
as a trusted healthcare advisor in its ongoing
battle with Walgreens, CVS uses customer
data and feedback to personalize its ExtraCare
Diabetes and Pharmacy & Health Rewards
programs, and has expanded services at its
in-store Minute Clinics. “[Those ExtraCare]
programs provide new ways for customers to
choose how they want to engage with CVS/
pharmacy to receive additional savings and
rewards based on their specific needs and interests,” says Mike DeAngelis, director, public
relations, at CVS.
This fall, a new CVS program will leverage
healthcare as a trip driver to spur purchases
of baby products in a multi-brand partnership
between Abbott Nutrition, Johnson & Johnson
and Kimberly-Clark. CVS hopes to fend off
stiff competition in the baby category from
discount retailers with its “One-Stop Baby
Shop” beginning in October. The escalating
rewards program will offer ExtraCare customers savings of $5, $10 and $15 on purchases of
$20, $30 or $40 (respectively) on participating
products. Those include K-C’s Huggies diapers,
pants and wipes; J&J’s Children’s Motrin, Sudafed and Tylenol; and Abbott’s Pedialyte and
PediaSure children’s nutrition brands.
The cosmetics category, meanwhile, has
been given a major facelift ever since CVS discontinued its Beauty360 store-within-a-store
concept last spring. That venture sought to
bring an upscale experience to CVS customers
with pricier makeup items and departmentstore style beauty consultations. According to
retail industry experts, it failed to meet expectations in part because many prestige cosmetics brands simply did not want their products
sold in CVS stores.
Since then, CVS has shifted its focus to value
and convenience through its ExtraCare Beauty
Club, while not completely abandoning the
idea of creating a high-end shopping environment. At one test store in Massachusetts, CVS
recently shrank many of its regular aisles to
devote nearly half of the store to beauty prod-
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ucts. “It was completely redone, had beautiful
lighting and felt like a Sephora,” says Kantar’s
Campbell. “It didn’t have the same prestige
products, but it still felt high-end.”
With its array of personalized offers and
rewards, the Beauty Club has grown to more
than 13 million members, per the company.
All members receive $5 off for every $50 spent
on beauty products within two days of purchase, along with individual e-mail offers that
contain beauty tips and new product information. CVS advertises the Beauty Club in online
video spots at CVS.com and through in-store
signage that incorporates both mainstream
cosmetics brands and the exclusive Nuance
Salma Hayek line. Recent Nuance cosmetics
endcap displays are “a good example of CVS’
approach to minimal, clean and clear communications,” says Catapult’s Margiloff.
In general, those who work with CVS on
shopper marketing say the retailer is increasingly more interested in collaborating with
manufacturers and vendors on customized
programs and less interested in accepting standard displays. Concepts that feature brands
with quick sales turnarounds (i.e., two weeks
or less) and that incorporate CVS private labels while communicating ExtraCare offers
on multiple products – all in the interest of
increasing basket size and driving conversion –
are the most likely to succeed. “ExtraCare card
members buy 85% more items per trip than
the average shopper,” notes Chris Redmond,
director of new business development at RockTenn Merchandising.
Adds Margiloff: “A lot of the work that CVS
has done in shopper marketing over the past
year or two has been about creating a new
value perception. ExtraCare is always going to
be a huge part of the value equation.”
As seen in
RETAIL INTIMACY
Part 3:
Building Loyalty
at
Kroger
On and Off-Platform
Digital Banner Ads
In collaboration with:
Digital Coupons
Ad Landing Page
Click-thru from banner ads
Shopping List and Link to
Coupon Savings
Kellogg’s Email Blast
By Michael Applebaum
This is the third installment in a five-part series examining best practices
for shopper marketing collaboration. With sophisticated targeted
marketing and enhanced digital capabilities, Kroger is making sure its
loyal customers keep coming back.
T
hese days it is not easy for any supermarket to hold on to its customers.
Competition in the grocery channel
is fierce, with shoppers’ increasingly higher
demands for quality, freshness and service
competing with their desire for convenience
and value. That is why Kroger’s ability to consistently reward and retain its loyal customers
– through sophisticated targeted marketing
that leverages its loyalty card program, and
now with an increasing emphasis on its digital
marketing strategy – is keeping the supermarket titan at the top of the heap.
“Regardless of the program that you are proposing, the question comes back: ‘What are you
doing to reward Kroger’s loyal shoppers?’” says
Lynn Cross, account director and Kroger team
lead at Catapult.
Shopper marketing success at Kroger does
not come easily. To begin with, this is a massive
organization. The second-largest U.S. retailer
after Walmart is comprised of 19 grocery divisions (including Fred Meyer, Ralphs, Food4Less)
– with the acquisition of the Harris Teeter chain
expected to be finalized later this year – and
five convenience store/fueling center chains.
Working within this complex infrastructure can
be intimidating for marketers who do not have
close ties to Kroger’s category managers or its
marketing and digital departments. In addition,
Kroger does not do a tremendous number of
broad consumer-driven promotions. Typically,
the retailer’s shopper marketing programs are
closely tied to its corporate calendar, in which
participating manufacturers must align their
brand messaging to a retailer-led event, such
as a buy/get savings promotion or a back-toschool or Daytona theme.
In spite of these challenges, several major
food and beverage companies, including the
Coca-Cola Co. and ConAgra Foods, have been
able to leverage the breadth of their portfo-
lios and build strong relationships with Kroger.
Both of these companies are known for their
consistent execution at its retail stores.
ConAgra, for example, has worked with
Kroger to create meal-solution programs that
encompass a wide range of in-store merchandising and path-to-purchase marketing by
building off the retailer’s own events. In recent
years, ConAgra has frequently participated in
Kroger’s Cart Buster (now called Great Big Savings) calendar events, often in the “10 for $10”
promotion, as many of its canned products are
priced in that range.
“We take these price promotions to the
next level by overlaying messaging that inspires
shoppers and give reasons to buy our brands
beyond price,” says Olga Yurovski, shopper
marketing director at ConAgra. As examples,
she cites ConAgra’s custom pallet displays and
co-equity FSIs with recipes and meal preparation ideas, as well as its promotional messaging around a common charitable cause with
Kroger to end child hunger.
ConAgra’s dedicated local shopper marketing teams and independent budgets/decisionmaking authority allow the company to drive
scale events at Kroger based on “quality shopper
© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of
any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.
8
special Report
insights” and “turnkey activation,” says Yurovski.
Additionally, with its broad portfolio of products
spanning 82 categories, ConAgra is able to work
at a high level directly with Kroger’s merchandisers on total store events. “Smaller companies
may not get the same priority because they must
start with the category managers” who handle
brand-specific events like shelf talkers or digital
coupons, she says.
Some of the largest CPG companies, including Coca-Cola, have also capitalized on their
direct-to-store distribution, which allows a
company’s sales reps to work closely on-site
with Kroger’s merchandising teams to create
appropriate and impactful messaging. In the
last couple of years, Coca-Cola has successfully
collaborated on cross-category partnerships
at Kroger stores with manufacturers including
the Hershey Co., as well as on award-winning
merchandising and displays for vitaminwater
that feature singer Carrie Underwood.
Kroger has also shown a willingness to experiment with unique merchandising concepts,
partnering with Coca-Cola recently on a buildyour-own-pack variety station and with Kraft
Foods a while back on a “Sandwich Place.”
Going Digital
Until recently, Kroger has been slow to advance
its digital shopper marketing capabilities – something that most industry experts agree it must do
in order to minimize a growing threat from on-
The “Free Friday Downloads” program enables
consumers to send coupons for free product directly to their loyalty cards via the retailer’s mobile
app or Kroger.com.
line retailers and adapt in an increasingly mobile
shopping age. But starting late last year, the company began to beef up its digital marketing staff
with new executive hires (including John Moritz,
vice president of digital, and Anne Maness, senior manager of digital personalization) from the
likes of Macy’s and Amazon.com. In May, Kroger
introduced a new version of its mobile app that
allows shoppers to use their smartphones to
browse weekly ads, download digital coupons
to their loyalty cards and complete purchases at
the register.
Kroger is also becoming more active in social
media. Over the summer, the retailer introduced Free Friday Downloads, in which it sends
a digital coupon for a free item along with additional savings offers to loyalty card members
whose accounts are linked on Kroger.com.
Kroger has been promoting the program on
its Facebook page and sending out advance
notice of the Friday freebies through its Twitter
account (#FreeFridayDownload).
“These kinds of mobile services are musthaves for Kroger in order to attract a new generation of younger customers,” says Sandy
Skrovan, U.S. research director at Planet Retail
in New York. “We expect Kroger to accelerate
its multi-channel marketing efforts and use of
digital/social media as a means to stay connected with tech-savvy shoppers.”
At the same time, CPG manufacturers continue to shift more marketing dollars online, thus
creating new opportunities for these companies
to join forces with Kroger on shopper marketing
programs with a strong digital bent. “There are
a number of marketing tactics that can build
loyalty and align brand/retailer objectives,” says
Sandra Urti, senior manager of shopper marketing at the Kellogg Co. “The digital space has
opened up many more options with our retailers, including Kroger. Kellogg wants to build
frequent targeted communications that offer
relevant brand solutions for Kroger shoppers.”
As an example, Kellogg’s 2013 Spring Challenge campaign (“Lose up to 6 pounds in 2
weeks”) drove shoppers to Kroger stores with
an email blast that carried a message to purchase Special K: buy 3 items, save $3 instantly
at checkout. The campaign also included digital
coupons for two weeks in May and was promoted through a series of banner ads along
with recipes and a shopping list on Kroger.com.
Similar online tactics were employed in June,
when Kroger offered its loyalty cardholders a
free dozen Simple Truth (Kroger’s private label)
organic eggs with purchase of breakfast products including Kellogg’s Kashi Go Lean cereal
and White Wave’s Silk soy milk.
ConAgra has also effectively employed programs with digital overlays. For example, a
Kroger Receptivity
to In-STore Tactics
A-boards
Aisle Violators/Fins/blades
often
Balloons
sometimes
Base Wrap
sometimes
Ceiling banners/signage
often
Checkout Ads
rarely
Checkout dividers/separators
sometimes
Circular rack ads
rarely
Counter cards
rarely
Demonstration/Sampling kits
rarely
Digital signage ads
rarely
Employee apparel
sometimes
Endcap signage kits
often
Floor Decals
often
Header Cards
often
At-shelf product demo/sample
sometimes
In-line/category headers
sometimes
In-store radio
often
Inflatables
sometimes
Outdoor signage
sometimes
Neckhangers
sometimes
New item showcases
often
Pole toppers
sometimes
Printed materials/handouts
sometimes
Placeholders, on-shelf
rarely
Price-label messaging
sometimes
Security pedestal ads
sometimes
Shelf Blockers
sometimes
Shelf Strips
sometimes
Shelf Talkers
often
Shelf Danglers/Wobblers
sometimes
Shopping Cart Ads
sometimes
Side Panels
Standees
rarely
often
Take-one dispensers
sometimes
Tearpads
sometimes
T-stand posters/stanchion signs
often
Wall banners
rarely
Window clings
rarely
Window posters
rarely
Endcap Displays
often
Shelf trays/PDQs
often
Pallets
often
Floorstands/shippers
often
Dump bins
Power wings/sidekicks
sometimes
often
Category management systems sometimes
Spectaculars/lobby displays
Source: Path to Purchase Institute Analysis, May 2013.
9
rarely
often
special Report
shopper’s purchase behavior beyond a single
mailer and introducing targeted digital communications,” says Catapult’s Cross.
The Value Push
ConAgra’s custom pallet displays provide Kroger
shoppers with simple meal solutions.
January 2013 meal-solutions program sent an
email blast to Kroger’s loyalty card shoppers
with load-to-card coupons and incorporated a
customized landing page at ReadySetEat.com.
“Growing business with Kroger’s loyal shoppers is our priority too,” says Yurovski. “The
programs that focus on loyal Kroger shoppers and our brand shoppers return higher
ROI than those that target the competition’s
[shoppers].”
In each of these efforts, Kroger relied on
its email database from global market research firm dunnhumby (the retailer owns half
of dunnhumby USA) to identify and reward
Kroger’s most loyal shoppers. The company’s
ongoing partnership with Kroger has long set
the industry standard for effective targeted marketing. “Over the past few years, dunnhumby
has raised the bar with increased emphasis on
post-program analysis, including following the
Kroger continues to take significant steps at
both a macro and store level to bolster its price/
value proposition. This year, the company continued to roll out new Ruler Foods discount grocery store formats in the Midwest. The no-frills
concept offers a limited assortment of grocery,
produce and frozen foods – primarily Kroger
store or value brands at a discounted price – in
a small interior space of about 20,000 square
feet. Customers bag their own groceries and put
a 25-cent deposit down to “rent” a shopping
cart. If successful, the concept could provide “a
viable cog in Kroger’s multi-format portfolio of
store types, one which could rival the likes of
Aldi, Save-A-Lot and the rapidly expanding dollar stores,” says Planet Retail’s Skrovan.
The company also recently discontinued its
popular practice of doubling coupons at stores,
stating that it planned to reinvest the savings
in lower prices for some 3,500 items across all
Kroger chains. Retail industry experts generally
view these moves as positive developments.
“Kroger is a rare beast in being a large food
retailer that took on Walmart as their direct
competition,” says Jim Hertel, managing partner at Chicago-based Willard Bishop.
Hertel says that over the past four to five
years, Kroger has achieved about three to four
percentage points in cost savings and redirected
that money into lower prices across the board.
“They’ve got a really good handle on how tight
they can stretch the string in their prices relative
to Walmart. On a total store basis, they can
probably command a premium somewhere in
the range of 8% to 10%,” he says. “Their belief
10
is that they offer a better shopping experience –
including better-quality produce and stores that
are easier to navigate – although the value that
their customers will place on that experience is
not infinite.”
Each of Kroger’s major calendar events center
on a value play that remains consistent throughout its stores. Kroger is a corporate sponsor of
NASCAR’s Daytona 500, for example, and typically includes racing themes in merchandising
along with savings offers around the February
race and also the Fourth of July. Other strong
selling periods include March Madness and
Back to School. Participation in Kroger’s corporate events affords a manufacturer placement
in the weekly circular, corporate POS and shelf
signs/tags, typically carrying a value offer such
as Buy 5, Save $5 on participating products.
Experts also point to Kroger’s private-label
program as providing a distinct edge over rivals.
With its sophisticated product packaging and
a tiered-pricing approach that is often imitated
by other supermarket chains, the program features private selection or premium brands available only at Kroger, national brand equivalents
for about 25% less that their counterparts and
a value tier with savings of up to 35% or 40%,
says Hertel.
As Kroger continues to shore up its strengths
and fill in the gaps in its business model, including digital and e-commerce, its agency
partners advise marketers to remember: This
is a very big ship to move, one for which rapid
change is unlikely. The key to success lies in developing programs with Kroger, not for them,
says Cross. “Get them involved early, let them
have a voice and keep them involved every step
of the way,” she says. “This way, they have
stake in the game and are invested in seeing
the program succeed.
As seen in
RETAIL INTIMACY
Part 4:
Winning at
Walmart
In collaboration with:
By Michael Applebaum
This is the fourth installment in a five-part series examining best
practices for shopper marketing collaboration. From experiential
programs to advertising in its custom lifestyle publication, Walmart
is expanding its solutions-based approach to shopper marketing.
I
n this day and age, Walmart knows it
cannot stand pat. The long undisputed
price leader is facing disparate challenges
– from online retailers to emboldened dollar stores – and a smartphone-wielding consumer who can expertly comparison-shop all
of these outlets. The world’s largest retailer
(with global sales of $466 billion in fiscal
2013) has responded by rolling out new store
formats such as Neighborhood Market and
Walmart Express to complement its 3,211 U.S.
supercenters. The company also has adopted
a more sophisticated mindset when it comes
to shopper marketing. Recognizing the power
of brands to leverage its cornerstone Every Day
Low Prices positioning, Walmart has unveiled
innovative new programs that place value in
the context of a total shopper solution.
“Walmart is currently looking to its suppliers
to help drive traffic, provide solutions for the
shopper and grow sales,” says Melissa Ber-
ryhill, SVP and Walmart team lead at Catapult
Marketing. “The solutions-based approach
allows Walmart to demonstrate the value of a
one-stop trip and offer the shopper a breadth
of assortment across many different categories
that many times only it can offer under one
roof.”
CPG companies are taking an increasingly
active role in the development of shopper marketing at Walmart. Primarily, marketers are
participating in a growing number of co-op
programs anchored by seasonal, holiday or
themed events such as Heart Health, Allergy
Relief, Game Time, and Stock Up & Save. Promotional packages for these events include
general market TV and digital support, in addition to in-store merchandising and potential
placement in circulars and other media/advertising vehicles.
Bayer, for example, in early 2013 supported
Walmart’s “Back on Track” co-op initiative
targeting consumers looking to transition from
holiday excess to healthier living by introducing a series of print ads as the sole sponsor
of a special interest “Health & Wellness” issue of All You, a custom lifestyle magazine
published by Time Inc. A total of 32 ads encouraged shoppers to build a daily regimen
around Bayer’s portfolio of multivitamins and
supplement products, such as One-A-Day and
Citracal. Separate copy within the ads highlighted Walmart’s 30-day prescriptions for $4
and 90-day prescriptions for $10, while reminding shoppers of Every Day Low Prices on
OTC medications. The effort gained in-store
support from cross-merchandising floorstands
that stocked the magazine and Bayer aspirin
SKUs.
“If a woman is taking one nutritional or
OTC product already, it is easier to incorporate
another product into her routine,” explains
Meredith Davenport, manager of customer
and shopper activation at Bayer HealthCare.
“Value clearly plays a role here as well, with
Walmart offering the best value in the marketplace for both OTC and Rx products.”
Here’s how the program evolved: All You initially approached Bayer with the idea to blanket
© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of
any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.
11
special Report
or “own” a special-interest issue with a message tailored to Walmart’s shoppers. (Bayer
also ran banner ads stressing “Building healthy
habits one day at a time” on Walmart.com.)
The concept of building a regimen around Bayer products was then developed between the
manufacturer and its agency partner, Catapult. “Bayer’s initiatives are focused on driving
appropriate regimen behavior in consumers,”
says Davenport. “Our shopper marketing team
knew that January was a prime time to encourage starting a healthy regimen. The ability to
do this in-store with product and value for the
consumers fit all our goals.”
For Walmart, the program’s appeal lay in its
ability to grow category sales of OTC medications and simultaneously drive customers to
the pharmacy counter. “It was built to be a
regimen driver for select Bayer brands as well
as applicable categories,” notes Berryhill. In a
broader sense, Walmart could be seen taking
a positive role in shaping consumer habits,
thereby advancing its overall health and wellness positioning.
Collaboration allowed the partnership to
flourish, Davenport says. “My shopper marketing team, numerous Bayer HQ teams and
Catapult were all involved. We worked closely
with the Walmart marketing group as well to
ensure we were aligned with their goals both
in-store and online during this timeframe.”
Building Programs
From the Ground Up
When marketers come to the table with insights-driven strategies and the right mix of
ingredients, including compelling brands and
products, they often have an opportunity to
shape – and sometimes even build – programs
at Walmart from the ground up. In 2013, for
example, Dr Pepper Snapple Group added
a whole new dimension to the second annual Walmart “Steak-Over” challenge. The
retailer has been conducting these parking-lot
events (this summer with Dr Pepper, Clorox
Co.’s Kingsford and Kraft Foods Group’s A.1.
as presenting sponsors) near store entrances
to promote its USDA Choice-grade beef selections. This year, Dr Pepper introduced a new
layer to the challenge by encouraging use of
its core beverage as a marinade and cooking
ingredient for the steaks during the weekly
grilling competitions.
For some time, grilling had represented an
important part of Dr Pepper’s strategy to expand usage occasions and drive frequency of
purchase. Findings from proprietary research
conducted by its shopper insights team in the
fall of 2012 contained data linking the consumption and pairing of dark sodas, with Dr
Pepper mentioned specifically, to grilling fresh
meat such as steak. Armed with these insights,
the company enlisted firehouses across the
country to develop marinade recipes with Dr
Pepper as a unique flavor ingredient. Winners
in local competitions would have the chance
to compete at a finale where the grand prize
would include a $20,000 donation to the winning team’s charity of choice, as both Walmart
and its partners looked to enhance the community-building aspects of the three-month
experiential program.
By understanding how Walmart shoppers
consume its products, Dr Pepper was able to
shine a spotlight on a previously unheralded
usage occasion and generate incremental sales
during the promotional period. “We were able
to drive our business during the grilling season
alongside a Walmart strategic initiative,” says
Leah Bach, shopper marketing manager at Dr
Pepper Snapple Group. Her team had introduced the concept in strategy discussions with
the Fresh Foods marketing team at Walmart
and later worked with the retailer and multiple
agencies (including Catapult, event marketing
firm Eventus and CurrentPR) to coordinate the
events.
The Steak-Over challenges were generally
held on Saturday afternoons in eight cities
across the U.S. from March through Memorial
Day week, with the finale taking place in Los
Angeles on May 22. Each event featured sampling by Dr Pepper’s mid-calorie TEN brand –
whose ambassadors encouraged the so-called
“manly men” firefighters to enjoy its “TEN
bold calories” – as well as music from local
radio DJs and other entertainment elements.
Dr Pepper also leveraged the program to
make further inroads with Hispanic shoppers.
Each local market plan included outreach to
Hispanic bloggers and media outlets, particularly in Texas, Florida and Los Angeles. In San
Antonio, Dr Pepper sent brand reps in its mobile Club 23 (an 80-by-100-foot semitrailer)
to dance, play video games and engage with
consumers. “For the L.A. finale, due to some
space restrictions, we brought out the Dr Pepper Vida Van team and sampled a range of our
products from Dr Pepper to Clamato tomato
juice cocktail to leverage the power of our
portfolio,” notes Bach.
Retail activation included shelf-talkers and
signage carrying pre-announcement of the
events. “In Walmart stores that [featured] our
solution center in the fresh meats area, we
included some dual-sided pallet displays [with
Kingsford] to encourage use of Dr Pepper as
a marinade and visits to our Walmart.com/drpepper page to get additional recipes,” notes
Bach. To extend the campaign message into
Walmart Receptivity
to In-STore Tactics
A-boards
Aisle Violators/Fins/blades
Balloons
Base Wrap
Ceiling banners/signage
Checkout Ads
Checkout dividers/separators
Circular rack ads
Counter cards
Demonstration/Sampling kits
often
sometimes
often
rarely
sometimes
rarely
rarely
sometimes
often
Digital signage ads
often
Employee apparel
sometimes
Endcap signage kits
Floor Decals
Header Cards
At-shelf product demo/sample
In-line/category headers
often
sometimes
often
sometimes
often
In-store radio
sometimes
Inflatables
sometimes
Outdoor signage
rarely
Neckhangers
rarely
New item showcases
rarely
Pole toppers
Printed materials/handouts
sometimes
often
Placeholders, on-shelf
sometimes
Price-label messaging
rarely
Security pedestal ads
often
Shelf Blockers
sometimes
Shelf Strips
sometimes
Shelf Talkers
Shelf Danglers/Wobblers
often
sometimes
Shopping Cart Ads
rarely
Side Panels
often
Standees
Take-one dispensers
often
sometimes
Tearpads
often
T-stand posters/stanchion signs
rarely
Wall banners
rarely
Window clings
rarely
Window posters
rarely
Endcap Displays
often
Shelf trays/PDQs
often
Pallets
often
Floorstands/shippers
often
Dump bins
often
Power wings/sidekicks
often
Category management systems sometimes
Spectaculars/lobby displays
Source: Path to Purchase Institute Analysis, May 2013.
12
sometimes
often
special Report
the summer, Dr Pepper built custom content
with Triad Retail Media on the site to provide
additional usage occasions centered around
“Summer Fun,” she says.
Evolving on Merchandising and
EDLP
Walmart’s receptivity to supplier-driven programs is an outgrowth of several factors. In
part, its attitude reflects an ongoing shift away
from the clean-store policies of Project Impact
(introduced back in 2008) toward a sharper
focus on Action Alley – i.e., the pallets and cart
rails in the main aisles of stores. When Bill Simon took over as company president and CEO
in 2010, he introduced a friendlier stance of
joint planning with suppliers. Walmart elaborated on the policy during its annual investor
meeting last fall, saying it would place more
emphasis on insights-driven strategies under
the leadership of Cindy Davis’ global customer insights team. Integration of customer
POS data and measurement analytics using
real-time feedback from social media channels
were also mentioned as instruments that could
help strengthen the retailer’s “Save Money.
Live Better” market positioning.
On the business side, Walmart has seen its
profit margins shrink in recent quarters as the
shaky U.S. economy and higher gas prices have
disproportionately hurt low-income consumers. The company’s lackluster performance
comes despite its efforts over the past yearand-a-half to “reinvest” in Every Day Low
Prices, particularly in areas such as food and
soft goods. “They haven’t seen the top-line
growth that they’ve expected from those investments, so they are counting on more support from suppliers to take up the slack,” says
Robin Sherk, a senior analyst at Boston-based
Kantar Retail.
At the same time, Walmart is facing stiffer
competition from the likes of Amazon.com
and dollar stores. The latter continue to roll out
at a breakneck pace and peel away the fill-in
trip from big discount retailers, says Sherk.
On a more positive note, recent studies suggest that Walmart is maintaining its price leadership over both Target and Amazon. For example, Walmart’s prices were found to be 4%
lower than Target’s overall in Kantar’s February
2013 comparative basket study, with Walmart’s
edible grocery sub-basket recording its widestever margin ($4.17) since the data collection
13
began in 2009. Target’s basket was actually
1.1% lower than Walmart’s when factoring
its REDcard reward discounts on those items.
Thus, the study noted Target’s advantage with
shoppers willing to commit to stock-up trips or
building up savings over the long term.
Walmart was found to have a more substantial lower-price lead over Amazon in a similar
study by Kantar in May, although the gap was
much less when the firm compared Amazon’s
basket with Walmart’s Supercenters (16%)
vs. that of Walmart.com (7%). Meanwhile,
Walmart is trying to close its own technology
gap by improving functionalities on Walmart.
com and by launching a series of digital innovations, such as Scan & Go self-checkouts,
from its @Walmartlabs unit.
Going forward, Walmart’s biggest test may
lie in its ability to reach a more affluent group of
price-sensitive shoppers without straying too far
from its base. It has already opened the door for
marketers to communicate their message beyond price – signage is now allowed to hit upon
individual brand messaging alongside EDLP – so
the question is now whether Walmart (and its
marketing partners) can continue to strike the
right balance as it adjusts to changing demographics and market conditions.
“Walmart knows it needs more than just
EDLP to effectively compete in today’s retail
market,” says Catapult’s Berryhill. “EDLP is
the blocking and tackling, if you will, and a
part of doing business with Walmart. Other
drivers include offering the right brands and
products – in the right placement – to meet
shopper needs.”
And as for the “Save Money. Live Better”
tagline, now 7 years old and counting? “That is
a more personable way to share and reinforce
EDLP to the shopper,” says Berryhill. “It defines
the Walmart brand.”
As seen in
RETAIL INTIMACY
Part 5:
Winning at
Dollar
General
In collaboration with:
By Michael Applebaum
This is the final installment in a five-part series examining best practices
for shopper marketing collaboration. In this part, we look at how
Dollar General maintains an unwavering focus on its customers across
a diverse slate of programs.
T
hese are heady times for Dollar General. The company has posted several
consecutive quarters of strong sales
and earnings growth while rapidly expanding its retail footprint. In fiscal 2013, Dollar
General opened about 650 new U.S. stores,
including its 11,000th outlet in Murfreesboro,
Tenn., and remodeled several hundred of its
older locations. Already boasting a loyal customer base, the retailer has been attracting
new shoppers with highly competitive prices,
cleaner and more modern-looking stores, and
a wider product assortment in the household
and grocery categories.
Dollar General reinforces its value proposition through a diverse slate of shopper marketing programs. Its corporate calendar features seasonal and co-op events (e.g., Super
Bowl, back to school); cause-related tie-ins
(the company does a considerable amount of
outreach through its Literacy Foundation, for
example, which awards grants to schools, public libraries and nonprofit organizations to assist young students with reading deficiencies);
and original programming with many leading
CPG companies including Procter & Gamble,
Kimberly-Clark, Coca-Cola, PepsiCo, ConAgra
Foods, Nestlé-Purina and Mars.
“I don’t think I’ve ever worked with a retailer
that’s so in tune with its shoppers,” says Kelly
Mattran, shopper marketing manager at PepsiCo. “One of the things that has often come
out of our conversations with Dollar General is
that they insist on being dependable for their
shoppers. Part of that is knowing you can go
into any of their stores and find the products
you’re looking for.”
Dustin Lehner, shopper marketing team lead
at Mars Petcare, says that Dollar General not
only “knows its shoppers,” but it does not
waver in laying out a customer-centric strategy
for shopper programs with clearly defined ob-
jectives. “I always know going in what they are
trying to achieve,” says Lehner. “They’ve been
extremely collaborative and opened the door
for our marketing, digital and other groups to
expand our pet programs.”
Colby Swan, Dollar General’s director of
marketing, says that the chain is also open to
doing “outside-the-box” programs as long as
they are tailored specifically for its shoppers:
“Dollar General is constantly evaluating new
ways to partner with vendors through innovative and fresh concepts. Through continual
customer feedback, we are able to provide
the products customers want at the value they
expect. This is a key component of our success since our product selection and business
success is built on providing customers the
products they use most often while helping
them save money.”
Mountain Dew Has Much in
‘Store’
One of the most successful shopper-marketing
initiatives at Dollar General in recent years has
been The Dew General Store. This PepsiCo/
Mountain Dew rewards program has grown in
scope each year since its 2011 launch and is set
© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of
any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.
14
special Report
for a refresh in 2014. Notably, it has increased
Mountain Dew’s share of wallet at Dollar
General without relying on any additional promotional discounts, says PepsiCo’s Mattran.
“We’re creating value for shoppers beyond
price,” she says. “The rewards enable customers to buy the products they want at the stores
they want, and have that extra badge to carry
with them. It’s an incentive to buy a little bit
more of their Mountain Dew products at Dollar General.”
This year, Mountain Dew leveraged its NASCAR sponsorship and its partnership with
country music singer Brantley Gilbert to deliver branded merchandise to customers who
redeemed their points online at TheDewGeneralStore.com. Custom displays included a
six-week summer endcap featuring NASCAR
driver Dale Earnhardt Jr. and a front-of-store
U-boat display, running September through
November, with country music imagery. Shoppers collected points from purchases of participating Mountain Dew products and were
rewarded with Dew-branded clothing, Trek
bikes, Weber grills and beach accessories (for
the summer promotion), as well as Beats headphones, iPhone covers, an acoustic guitar, and
tickets to a NASCAR race in Charlotte, N.C.,
with a chance to ride three laps around the
track in Earnhardt’s No. 88 car.
Based on a post-purchase analysis, Mattran says the program has drawn a significant
number of male customers while still resonating with Dollar General’s core female, baby
boomer shopper. “Mountain Dew’s typical
millennial-male buyer is obviously a very different shopper,” she says. “But many women
are in the store and buying Mountain Dew
for their husbands or sons. She’s thinking of
him, wanting to make sure everyone in
her home is taken care of.” For 2014,
Mountain Dew is looking to add a
complementary partner to the program – potentially a snack brand – and
find a permanent merchandising location at Dollar General stores.
Mattran attributes PepsiCo’s success at Dollar General to the open lines
of communication that exist between
the two companies’ respective marketing and sales organizations. “This
is one of the tightest relationships we
have with any of our retail customers,” she says. “Their marketing team
is looped into their buying desk and
has a fair amount of influence about
what happens in stores. They’re very
direct in what they’re looking for. If
there’s something that they don’t like,
they’ll tell us right off the bat.”
She cautions marketers for whom securing
display is a priority that there are limited opportunities within an approximate space of
7,200 square feet. Thus, she says, you can’t
win over Dollar General 100% of the time.
“Sometimes we have access to [assets] that
don’t fit in with their objectives in that specific
time frame,” says Mattran. “But nine out of 10
times, they’ll work with us if it’s [a] compelling
enough [property].”
Kimberly-Clark, ConAgra Forge
New Territory
Across the CPG spectrum, new opportunities
are arising as more consumers are flocking to
the dollar channel for their fill-in trip needs.
Kimberly-Clark, for example, worked with Dollar General on a 2013 program for its Huggies
brand (“Little Hands, Big Plans”) that centered
on an essay-writing contest in which consumers described how the $5,000 grand prize
would allow them to achieve the educational
dreams they have for their children. The program included FSIs, shelf talkers, digital/social
media support and additional promotional activity involving Huggies’ new SureFit waistband
and moisture absorption technology.
The concept was developed in strategy
sessions between Kimberly-Clark’s shopper
marketing team (which then included Jennifer
Carter, now senior brand manager for shopper
marketing and family care) and agency of record, Geometry Global. The idea was seen as a
way to drive awareness in the underpenetrated
baby category while addressing the challenges
of low-income shoppers. It also dovetailed
nicely with the retailer’s Literacy Foundation
mission, explains Stephanie Wieczorek, shopper marketing manager at Kimberly-Clark.
Dollar General
Receptivity to
in-store tactics
A-boards
Aisle Violators/Fins/blades
Balloons
Base Wrap
often
sometimes
rarely
Ceiling banners/signage
often
Checkout Ads
rarely
Checkout dividers/separators
rarely
Circular rack ads
often
Counter cards
rarely
Demonstration/Sampling kits
rarely
Digital signage ads
rarely
Employee apparel
rarely
Endcap signage kits
often
Floor Decals
rarely
Header Cards
often
At-shelf product demo/sample
rarely
In-line/category headers
rarely
In-store radio
rarely
Inflatables
sometimes
Outdoor signage
sometimes
Neckhangers
sometimes
New item showcases
Pole toppers
Printed materials/handouts
rarely
sometimes
rarely
Placeholders, on-shelf
rarely
Price-label messaging
sometimes
Security pedestal ads
rarely
Shelf Blockers
sometimes
Shelf Strips
sometimes
Shelf Talkers
often
Shelf Danglers/Wobblers
rarely
Shopping Cart Ads
rarely
Side Panels
often
Standees
often
Take-one dispensers
rarely
Tearpads
T-stand posters/stanchion signs
Wall banners
Window clings
sometimes
rarely
sometimes
rarely
Window posters
often
Endcap Displays
rarely
Shelf trays/PDQs
often
Pallets
sometimes
Floorstands/shippers
often
Dump bins
rarely
Power wings/sidekicks
often
Category management systems
rarely
Spectaculars/lobby displays
rarely
Source: Path to Purchase Institute Analysis, May 2013.
15
rarely
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ucts] and go after varying income levels of
shoppers,” Esposito says. “At the same time,
we’re cognizant of Dollar General’s promotional calendar and what their merchandisers
are focused on in any given month. We look
for ways to integrate shopper or promotional
activity that ties into the relevant season or
time of year.”
Updating the Dollar Store Image
“Dollar General shoppers do everything they
can to care for their family within their means.
This includes supporting their children’s education, which is often a big expense,” Wieczoreck says. “Dollar General uses a variety of
ways besides reading advancement to connect
to their Literacy Foundation, including promoting continued education, so this was a nice
alignment with their corporate objectives.”
Food represents another sizable opportunity
at Dollar General. In the past few years, the
retailer has expanded its grocery section, for
example, by bringing in additional coolers near
the front of its stores to house convenience
items like frozen sausages, waffles and pizza.
Thus, marketers like ConAgra have stepped
in to capitalize on the growing segment with
targeted solutions. “ConAgra has had a lot of
success in executing programs that provide
shoppers with a quick and easy meal solution
while still giving them the value they are looking for,” says Abbey Greer, account executive
and Dollar General team member at Catapult.
As an example, ConAgra developed a recipe
for an egg, bread and sausage casserole as
part of a breakfast meal solution for its Banquet Brown ’N Serve frozen sausages. The
program, which ran throughout September,
featured shelf talkers with recipe tear pads that
included a coupon for a free loaf of Dollar General’s private-label Clover Valley white bread
with purchase of a box of Brown ’N Serve and
a carton of one dozen eggs.
While the program focused on creating a
strong value component, convenience was
also a building block of the solution, says
Mike Esposito, shopper marketing manager at
ConAgra. “The basic idea was: How we can
feed a family of four and get the Dollar General
shopper to quickly see the value in the offer?
It had to be simple enough so that shoppers
didn’t feel like they had to treasure hunt for
the recipe ingredients,” Esposito says. “We
also wanted to have additional communication points outside frozen. The bread aisle is
typically one of the first you see, so there was
an opportunity to drive shoppers to multiple
points across the store.”
With its sheer size and portfolio of products, ConAgra has the luxury of being able
to segment programs using value brands like
Banquet and Chef Boyardee to target different
subsets of dollar store shoppers. “We have
flexibility as to how we market [those prod-
16
Dollar General today continues to benefit from
the seeds of revitalization it planted during the
2008 recession. “Their timing was a bit of a
fortunate accident,” says Mike Paglia, principal
analyst at Boston-based Kantar Retail. “They
were just starting to remodel stores and ramp
up assortment when the economy went south,
and having shoppers suddenly give them a
second look provided a lot of momentum. But
their efforts in stores have been very focused,
deliberate and measured.”
Now, more affluent shoppers are beginning
to give Dollar General that second look. In fact,
the fastest growing segment within the dollar
channel are shoppers who earn more than
$75K per year. At Dollar General specifically,
this group comprised a healthy 7% of shoppers, as of Kantar’s June 2013 survey. Twothirds of Dollar General shoppers remain in
the $50K or under group, per the study. In addition to becoming more affluent, the overall
demographic is increasingly skewing younger
special Report
and more Hispanic, Paglia notes.
Dollar General is reinforcing its spiffier image by blanketing stores with its trademark
black-and-yellow signage that contains a clear
message for shoppers: We’re not your typical
dollar store. Alongside one sign that reads,
“Expect Low Prices. Every Day” is another that
says, “Being affordable doesn’t mean being
cheap here” and another: “We deliver top
brands at bargain prices.”
The retailer has also shown a willingness to
pursue unconventional tactics. “Very rarely
do they shoot something down just because
it’s different or unique. As long as the idea is
rooted in research and credible insights specific to the Dollar General shopper, it has a
chance to move forward,” says Mars Petcare’s
Lehner. He cites a holiday 2012 program in
which Mars featured a bundled savings offer to cross-promote the candy and pet food
categories, “something that would be a big
hurdle for many other retailers.” Custom shippers provided secondary display at the front of
the store, using the tagline, “A treat for you,
and a treat for them.”
Lehner explains: “Shoppers think of their
pets as family, so when they are shopping for
stocking stuffers, why not remind them their
pets need treats too? We talked about the
idea internally, presented it to them and they
loved it.”
Going forward, Dollar General is supporting Mars’ efforts to become more strategic,
vs. promotional, in its petcare programs.
“They’ve done a great job in building awareness for the pet category through tie-ins with
Mars’ Pedigree brand and the Country Music
Awards,” notes Amy Sorensen, account supervisor at Catapult. “Shoppers now know that
Dollar General carries quality national petcare
brands.”
According to Paglia, this is all part of a
larger strategy to solidify Dollar General as
a “complementary mission” to the stock-up
trip. “A shopper goes to Kroger or Walmart
for two-thirds of their basket and stops by a
Dollar General store on their way home because they know they can get their favorite
deodorant or shampoo at the lowest price,”
17
says Paglia. “Dollar General is perfectly OK
with that. They’re not trying to steal trips from
other retailers.”
And yet, as many would argue, that’s exactly
what they are doing.
About the Author
Michael Applebaum is a freelance writer
and editor who specializes in developing features that address all aspects of
marketing. He trained in the New York City
publishing industry and held senior-level
editorships at Brandweek, Photo District
News and Spy magazine.
Catapult is today the merger of two powerful agency brands – Catapult and RPM
– now operating under a single vision and
name. Catapult was launched in 2005 as
an integrated agency resource, while RPM
began in 2008 as a decentralized shopper marketing agency. Today both have
come together under the Catapult name,
delivering insights, brand strategy, shopper
marketing, consumer promotions, digital,
and outstanding creativity.
In 2012, the agency became part of Epsilon, the recognized leader in providing data
and technology solutions. This gives Catapult access to proprietary data and analytics
that help develop rich, fact-based insights
to fuel winning creative solutions. It also
provides a more granular level of assessing
in-market performance of its programs.