With large stores continuously slashing prices, it’s pretty hard to lower the prices any further.  With the accessibility of these low prices to everyone the question arises how important is offering value-added promotions to the client? Clare Rayner, writer of the Retail Acumen blog made an interesting observation from the Multi-Channel Retail Summit that he attended in England. The keynote speaker was Doug Gurr from Walmart. In his speech Mr. Gurr noted that in Japan, mobile technology allows shoppers to scan barcodes of items in stores and that an app provided by Amazon allows shoppers to compare the in-store price with Amazons’ price. This kind of pricing transparency is a reality and will become available to everyone carrying a smart mobile device. 

On the other side of the Atlantic Ocean, the National Retail Conference was taking place and Winston Weber, a speaker, cited a study that showed 50%-60% of all shopping decisions are made at the retail store. Therefore, the store remains important to retailers. He also feels that while value-added promotions may not be effective, retailers must begin to promote what he calls solutions. That is, retailers must become their own ‘retail consultants’ and begin to develop a shopper centric retailing model. This requires developing a shopper solution strategy so that the shopper feels that the trip to the store has been productive. The trick is that this requires a new creative approach to the merchandising process.

Merchants and their category managers should refocus their efforts from obtaining the best deal from suppliers to developing retail solutions for customers that may transcend categories.  To accomplish this, Mr. Weber states category managers can’t be forced to focus solely on their own key performance indicators, but focus on the overall profit of the retailer.  Then they could create product bundling that would increase overall sales and improve satisfaction for the customer. To become ‘retail consultants’ an element of cooperation is required to satisfy the customer and achieve results that are best for the company.

This might be difficult to accomplish considering the longstanding culture in retailers where category management operates in silos. That is why it is imperative for retailers to become ‘retail consultants’. If a shopper centric model is implemented, category managers can work together to focus on what’s most important to each of their customers and make their lives easier. How many times have parents bought a basketball for their kids, but forgot to buy them a jersey that would be in a different aisle. Now life will be easy since they are bundled together for a promotional price.  The way to convince the retailer that this is a good idea is to introduce analytics to the process.

In a research report published by IDC, they cite a case study where a manufacturer of high-tech electronic devices and components managed to reform the R&D allocation process by promoting cooperation between competing R&D labs in allocating resources when the data showed that it was in the best interest of the company to do so. Retailers can follow this example and link analytics, merchandising allocation and promotions systems to offer the customer timely and compelling solution-based offerings across multiple channels that will make the shopping experience satisfying to consumers. If this can be accomplished, then retailers truly become retail consultants for their customers.

Cross Channel Marketing is a critical factor to a strong and successful marketing campaign. Not to be confused with multi channel marketing, Businessdictionary.com defines Cross Channel marketing as the “use of one marketing channel (such as direct mail or internet) to support or promote another channel (such as retailing).”  This will help coordinate your marketing goals to the consumers and will ensure the strengthening of your companies brand awareness. This continuous coordinated message directly targeting specific demographics, in a specific location, who speak a specific language will reduce costs and improve overall effectiveness of targeting the right consumer at the right time.  Now there is a new vehicle that can bring Cross Channel marketing to new level: the iPAD.

The introduction of the iPAD is so exciting because it opens the door for a new channel that did not truly exist before. This is a media rich mobile device that lets users combine videos, news magazines and publishing all into one device.  Digital magazines and digital newspapers will soon become a standard medium over the next few years. A recent article from Retail Systems Research states “One of the fundamental changes going on in mobile computing & communications is the migration from living in a ‘two mobile device environment’ with most people having a notebook (information creation & personal library) and a cell phone (calls & messaging) to a ‘three mobile device environment’ with most people having a notebook to create and manage content, a tablet for eBook reading and rich media playing (videos, TV, movies), and a cell phone for calling and messaging. The iPAD represents the beginning of the convergence of these channels and we should expect retailers and other organizations to begin working on integrating information for the converged three mobile device environment.

Retailers interested in engaging in Cross Channel marketing promotions should consider the iPAD as a new channel. The iPAD is an important development because it allows retailers to create ads that are interactive, user friendly and offer multimedia content. As an example, consider an automotive advertisement, where consumers can view a 3D display of a car, change the color and then send it off to friends and family as they commute to work on the train.  iPADs can also be outfitted with location technology. This gives retailers the ability to deliver ads based on the consumer’s proximity to a store or outlet. This is an incredible opportunity to deliver ‘call to action’ advertisements to mobile users.

While some retailers support Cross Channel promotions, many do not have systems in place to automate the promotions process.  In order to design an effective promotion that integrates the iPAD, retailers need to ensure that their promotions systems can support this new channel.  Those retailers that tend to rely on manual processes will fall further behind their competitors as new devices, such as the iPAD, reach consumers hands.

While it is still early to determine how the iPAD will change the promotions landscape, we expect retailers will require changes to their planning and promotions workflow and therefore to the systems that support their promotions process. With this new opportunity, retailers will have access to just-in-time promotional vehicles. Therefore, retailers should think about how long it takes for them to create an ad campaign. Now is the time for taking action to shorten the ad production cycle with new and improved systems that automates as much of their process as possible.

Several years ago there was a lot of buzz in the retail industry regarding cross media promotions that impact marketing events. During a span of two to three years the Interactive Advertising Bureau (IAB) sponsored a large study with around one dozen cases with major manufacturers and retail companies ranging from McDonalds to Kleenex to Pharmaceuticals in order to determine whether promotions that are planned across more than one media channel can return better results. You can find some of the case studies at the IAB website. Each of these studies were funded by both the IAB and a company engages in retail advertising and the results showed that allocating marketing dollars across more than promotion channel indeed did return superior performance.

The conclusion of the study was overwhelmingly positive. Reaching out to targeted consumers using more than one media channel increases sales. Because the studies were designed as a budget reallocation study to determine the most efficient mix of media spending, they came up with the saying “Same Budget, Better Results” to highlight the outcome of the study.

In summary, the study concluded that across all of the case studies and categories that they represent, the optimal mix of expenditures for promotions are as follows:

As its name implies, The IAB studies were focused on determining the efficacy of advertising on the web so stakeholders in the print media felt that the study did not represent print media fairly. Still, while the allocations may be disputed, the companies that sponsored the studies came away convinced that they need to pay attention to more than one advertising channel. We also believe that this is the case.

There is an interesting discussion that has started up on RetailWire on one facet of print advertising – the weekly circular. In whatever form it is distributed in the future (via newspapers or as a circular bundle with no news) there is a strong case to be made that so far no other medium is successfully replacing it, so far. As a couple of responders state, weekly circulars are the primary vehicle retailers have to go to market and sales often decline when the circular is pulled.  Our retail contacts have told us the same. 

Newspapers are getting smarter by allowing retailers to target ads by geographic criteria.  Not to be outdone by the on-line community, the Newspaper Association of America and MORI Research published preliminary results of an advertising study  that concluded that “Newspaper advertising remains the most powerful tool for advertisers who want to motivate consumers to take action.” The study notes that 59% of adults identify newspapers as the medium they use to help plan shopping or make purchase decisions and that 82% “took action” as a result of newspaper advertising. And finally, a poll from AdWeekMedia and Harris Interactive sites that TV ads are helpful to 37% of respondents, and Newspapers coming in 2nd at 17%.

Where does this leave us? Probably the safest conclusion for the retailer’s bottom line is that no one advertising channel reaches everyone and that synchronizing ad placements across channels yields to improved event performance. The next questions that we will address in this discussion is what is keeping retailers from executing the best possible promotional events while keeping their ad budgets level or even by doing more with less. Please visit us again as we continue our theme of Smaller Ad Budget, Better Results. We will discuss organizational/business process issues, technology implementation and business models that will get retailers where they need to be.

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