A NEW HOME FOR TORCHMEDIA

We'd like to introduce you to the new-look TorchMedia website: www.torchmedia.com.au.

With an integrated site blog (amongst many other exciting new features), we will no longer be updating this blog.

Please update your bookmarks and we hope to see you there!

You can also follow us on Twitter: www.twitter.com/TorchMedia.

The problem with BOGOFs and deep discounting

Grocery competition has become increasingly fierce over the last 12 months – competition with other manufacturer brands, and also increasingly with store brands. Price-based promotions have played a vital role in enabling brands to compete against store brand products. So popular are BOGOFs and multi-buys in the UK, brands currently spend £25.6 billion annually on such promotions according to data released by the Institute of Sales Promotion.

But with BOGOFs, multi-buys and deep discounting inevitably comes consumer waste. Whether it’s a second block of cheese for $2 or a ‘free’ punnet of strawberries, the simple fact is that much of it gets thrown out. According to recent research from IGD, more than a quarter of respondents (26 per cent) say they want to see an end to multi-buys on fresh food. A further 28 per cent said they are concerned about food waste created by promotions.

There are smarter ways to connect with shoppers – price cutting activities will move stock over the promotional period, but they fail to engender long term loyalty or connect with peoples values.One consumer value that has emerged in the global recession is the move away from excessive consumption – consumers don’t want to be associated with waste and frivolous spending. It simply no longer makes the consumer feel ‘good’. But what does?

UK nappy brand Pampers ran a joint promotion with UNICEF to provide tetanus vaccinations for newborns in developing countries. It promised 'one pack = one vaccine' and outperformed a leading competitor BOGOF promotion because shoppers were offered a straight choice between getting an extra pack free, or saving a life. In contrast to the short-term hit of price, these kinds of promotions build brand equity, activate sales and create long term loyalty.

Key findings from the GMA

A recent Grocery Manufacturer’s Association (GMA) study revealed a few insights into shopper behaviour.

• Shoppers select 41% of the brands they buy across categories before they enter the store. However, the sale can be lost if the brand does not meet the shopper’s expectations in store or if another brand can capture their attention for even just a few seconds. The ability to activate brand equity at the shelf is essential to winning these sales.

• For the 59% of items for which brands are selected in-store, 85% of shoppers perceive in-store factors as more influential than out-of-store marketing.

• The relative importance of in-store marketing stimuli in getting beyond price and closing the deal for brands for which shoppers have not yet made up their minds varies by product category. For example, while product packaging is an important factor for health & beauty and household products, shelf signage and displays are relatively more influential stimuli for food & beverage products. These differences are reflected in the higher incidence of impulse purchases for food & beverage products, as well as the greater levels of competitive switching between brands.

Download the full report at the GMA website.

Check out this checkout

This checkout featured as part of a larger campaign created for Denver Water in 2009, to get the word out to save water.

The campaign transforms grocery store checkout belts into flowing rivers, with the order dividers bearing the campaign’s slogan – “Keep our Rivers flowing, use only what you need.”

Nielsen's Top Five US Consumer Goods Spending Trends for 2010

Read the original full text at Nielsen's blog.

1. Restraint remains the new normal
   The need to save money, unemployment and other economic issues continue to be top of mind. Almost one-third of consumers say that they will use credit less even when conditions improve with 19% saying that they intend to save more money.



2. Value is a top priority
   A focus on low prices at the expense of all other variables threatens margins and brand equity. Value messaging must also include some point of differentiation beyond pricing. Manufacturers and retailers that take an active role in innovation and ad spending are likely to be the big winners.



3. Store brand growth continues
   Consumers returned to cooking and eating at home, boosting grocery channel shopping trips in the process. Store brands became an acceptable alternative — or even preferred brand — for many.



4. Grocery consolidation intensifies
   Local and regional players will become acquisition targets and some larger national and regional supermarkets will divest unprofitable formats and banners to strengthen investments behind their winning formats and banners.



5. Assortment wars escalate
   Brands caught in the trap of greater store brand focus and assortment optimisation will look to forge alliances with key retailers, or step-up efforts as store brand suppliers. Retailers attempting to simplify the consumer shopping experience with reduced ‘clutter’ may lose sales as they shift away from in-store merchandising that drove impulse buying and built shopper baskets.

Global Retail Trends

Shopaholic attended the recent annual AMI Conference and sat in on a fascinating presentation from John Batistich, General Manager Marketing, Westfield Group.

Based on a recent Westfield Study Tour, Batistich outlines ten changes in global retail trends.In this post we look at two of these:

1. Technology
2. Shift to advocacy

Technology

Technology has changed the nature of retail touchpoints. In the last month, Shopaholic has purchased music over iTunes, applications and games through the iPhone app store, and SingStar game tracks through a Playstation 3 console, via the online Playstation Network.

Such innovations have disrupted and redefined how we buy and consume. The computer and mobile phone in particular have joined the in-store environment as very accessible points of purchase. Brands need to ensure consistent alignment of marketing communications across all purchasing environments.

Batistich labels digital screens ‘the new in-store / in-centre medium’. Accordingly, an Arbitron report released earlier this year found that 67 percent of American adults had not only been in the presence of, but recalled seeing a digital out-of-home screen in the past month.

Digital screens offer great scope to engage with consumers through incorporation of touch screens, WiFi and Bluetooth. With the cut-through and flexibility offered by dynamic content, digital screens are sure to continue to deliver results in the retail environment.

Shift to advocacy

Batistich speaks of a technology-enabled shift from marketing models of tell/sell to involvement/participation. Consumers are sharing, advising, guiding and creating within social communities – see Brian Solis' Conversation Flower below.

Although these forms of community involvement take place out-of-store, the insights that can be gained are relevant to the in-store environment. After all, shoppers enter the store with their full range of out-of-store experiences and knowledge.

Consider that 50% of shoppers now research online before entering the in-store environment to make a purchase. With anonymous online opinions carrying the same weighting as trusted recommendations from family and friends, ‘word of mouth’ just became a lot broader.

Westfield has recognised the power of consumer advocacy, creating a Facebook application as part of a wider campaign promoting its gift cards. The application requires the user to opt in so that their status is updated to “All I Want for Christmas is a Westfield Gift Card”, with further copy stating that the user is now in the running to win a $10,000 gift card. This status change is displayed on the individual’s Facebook profile and appears in their friends’ news feeds.

Launched on November 24, over 200,000 Facebook users had opted into the application and updated their status by the 27th. Bearing in mind that this status change appears in friends’ news feeds, the promotion’s reach extends far beyond those 200,000 who have participated.

The Nielsen Global Liquor Symposium and Global Wine Forum

Last week, the Liquor Merchants Association of Australia (LMAA) in association with Nielsen presented the inaugural Nielsen Global Liquor Symposium and Global Wine Forum at Doltone House in Pyrmont, Sydney.

With key liquor industry representatives from Australia, New Zealand, the UK and America, it was a great opportunity for Shopaholic to gain some valuable market intelligence about the current state of play and emerging trends in the liquor industry.

Highlighted are a few key points worth pondering for any liquor marketer.

Consumer spending habits
“While alcohol beverages are sometimes thought to be ‘recession proof’, we’re seeing significant evidence of changes in consumers’ dining and buying habits,” said Danny Brager, Nielsen Beverage Alcohol Team US. As a marketer, we need to understand those changes.

Job security is still a concern looming over most consumers’ heads, and they are changing their purchasing behaviour accordingly. 30% of those surveyed by Nielsen claimed to have cut down on purchases of alcohol, and almost half have cut back on nights out. This trend was visible across all four markets represented at the Symposium.

Why then do Australian consumers continue to ‘trade up’? BarScan data indicates that the average price per serve has grown in the last year across all categories. Off premise also experienced much stronger growth in the categories of premium spirits, RTDs and beers than in their standard counterparts.

Perhaps more important than price to a shopper, is perceived value. With alcohol there is a degree of status consumption involved, and so shoppers are more open to paying a premium for something they perceive to completely meet their needs. With the strong shift to off premise, retail media has never been better placed to influence shoppers at the point of sale.

Promotional reliance
Overseas shoppers have become conditioned to buy only on price promotion. While price promotion accounts for over half of Australia’s beer and wine sales, this rises to close to 80% in New Zealand. In Australia, while most categories have experienced an increased reliance on promotion for sales, beer has actually experienced a slight decrease. With beer claiming over half of the past year’s new product development sales in Australia, it would seem that shoppers are willing to pay a premium for innovation. Brands should take care to avoid the pitfalls of relying solely on price promotion and consider other activation strategies such as in-store advertising.

Government
Although RTDs now look to be back on track for growth, the 30% short-term decline in the category value (post-excise increase) illustrates how the Australian Government can be a real driver of structural change. Of significance is the current call for the ban of broadcast advertising of alcohol. A ban on television and radio advertising could lead to retail media becoming an even more integral part of the marketing mix.

Wine
The majority of consumers have a real lack of knowledge on wine, but are thirsty to learn. A lot of wine shoppers buy the brand, or the packaging. With the extraordinary success of NZ Sauvignon Blanc worldwide, the question was raised at the Symposium whether the comparative decline of Australian wines was down to the product, or the marketing.

A 2009 report by Miller Zell on effective in-store triggers found that 43% of shoppers want more information on product details. A similar percentage of shoppers want product comparisons. Tesco in the UK provided this in the form of an online wine selector, advising consumers which wines went with which meals. This type of communication needs to be followed through in-store to speak to these consumers as shoppers.