Forget price. Forget the competition. Focus on the consumer.
Such was the insight at the Promotion Marketing Association's Annual Integrated Marketing Conference last week, for marketers struggling against store labels.
It's a hot topic and the basis for a Marketing News feature story coming out this spring.
Sales for store brands increased by 4.5% in the first quarter this year, while brand sales went down about 3%, Dennis Moore, president of analytic consulting for ACNielsen, said at the Chicago conference last Wednesday. Naturally, the main motivating factor is price, particularly now. And regarding that part of the battle, there's no way brands can win, said Paul Kramer, COO of Westport, CT-based Catapult Marketing, during IMC's Great Agency Panel on Tuesday, March 10. "Competition on price is a dead end for 99 out of 100 manufacturers," he said. "The strategy in the marketplace is to reinforce the emotional bond we provide customers."
Simon Hay, CEO for Cincinnati-based dunnhumby USA, a satellite of the London-based consumer research and consultancy company, said that some old habits regarding shopper marketing strategy die hard, but they need to die, beginning with the core mentality that drives business decisions.
"People think of shopper marketing as another way to rent market share each week," Hay said at his IMC keynote presentation last Wednesday. "The idea is not about the customer but, 'Am I beating the competition?'"
"Most manufacturers are lagging in their efforts to understand their loyal shoppers and treat them well," he later said, adding that the question shouldn't be "How can I make shoppers more loyal to my brand?" but "Am I focusing most of my efforts on my best shoppers?"
Hay said there is too much obsession with market share statistics, too much focus on short term results, and that retailers and manufacturers need to work together in placing the customer first and improving their communications and sales.
Hay also said there is too little scrutiny on marketers' efforts to drive sales. "The redemption rates for coupons in 2008 on average was 5%, with 1% redemption rates," Hay said, citing Nielsen. ""We have to ask ourselves this question: 'How can 95% failure be considered a success?'"
So are you waging war on the store brands? If so, what kind of strategies are you using? What's working? What isn't working or won't work? What do you want to try? Please post your war stories, or you can contact me directly at plevy@ama.org. We may even feature you as a source for our upcoming piece about the fight against private labels.
