17
hat do a chic first-aid kit, a cus- tomizable set of crayons, a sea- sonal 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 & John- son, 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 con- tain 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 get- ting 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- 1 As seen in © 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. 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. 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 prom- ise. 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 dic- tates 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 im- portant,” says Heidi Froseth, senior vice presi- dent and Target team leader at Minneapolis- based Catapult. While Froseth cautions against Winning at Target In collaboration with: W 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. RETAIL INTIMACY Part 1: Series Schedule Part 1: Target Part 2: CVS/pharmacy Part 3: Kroger Part 4: Walmart Part 5: Dollar General

RETAIL INTIMACY Part 1: Winning Target...special RepoRt 3 Five Keys to Success at Target 1. Begin with your merchant Target’s buyers play a uniquely vital role in the retailer’s

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hat do a chic first-aid kit, a cus-tomizable set of crayons, a sea-sonal 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 & John-son, 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 con-tain 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 get-ting 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-

1

As seen in

© 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.

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 KitA few compelling words come quickly to mind when one thinks of first aid: Safety. Injury.

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 prom-ise. 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 dic-tates 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 im-portant,” says Heidi Froseth, senior vice presi-dent and Target team leader at Minneapolis-based Catapult. While Froseth cautions against

Winning at TargetIn collaboration with:

W

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.

RETAIL INTIMACY

Part 1:

Series Schedule

Part 1: Target

Part 2: CVS/pharmacy

Part 3: Kroger

Part 4: Walmart

Part 5: Dollar General

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” pro-motion 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 first-aid kit in 2009 as a way to bring innovation to the increasingly commoditized first-aid catego-ry. 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 be-yond an anniversary program or endcap,” says Heather Campain-Robish, director of shop-per 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 conduct-ing brainstorming sessions with Target’s buy-ers, insights teams, category managers, sales teams and other marketing leaders. The “Be prepared” messaging arose from these meet-ings and spoke to a more comprehensive strat-egy 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 mer-chandising and digital marketing.

“We know that some occasions require products that are complementary to the first-aid 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 prod-ucts are featured on camping and wedding-related pages within Target.com. At J&J’s brand page, Target promotes the “First Aid Kit” with brands such as Neutrogena sunscreen and Neo-sporin 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. Ad-ditionally, 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 con-fident 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

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 some-thing different for their children, but they want it at a great value,” he says. “When you part-ner 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 Cray-ola 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 ev-ery six months). Target vetted the list down to 24 final SKUs. Pricing for the eight-count box-

2

special RepoRt

3

Five Keys to Success at Target

1. Begin with your merchantTarget’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 relation-ship is complemented by the merchants’ other business partners (business analysts, merchandise planning, opera-tions, category marketing, insights, segmentation and digital). These are all important relationships for a ven-dor’s shopper marketing resources to foster, she says. Un-derstanding the division, category and segment objectives and strategic marketing pillars are essential to meeting these mutual goals.

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, in-sights to research, concepts and campaigns to create, and category and aisle reinventions to explore.

However, be mindful that of all these opportunities in-clude the sponsorship, approval and continuous alignment with your merchant partner.

3. Conduct annual collaborative planning meetings

It’s important to evaluate your successes and opportunities through a rigorous advanced analytics score-carding pro-cess. “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 merchan-dising team: divisional leader, senior buyer and buyer.”

Taking stock annually and conducting a collaborative planning session together with key stakeholders to evaluate

growth, positioning and opportunities is crucial to meet-ing 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 strategicWith a nearly 18-month planning process, it’s important to build a plan that optimizes past learnings and demon-strates innovative thought leadership. Be keenly aware of Target’s merchandising, marketing, operations, in-store 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 pre-senting color concepts.

5. Develop ideas in the context of collaboration

“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 brainstorm-ing 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 pro-motion and believe that you’ll wow the guest,” she says. “Respecting the process is an integral part of understand-ing how Target stewards its brand.”

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, East-man 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 up-coming back-to-school season, Crayola is rolling out a customiz-able marker line (in Target stores as of this month), backed by in-store marketing and an updated packaging design. Unlike the separate crayon-themed charac-ters, 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.

P.F. Chang’s: ‘Asian with a Flair’ Wins in FrozenConvenience has long been the driving force behind meal solutions. With that in mind, Tar-get sought to draw more time-starved shop-pers to its frozen food department this past spring through a “Meals Made Easy” endcap destination. When Target buyers approached ConAgra with the opportunity, the manufac-turer turned to its recently acquired portfolio of P.F. Chang’s frozen foods to fit the bill.

ConAgra estimated that the restaurant qual-ity 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 fro-zen 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 in-gredient 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 hand-outs 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 overcom-ing 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 sug-gested adding pictures of the frozen appetiz-ers on the back of the cards/handouts along with the dipping sauce recipe. “The concepts got better and better through each of the ide-ation stages,” says Cross.

M&M’s: Easter Means Taking Candy from a BunnyTarget 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” char-acter, 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 choco-late 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, shop-per marketing manager at Mars.

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 fes-tive 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 of-fered a special Easter egg-shaped version of its Snickers and Twix brands. “You might find that item in other stores on a [standard mer-chandising 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.

special RepoRt

4

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 ex-ample, Allegra made a bold pitch to become part of a woman’s daily beauty routine. Alleg-ra-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 dur-ing 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 incremen-tal sales during its seasonal allergy program.

RETAIL INTIMACY

5

As seen in

© 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.

communications is one of the key reasons we partner so strongly with them,” says Roy Benin, chief consumer officer, Mars Choco-late 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 re-ceive a Coke or Pepsi coupon dispensed at the ExtraCare kiosk at the front of the store. Simi-larly, 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 pro-found impact on how CVS communicates with its customers, says Jessica Campbell, a research analyst with Kantar Retail in Boston.

Sanofi-Aventis’ Allegra, meanwhile, drove traf-fic to CVS stores by launching an entire mar-keting 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 seg-mentation by demographic profiles. The chain instead is using purchase data from its Extra-Care 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

In collaboration with:

T

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.

Part 2:

Getting Personalat CVS

special RepoRt

“You’re going to see a lot more smaller, tar-geted 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 ver-sion with unique savings for ExtraCare custom-ers 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 publi-cation to comparison shop the drug channel.

Personalization and New PartnershipsThese 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 dif-ferentiated 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 refriger-ated 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 in-tegration 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 phar-macy and at the front of the store – and seeks shopper marketing programs that increase bas-ket size and conversion rates. The more “per-sonal” 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 to-day begin with a “cross-purchase” analysis of ExtraCare data to identify selling opportunities in multiple categories and brands. Not surpris-ingly, the vast majority of shoppers who pur-chase 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 eight-week 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 com-munication,” says Gia Cyrier, shopper marketing manager, CVS team, at Kimberly-Clark. “This is personal to her. May-be her kids at home are suf-fering with allergies – there’s Children’s Allegra on the dis-play – 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 ac-tionable category insights. “CVS relies on its suppliers to tell a story that brings the data to life,” says Kantar’s Campbell. Colgate-Palmo-live, for example, has brought its understand-ing of Hispanic consumers to an ongoing part-nership with CVS and Kimberly-Clark. This fall, CVS will be conducting a “Pick up the Values” campaign that encompasses Colgate’s tooth-paste, 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 al-ways 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 dur-ing the first week of the promotion (and an ad-ditional $2 during the second week) for partici-pating Colgate and Kimberly-Clark products.

6

A-boards rarely

Aisle Violators/Fins/blades often

Balloons rarely

Base Wrap often

Ceiling banners/signage often

Checkout Ads sometimes

Checkout dividers/separators rarely

Circular rack ads often

Counter cards 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 rarely

Neckhangers 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 often

Shelf Strips sometimes

Shelf Talkers often

Shelf Danglers/Wobblers 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 often

CVS RECEPTIVITY TO IN-STORE TACTICS

Source: Path to Purchase Institute Analysis, May 2013.

special RepoRt

7

Collateral will communicate with shoppers in both English and Spanish, with tactics running the gamut from national FSIs, ExtraCare cou-pons and multi-branded endcap displays, to e-mail, direct mail, online ads and social media.

From Health & Beauty to BabyHealth 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 in-terests,” 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 custom-ers 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, Su-dafed 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 dis-continued 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 department-store style beauty consultations. According to retail industry experts, it failed to meet expec-tations in part because many prestige cosmet-ics 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 environ-ment. At one test store in Massachusetts, CVS recently shrank many of its regular aisles to devote nearly half of the store to beauty prod-

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 pur-chase, along with individual e-mail offers that contain beauty tips and new product informa-tion. 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 commu-nications,” says Catapult’s Margiloff.

In general, those who work with CVS on shopper marketing say the retailer is increas-ingly more interested in collaborating with manufacturers and vendors on customized programs and less interested in accepting stan-dard displays. Concepts that feature brands with quick sales turnarounds (i.e., two weeks or less) and that incorporate CVS private la-bels 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 Rock-Tenn 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.”

hese days it is not easy for any super-market 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 con-sistently 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 supermar-ket titan at the top of the heap.

“Regardless of the program that you are pro-posing, 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

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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 merchan-dising 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 Sav-ings) 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 prepara-tion ideas, as well as its promotional messag-ing around a common charitable cause with Kroger to end child hunger.

ConAgra’s dedicated local shopper market-ing teams and independent budgets/decision-making authority allow the company to drive scale events at Kroger based on “quality shopper

after Walmart is comprised of 19 grocery divi-sions (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-to-school 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-

In collaboration with:

T

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.

Part 3:

Building Loyaltyat Kroger

Kellogg’s Email Blast

On and Off-PlatformDigital Banner Ads

Digital Coupons

Ad Landing PageClick-thru from banner adsShopping List and Link to

Coupon Savings

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 merchandis-ers 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, includ-ing 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 ex-periment with unique merchandising concepts, partnering with Coca-Cola recently on a build-your-own-pack variety station and with Kraft Foods a while back on a “Sandwich Place.”

Going DigitalUntil recently, Kroger has been slow to advance its digital shopper marketing capabilities – some-thing that most industry experts agree it must do in order to minimize a growing threat from on-

line retailers and adapt in an increasingly mobile shopping age. But starting late last year, the com-pany began to beef up its digital marketing staff with new executive hires (including John Moritz, vice president of digital, and Anne Maness, se-nior 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 intro-duced Free Friday Downloads, in which it sends a digital coupon for a free item along with ad-ditional 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 must-haves for Kroger in order to attract a new gen-eration 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 con-nected with tech-savvy shoppers.”

At the same time, CPG manufacturers con-tinue 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 market-ing at the Kellogg Co. “The digital space has opened up many more options with our retail-ers, including Kroger. Kellogg wants to build frequent targeted communications that offer relevant brand solutions for Kroger shoppers.”

As an example, Kellogg’s 2013 Spring Chal-lenge campaign (“Lose up to 6 pounds in 2 weeks”) drove shoppers to Kroger stores with an email blast that carried a message to pur-chase Special K: buy 3 items, save $3 instantly at checkout. The campaign also included digital coupons for two weeks in May and was pro-moted 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 prod-ucts including Kellogg’s Kashi Go Lean cereal and White Wave’s Silk soy milk.

ConAgra has also effectively employed pro-grams with digital overlays. For example, a

9

A-boards rarely

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 rarely

Standees 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 sometimes

Power wings/sidekicks often

Category management systems sometimes

Spectaculars/lobby displays often

KROGER RECEPTIVITY TO IN-STORE TACTICS

Source: Path to Purchase Institute Analysis, May 2013.

The “Free Friday Downloads” program enables consumers to send coupons for free product di-rectly to their loyalty cards via the retailer’s mobile app or Kroger.com.

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10

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 shop-pers is our priority too,” says Yurovski. “The programs that focus on loyal Kroger shop-pers 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 re-search 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 mar-keting. “Over the past few years, dunnhumby has raised the bar with increased emphasis on post-program analysis, including following the

shopper’s purchase behavior beyond a single mailer and introducing targeted digital commu-nications,” says Catapult’s Cross.

The Value Push Kroger continues to take significant steps at both a macro and store level to bolster its price/value proposition. This year, the company con-tinued to roll out new Ruler Foods discount gro-cery 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 dol-lar 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 part-ner 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

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 through-out its stores. Kroger is a corporate sponsor of NASCAR’s Daytona 500, for example, and typi-cally 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 corpo-rate 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 fea-tures private selection or premium brands avail-able 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, in-cluding 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 de-veloping 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.

ConAgra’s custom pallet displays provide Kroger shoppers with simple meal solutions.

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 dol-lar stores – and a smartphone-wielding con-sumer 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-

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targeting consumers looking to transition from holiday excess to healthier living by introduc-ing a series of print ads as the sole sponsor of a special interest “Health & Wellness” is-sue of All You, a custom lifestyle magazine published by Time Inc. A total of 32 ads en-couraged 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 high-lighted Walmart’s 30-day prescriptions for $4 and 90-day prescriptions for $10, while re-minding 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 market-place for both OTC and Rx products.”

Here’s how the program evolved: All You ini-tially approached Bayer with the idea to blanket

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 mar-keting 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. Pro-motional packages for these events include general market TV and digital support, in ad-dition to in-store merchandising and potential placement in circulars and other media/adver-tising vehicles.

Bayer, for example, in early 2013 supported Walmart’s “Back on Track” co-op initiative

In collaboration with:

I

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.

Part 4:

Winning atWalmart

special RepoRt

or “own” a special-interest issue with a mes-sage 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 Bay-er products was then developed between the manufacturer and its agency partner, Cata-pult. “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 encour-age 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 medica-tions 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 well-ness positioning.

Collaboration allowed the partnership to flourish, Davenport says. “My shopper mar-keting 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 UpWhen marketers come to the table with in-sights-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 an-nual 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 selec-tions. 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 ex-pand 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 con-sumption 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 win-ning team’s charity of choice, as both Walmart and its partners looked to enhance the com-munity-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 intro-duced 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 sam-pling 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, particu-larly in Texas, Florida and Los Angeles. In San Antonio, Dr Pepper sent brand reps in its mo-bile 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 Pep-per 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/dr-pepper page to get additional recipes,” notes Bach. To extend the campaign message into

12

A-boards sometimes

Aisle Violators/Fins/blades often

Balloons sometimes

Base Wrap often

Ceiling banners/signage rarely

Checkout Ads sometimes

Checkout dividers/separators rarely

Circular rack ads rarely

Counter cards sometimes

Demonstration/Sampling kits often

Digital signage ads often

Employee apparel sometimes

Endcap signage kits often

Floor Decals sometimes

Header Cards often

At-shelf product demo/sample sometimes

In-line/category headers often

In-store radio sometimes

Inflatables sometimes

Outdoor signage rarely

Neckhangers rarely

New item showcases rarely

Pole toppers sometimes

Printed materials/handouts often

Placeholders, on-shelf sometimes

Price-label messaging rarely

Security pedestal ads often

Shelf Blockers sometimes

Shelf Strips sometimes

Shelf Talkers often

Shelf Danglers/Wobblers sometimes

Shopping Cart Ads rarely

Side Panels often

Standees often

Take-one dispensers 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 often

WAlMART RECEPTIVITY TO IN-STORE TACTICS

Source: Path to Purchase Institute Analysis, May 2013.

special RepoRt

13

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 EDlPWalmart’s receptivity to supplier-driven pro-grams 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 Si-mon took over as company president and CEO in 2010, he introduced a friendlier stance of joint planning with suppliers. Walmart elabo-rated 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 cus-tomer 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 consum-ers. The company’s lackluster performance comes despite its efforts over the past year-and-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 in-vestments, so they are counting on more sup-port 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 sug-gest that Walmart is maintaining its price lead-ership over both Target and Amazon. For ex-ample, 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 widest-ever margin ($4.17) since the data collection

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 substan-tial 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 in-novations, 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 be-yond 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 demo-graphics 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.”

hese are heady times for Dollar Gen-eral. The company has posted several consecutive quarters of strong sales

and earnings growth while rapidly expand-ing 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 cus-tomer 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 proposi-tion through a diverse slate of shopper mar-keting programs. Its corporate calendar fea-tures 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

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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 innova-tive 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 suc-cess 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

example, which awards grants to schools, pub-lic libraries and nonprofit organizations to as-sist 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 Pep-siCo. “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-

In collaboration with:

T

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.

Part 5:

Winning atDollar General

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 pro-motional discounts, says PepsiCo’s Mattran. “We’re creating value for shoppers beyond price,” she says. “The rewards enable custom-ers 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 Dol-lar General.”

This year, Mountain Dew leveraged its NAS-CAR sponsorship and its partnership with country music singer Brantley Gilbert to de-liver branded merchandise to customers who redeemed their points online at TheDewGen-eralStore.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. Shop-pers collected points from purchases of par-ticipating 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 head-phones, 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, Mat-tran says the program has drawn a significant number of male customers while still resonat-ing with Dollar General’s core female, baby boomer shopper. “Mountain Dew’s typical millennial-male buyer is obviously a very dif-ferent 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 pro-gram – potentially a snack brand – and find a permanent merchandising loca-tion at Dollar General stores.

Mattran attributes PepsiCo’s suc-cess at Dollar General to the open lines of communication that exist between the two companies’ respective mar-keting and sales organizations. “This is one of the tightest relationships we have with any of our retail custom-ers,” 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 op-portunities 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 TerritoryAcross 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 Dol-lar General on a 2013 program for its Huggies brand (“Little Hands, Big Plans”) that centered on an essay-writing contest in which consum-ers described how the $5,000 grand prize would allow them to achieve the educational dreams they have for their children. The pro-gram included FSIs, shelf talkers, digital/social media support and additional promotional ac-tivity 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 re-cord, 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, shop-per marketing manager at Kimberly-Clark.

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A-boards rarely

Aisle Violators/Fins/blades often

Balloons sometimes

Base Wrap 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 rarely

Pole toppers sometimes

Printed materials/handouts 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 sometimes

T-stand posters/stanchion signs rarely

Wall banners sometimes

Window clings 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

DOllAR GENERAl RECEPTIVITY TO IN-STORE TACTICS

Source: Path to Purchase Institute Analysis, May 2013.

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“Dollar General shoppers do everything they can to care for their family within their means. This includes supporting their children’s edu-cation, which is often a big expense,” Wiec-zoreck says. “Dollar General uses a variety of ways besides reading advancement to connect to their Literacy Foundation, including promot-ing 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 look-ing 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 Ban-quet 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 Gen-eral’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 communica-tion 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 prod-ucts, 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-

ucts] and go after varying income levels of shoppers,” Esposito says. “At the same time, we’re cognizant of Dollar General’s promo-tional 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 ImageDollar 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 shop-pers, as of Kantar’s June 2013 survey. Two-thirds of Dollar General shoppers remain in the $50K or under group, per the study. In ad-dition to becoming more affluent, the overall demographic is increasingly skewing younger

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and more Hispanic, Paglia notes.Dollar General is reinforcing its spiffier im-

age 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 spe-cific 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 of-fer to cross-promote the candy and pet food categories, “something that would be a big hurdle for many other retailers.” Custom ship-pers 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 support-ing Mars’ efforts to become more strategic, vs. promotional, in its petcare programs. “They’ve done a great job in building aware-ness for the pet category through tie-ins with Mars’ Pedigree brand and the Country Music Awards,” notes Amy Sorensen, account super-visor 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 be-cause they know they can get their favorite deodorant or shampoo at the lowest price,”

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.

Catapult is today the merger of two pow-erful 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 shop-per 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 Epsi-lon, the recognized leader in providing data and technology solutions. This gives Cata-pult 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.

About the AuthorMichael Applebaum is a freelance writer and editor who specializes in develop-ing 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.