• by Steve McClellan  @mp_mcclellan, February 10, 2012

While shopper marketing is gaining traction as a discipline among marketers, a new study from business consultant Booz & Company indicates that many consumer goods companies are struggling to use the practice to maximum advantage.

Part of the problem, Booz concludes, is a lack of effective communication between manufacturers and retailers and a failure to align strategies in the space.

Shopper marketing encompasses a wide variety of different capabilities and consumer touchpoints, including shopper research and insights, store design, customer relationship management, in-store communications, packaging and e-commerce.

As client demand has grown, agencies are paying more attention to retail and shopper marketing disciplines. A recent study by the Grocery Manufacturers Association estimates that shopper marketing across the retail sector is now a $50 billion to $60 billion category, up from an estimated $35 billion in 2009.

But the Booz study suggests that many companies, particularly in the consumer package goods sector, are struggling to get their shopper marketing strategies on the right track. According to Booz, problems occur because manufacturers and retailers disagree on strategy. ROI measurement is also an issue as is the budgeting process.

More than 85% of the 50 packaged goods companies surveyed by Booz in November and December 2011 agreed that retailers focus too much on shopper discounting, even for programs that are intended to provide additional value beyond pricing.

The big challenge, concluded Booz, is for manufacturers to “better engage retail partners in the development and execution of shopper solutions that deliver added value beyond price reductions.” Those that are successful, Booz said, “will earn the right to win their categories.”

ROI measurement results are often inconsistent, the survey found. Most of the respondents indicated that they measure brand sales lift half the time or less from such programs, while share gain results and brand health impact were measured even less.

According to the survey, shopper marketing budgets are often a matter of “beg, borrow or steal” versus having a standard line item on the balance sheet for such activities. Even 50% of the so-called “leaders” in the field acknowledge that “tin cupping,” to obtain funding from brands in the portfolio or business units during the year rather than from a dedicated budget, represents a significant source of funding for shopper marketing programs. And more than one-third of the companies Booz surveyed had no dedicated shopper marketing budget at all.

Manufacturers, concluded Booz, must “develop new funding and planning processes” for their shopper marketing efforts. Pre-set budgets, the study asserted, result in “better decision making, greater lead time and superior execution.”