In an effort to reduce their carbon footprint and create a greater industry push toward "going green," a group of major CPG manufacturers recently banded together through a public commitment to eliminate up to four billion pounds of packaging waste by 2020. These manufacturers are embracing long-term sustainability initiatives as a driving factor toward increasing sales and customer loyalty. However, despite this collaboration, manufacturers are overlooking a critical aspect negatively impacting their bottom lines and carbon footprints - their in-store promotional materials.
Most manufacturers overlook materials such as circulars and in-store displays when addressing waste because these materials are currently the only platform where their brands can engage the consumer at the point of purchase. The materials are printed in bulk and then shipped nationally, sometimes internationally, before they even reach their final destination. Often, these promotional items are used for short-term, in-store campaigns, only to be cycled out of the store and back into the waste stream shortly thereafter - typically, within one week. The waste generally associated with promotional materials is a four-step process: (1) initial manufacturing waste, (2) transportation and distribution waste, (3) non-compliance utilization waste, and (4) garbage dump waste.
With no other current alternative available to reach the decision maker at the point of purchase, manufacturers are still moving their dollars away from traditional media and into the store. In fact, one new and very exciting component in the trade promotion arena is shopper-marketing campaigns which account for nearly $35bn in spending across the industry and according to Booz & Co., a majority of CPG manufacturers rank shopper marketing as their number one investment with spending expected to increase five percent annually. In-store media is poised for immense growth.
However, in-store marketing programs today are one of the most challenging areas in manufacturers' marketing plans as there is no way to ensure the funds are properly spent and executed as they are designed to be. Despite such a substantial investment in point of purchase marketing, currently an estimated $25bn of spending is wasted annually on retail promotional materials, with nearly 50 percent of materials never making it to the shelf or store aisle, according to the In-Store Implementation Network. Furthermore, there is no comprehensive data associated with in-store trade promotions, and CPG companies find it quite challenging to effectively analyze and determine how store-specific campaigns perform and contribute to their ROI in the face of 50-percent noncompliance rates or limited sampled compliance reporting. Frankly, this is a pretty hefty price tag and a large amount of unnecessary waste for materials that do not yield truly measurable or usable results.
Surprisingly, the remedy to more efficient in-store marketing campaigns, while supporting manufacturers' push to go green in the retail environment is not out of reach. The simple answer to creating greater efficiency in shopper marketing and reducing waste for manufacturers and retailers alike is to make the transition to a digital environment. However, for most retailers, there is nothing simple about the solution. Despite the fact that we constantly read about "smart" technology overtaking nearly every area of life, consumer retail environments such as the supermarket - one of the most coveted marketing environments in the physical world - remains exasperatingly antiquated.
Through more efficient digital shopper marketing campaigns, marketers and retailers alike can further reduce their overall waste and eliminate unnecessary printed materials. By replacing items such as circulars or in-store promotions with a digital-ready retail environment, marketers are improving their bottom lines by reducing print and distribution costs and taking a major leap toward reducing their carbon footprint.
Taking Retail Out of the Red and Into the Green
According to Booz & Co., shopper marketing can be defined as building insights about consumers when they are in shopping mode and applying these insights to influence their purchase decision. Yet, to gain insights about the consumers, marketers require more information than they can receive based on circulars and traditional point-of-sale data. A digital environment would allow marketers to gain valuable information about the shopper who is actually standing in front of their product: how long are they spending at the shelf, what product they purchased before they went to buy yours and are they related?
Beyond that, marketers would have several opportunities to connect with the consumer in the store and influence their purchase decision. In the grocery environment for example, 36 percent of women shoppers spend 15 minutes or less preparing for a shopping trip. This lack of preparation enables digital-ready retail environments to connect with the consumer and guide their decisions through customized digital messaging. These messages can move shoppers to particular areas of the store where a new product is, and most importantly, create an emotional connection to the shopper with the brand. Additionally, as only 52 percent of trade promotions are evaluated post-promotion, often almost four weeks after the promotion, a digital marketing campaign enables marketers to track in real time when their promotions ran, at what times, and most importantly, who saw them.
In the fiercely competitive retail environment, marketers and retailers must fight to differentiate themselves and provide their customers with a unique and streamlined shopping experience. As we continue to rebound from the economic recession, trends signal that Americans are placing an even greater premium on quality customer service and responsible business practices. According to a recent American Express Global Customer Service Barometer, 70 percent of Americans are willing to spend an average of 13 percent more with companies they believe provide excellent customer service. Imagine as a manufacturer, if you could provide higher levels of quality customer interaction and more effective marketing tactics while also reducing overhead costs and your carbon footprint. The result would be more favorable customer opinions, a positive relationship with your target audience and a step toward becoming a more eco-friendly business.
As the world turns from the physical to the digital, so must the retail environment in order to ensure sustainability, profitability, and measurability. Traditional trade materials need to be replaced with digital technology which will ensure that the billions of dollars spent on in-store promotions do in fact reach the target customers at the point of purchase, at the precise time. The end result will be effective marketing campaigns that reach the desired target while increasing the marketer's bottom line.
Source: 3GTV Networks
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