Home » Winning At Retail: Why Getting On-Shelf is Just the Beginning
Winning At Retail: Why Getting On-Shelf is Just the Beginning
By Jackie DeLise
Over the years, the mass retail landscape has changed: Consumers have changed, media consumption has changed, and the relationship dynamics between retailers and manufacturers have changed.
Retail consolidation into a few mega-chains (and we all know who they are) now means that 10 percent of the biggest retailers account for 80 percent of the average manufacturer’s business, versus just 30 percent a little more than a decade ago. Manufacturers have no choice but to take notice, for it is this mass channel, and not mass media, that is attracting the bulk of their marketing dollar allocation.
But beware; getting in-store and on-shelf is not enough; this truly is when the “partnership” proposition really heats up. Manufacturers are often focused on the multi-billion-dollar mega-retail “partner” when it is their customer and category segment that should be the focal point—and the source of their competitive advantage.
What’s the landscape?
It is conceivable that a manufacturer could wake up one day and find that 80 percent of sales are being derived from one retailer, for whom they are developing a trade strategy instead of a customer strategy. With the power shift at retail, packaged goods manufacturers are mistakenly tailoring their marketing to one person—the buyer at corporate who is managing their brand.
But consider this scenario: a buyer of 20-years’ tenure retires and is replaced by a younger person who is new to the category. This new buyer is navigating the learning curve of the brand and category and requesting more and more information from the manufacturer (having never used the product or worked in the category). The eventual pearls of wisdom from this new buyer? The manufacturer must redefine its brand strategy.
In addition, retailers have been focusing more and more on their own proprietary brands, which have garnered consumer acceptance at the opening/entry price point in many categories. Typically, at this entry price point, the approach has not constituted building a brand, from an integrity or equity perspective. Unless they become true product innovators (and not imitators), such low-tier store brands will not be perceived as unique providers of quality goods; just the low cost solution.
But, as manufacturers and retailers now share the same customer, keep in mind that some retailers are beginning to build a more premium brand franchise by creating packaging and identity systems that are often as well-executed, consistent and effective as the national brands they are competing against.
Why are they doing this? Because retailers understand the intrinsic power of branding and are starting to act more like brand managers, building a direct connection to the consumer.
Retailers are also developing the parameters around what the manufacturer can, and cannot do, with their product, packaging and merchandising, which impacts brand presence at retail. Key example: Retailers want exclusivity from their vendors.
To get around this juggernaut, some manufacturers are creating sub-brands, a tactic that can create confusion at the point-of-sale for the consumer. Moreover, it also is a short-term stopgap method that does not build brand equity or loyalty.
The result is that the consumer is more confused than ever. With a proliferation of brands on the shelf, and no clear communications to ease the purchase decision process, in many cases simplification has been eliminated. And so have potential sales.
Retail dominance beyond traditional boundaries, over to the manufacturing side in a relentless pursuit of lower prices and higher profit margins, is the retail model of the 21st century. This involvement in virtually every aspect of a brand’s operations (which products get developed, what they are made of and how to price them) is wreaking operational havoc for manufacturers—while consumers take advantage of the cost savings.
Four brand action steps for winning at retail
So, what does a savvy brand marketer do to take control of his or her brand?
1 Understand Your Customer Better. Retailers and manufacturers are not gaining many new customers; they share the same customer and their growth challenge is to have greater impact on more of those customers through category leadership. The goal is to bring more new customers into the category, and not just trade dollars from one category to the next.
It starts with understanding customer needs better than the competition; how customers shop the category and interact with product. For manufacturers, it is wise to create a customer-centric brand strategy with a product and package focus. Generally, the retailer’s focus revolves more around the category versus the specific manufacturer’s brand.
2 Communicate at the Decision Point (Less is More). It is also critical for manufacturers to control in-store visual communications through simple, clear brand messages. Sell a single idea on the package, versus a “program”— sometimes less truly is more.
Research shows that consumers take an average of nine seconds to make a purchase decision. By offering a mass of visuals and text and no distinct focus on the package, the message is likely going to be ignored.
Two packages that do it right are from the Liquid Nails Adhesives family of products: the Ultra Quik Grip and Ultra Duty Poly construction adhesives. Both have subtle, yet impactful graphics and minimal copy that instantly informs the consumer of the products’ features and benefits. These packages also successfully sell at a premium price in Home Depot and other retailers.
No matter the category, brand marketers should learn from this example: pare down the message; identify the salient points and illustrate them with effective supporting graphics.
3 Create Brand Harmony. Prestone Bug Wash created brand harmony by integrating all graphic elements in a balanced design statement: it defines the target market, identifies a competitive point-of-difference, develops a brand “persona” and visually communicates in singular style.
The vivid, new green and yellow label clearly states the product’s benefits, including the claim that it cleans 100 percent better than other washer fluids. The Bug Wash liquid is a green color, but in order to visually communicate the new citrus scent, a small graphic image of oranges was designed and applied to a “Prestone yellow” label background that reinforces brand equity.
4 Innovate. Innovation is not something a business can pursue leisurely—it must be a conscious effort and a sustained component of the overall corporate culture. Innovation is an absolute imperative if you want to remain competitive. Procter & Gamble’s CEO A.G. Lafley said: “You either fund innovation, or you become more like a commodity over time.”
This makes perfect sense: Just make sure you understand your customers, too. Uncover and define their real, versus perceived, needs. Management guru Tom Peters wrote in his book, In Search of Excellence, “…make what customers want to buy, not what you manufacture best.”
Savvy product manufacturers are meeting the innovation challenge by delivering on consumer needs through great design, moving beyond function and aesthetics and infusing products with “soul”, as Robyn Waters writes in her book, The Trendmaster’s Guide.
If you encounter any confusion along the way, simply return to step 1: Understand Your Customer.
The power of innovative packaging to communicate with the consumer is the key for both retailers and manufacturers to act as partners and move product off shelves and out the door! BP
The author, Jackie DeLise, is director of business development at Liljeqvist & Wargo Inc., a strategic branding and design consultancy dedicated to creating leadership through design innovation. Jackie can be reached at 203.454.2592 or firstname.lastname@example.org.
I want to hear from you. Tell me how we can improve.
In this issue of Packaging Strategies you will find “The Latest Packaging Innovations Changing the Rules,” “The Future of Cannabis Packaging” and “OEE and a Multi-Metric Approach,” along with articles on beauty and alcohol social media influencers, batch vs. continuous and aseptic sterilization, challenger brands bridging ecommerce and retail, and a popular Michigan brewing company who has what it takes to tap into the community.