Whats Changing In The World Of Consumer Goods
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@tobydesforges slide deck from the "Shopper Marketing in the Digital World" workshop on July 5th 2012
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Whats Changing In The World Of Consumer Goods
- 1. What‟s changing in the world of consumer goods? www.engageconsultants.com facebook.com/engagetheexperts twitter.com/shopperexperts
- 2. Consumer goods is an enormous industry Top 250 companies turnover US$2.8 trillion* Globally these companies create profits of US$240 billion* Since 2008 the top 250 companies have grown annually by less than 4%* * Source Deloittes – “Global Powers Of The Consumer Products Industry 2012”
- 3. How it all started Developing Drive depth powerful of brands distribution
- 4. This model started to get shaky in the 80s Post-war scarcity 1950‟s Power in the Mass media “Consumer hands of Creation of consumer Marketing” manufacturers brands 1980-90‟s Retail consolidation “Trade Power moves Brand proliferation Marketing/Category towards retailers Media fragmentation Management”
- 5. Consumer goods is no longer fast moving! CAGR 2008 - 2010 10% 8% 6% 4% 2% 0% Consumer goods Retail Pharma and Biotech Mobile communications Source: Deloiites, Ovum, Imap, engage analysis
- 6. Today media is personal
- 7. 84% of people now use the internet for information about a product Source used by media type 84% 83% 82% 81% 80% 79% 78% 77% 76% 75% 74% Traditional media Internet sources In-store marketing Source: Google inc. 2011
- 8. Isn‟t this just for travel, auto or electronics? Global monthly searches 10 Millions 9 8 7 6 5 4 3 2 1 0 Coca Cola Dove Gillette Colgate Pantene Wrigley Shampoo Source: Google inc. 2011
- 9. Not in Asia? Facebook Users Facebook Users China (25) Sri Lanka (20) South America, 80,9 Africa, 30,468, 35,080 040 Australia, 12,8 Vietnam (16) 62,760 UAE (14) Sinagpore (13) Europe, 207,4 Asia, 166,498, 74,560 640 Hong Kong (10) North America Taiwan (6) , 205,629,460 Thailand (5) Malaysia (4) Philippines (3) Indonesia (1) 0 20,000,000 40,000,000
- 10. Retail is the biggest business on the planet Top 10 retailer's sales WalMart's sales 1100 450 Billions Billions 1050 400 1000 350 950 300 900 250 850 200 800 150 750 700 100 650 50 600 0 2000 2000 2010 2010 Source: Deloittes Global retail report/Wal-Mart annual reports/press reports/& and I holdign sreports/Trade Insight Trade global spend survey 2010
- 11. And retail consolidation will continue 52 50 48 48 47 59 56 54 65 61 48 50 52 52 53 41 44 46 35 39 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Modern self service trade Traditional counter service Source: Nielsen “Retail and Shopper Trends Asia Pacific 2010
- 12. Shoppers are retailers‟ lifeblood, and have more choice than ever More often More Spending shoppers more Better returns on capital employed
- 13. In many parts of the region hypermarket growth is slowing 32 29.8 30 29.2 28 26 24 22.8 21.7 22 22 21.4 21.2 20.7 20 Taiwan Malaysia Thailand Indonesia 2009 2010 Source: Nielsen Asia Retail and Shopper Trends 2011
- 14. Whilst smaller stores are gaining ground Convenience stores Supermarkets and minimarts 35 27 26.5 26.1 26 29.8 30 28.8 25 24 25 23 22 20 21.4 18.5 21 16.7 20 15 12.6 18.9 12.2 19 10 18 Taiwan Thailand Singapore Malaysia Indonesia 2009 2010 2009 2010 Source: Nielsen Asia Retail and Shopper Trends 2011
- 15. In as a result in Taiwan, Indonesia and Thailand Main shops are becoming less frequent Shoppers MAIN SHOP Frequency (% of grocery shoppers) 5 14 15 26 23 36 26 25 22 51 29 55 48 61 23 29 34 64 67 19 24 26 62 54 49 45 28 30 24 21 18 9 Weekly 2 Weeks Monthly Less Often 4% Source: Nielsen Asia Retail and Shopper Trends 2011
- 16. But what happens when 20% of sales are online?
- 18. Retailers “sell” a „virtuous cycle‟ Higher volumes enable lower costs Higher volumes Lower costs for key enable lower suppliers selling prices Lower selling prices drive volume Pitch: this is mutually beneficial (!), driving volume through lowering price Source: B&Q, Retail Outsourcing Ltd.
- 19. This delivers results for big retail
- 20. Trade spend has grown from 33% of marketing spend, to almost 60% Expenditure as a proportion of budget Trade Promotion Consumer Promotion Advertising & Media 1978 1998 2005 Source: Donnelly Marketing and Accenture Analysis 2006
- 21. 70% of promotions lose money – US$ 196 billion could be wasted every year Manufacturer : Lose Manufacturer : Win Retailer: Win Retailer: Win 60% Manufacturer : Lose Manufacturer : Win 15% Retailer: Lose Retailer: Lose 10% 15% 31% of CPG companies cite poor compliance as a key issue* Source: Manufacturer data & analysis, Nielsen Data, (CAS GMBH)/ Analysis/Trade Insight Trade global spend survey/ Deloites
- 22. The consumer goods industry could almost double its profits by investing effectively in-store The industry wastes nearly as much money in retail as it earns in profit 250 Billions 200 240 billion 150 100 50 0 Industry profit -50 (198 billion) Wasted in-store expenditure -100 -150 -200 * engage analysis based on Deloittes – “Global Powers Of The Consumer Products Industry 2012” 2.5bn 500m
- 23. A model invented in the 50‟s can‟t be made to work any longer! Post-war scarcity 1950‟s Power in the Mass media “Consumer hands of Creation of manufacturers Marketing” consumer brands 1980-90‟s Retail consolidation “Trade Marketing Power moves Brand proliferation /Category towards retailers Media fragmentation Management” Personal media 2010 Channel Power in the hands “Shopper proliferation of shoppers Marketing” Globalization
- 24. What is shopper marketing? www.engageconsultants.com facebook.com/engagetheexperts twitter.com/shopperexperts
- 25. Consumers and shoppers are different
- 26. Consumer behavior is a cycle Needs and desires Experience Occasions Availability to consume
- 27. Shoppers make products available to consume Shopper’s interpretation Needs and desires Shopper’s needs Experience Outlet selection Occasions Solution location AvailabilitySelection Product to consume Purchase Availability to consume
- 28. Purchase behavior is linear Shopper’s interpretation Shopper’s needs Outlet selection Solution location Product Selection Purchase
- 29. This not shopper marketing!
- 30. What is shopper marketing? “The systematic application of elements of the marketing mix to affect positive change in shopper behavior in order to drive consumption of a brand”
- 31. True, integrated, shopper marketing creates coherent links between the end consumer and the in-store environment Consumer Shopper Channel In–store Investment priorities behavior priorities marketing in customers
- 32. Shopper marketing in a digital world www.engageconsultants.com facebook.com/engagetheexperts twitter.com/shopperexperts
- 33. Digital has the power to power to personalize consumer marketing Needs and desires Experience Occasions Availability to consume ZMOT proves this potential
- 34. Digital applications can enhance shoppers‟ understanding Consumer’s demand Search, ratings, revie Shopper’s ws, friends and interpretation family opinion. Shopper’s needs Outlet selection Solution location Product selection Purchase
- 35. Digital enables shoppers to meet their needs better Consumer’s Store locations, demand price points, offers Shopper’s and coupons. interpretation product availability – buy now or buy Shopper’s needs later? Outlet selection Solution location Product selection Purchase
- 36. Digital has the power to influence shopper‟s behavior in-store Consumer’s demand Shopper’s interpretation Shopper’s needs Outlet selection Find products, check Solution recipes, review price location points, seek alternatives, download Product coupons, PAY, and selection exchange loyalty data Purchase
- 37. BUT Integrated shopper marketing is already complex Consumer insight Portfolio strategy Brand Brand Brand Brand priority priority priority priority 1 2 3 4 Shopper insight Customer plan In-store In-store In-store In-store Channel Channel blueprint blueprint blueprint blueprint plan Channel understanding Customer Customer insight plan In-store In-store In-store Channel Channel blueprint blueprint blueprint plan Customer plan In-store In-store Channel Channel blueprint blueprint plan Customer plan In-store In-store In-store Channel Channel Customer blueprint blueprint blueprint plan plan
- 38. Impacting on 172 different business processes In–store Consumers Shoppers Channels Customers Marketing Customer and Consumption drivers Channel dynamics Insight and trends Path to purchase and trends Purchase drivers distributor drivers and trends Key customer and Portfolio and brand Channel and route Strategy strategy Shopper strategy to market strategy In–store blueprints route-to-market strategy Brand investment Shopper investment Trade investment Trade investment Trade investment Investment framework framework framework framework framework Annual Brand plans and Shopper plans and Channel plans and In–store activity plan Customer and forecasts distributor plans plans forecasts forecasts Channel Brand expenditure Shopper expenditure In–store activity Customer and Budgets budgets budgets expenditure budgets distributor budgets budgets Product and ATL Path to purchase Channel plan In–store marketing Execution execution execution execution execution Selling and negotiation Review execution and Review execution Review execution and Review execution and Review execution and Review portfolio and brand shopper strategy and channel progress towards customer and route-to- strategy strategy blueprints market strategy
- 39. In an industry under enormous pressure Trade Increased spend out competition of control Media Raw Material fragmentation inflation Massive Trade pressure on Talent scarcity consolidation margins and inflation
- 40. Digital seems likely to increase the pressure on marketing budgets Forecast global spend Global Spend (US$ Billions) 600 500 400 Non- Non- digital, $382. 300 digital, $335. 06 47 200 100 Digital, $117. Digital, $195. 87 0 94 2010 2015 Source: PWC 2012
- 41. Five questions that you should ask to drive real returns Which Where What is What shoppers can you required What consumption will influence to investment opportunities support these influence is needed? exist? these? shoppers? behavior?