Maximize shopper marketing ROI

The history of store brands is one of growth, but not without some continued challenges. From the plain brown packaging with black print, retailers have very rapidly evolved store brands into highly sophisticated product lines, with SKUs available for a wide range of shopper preferences, including various price points, and consumer needs, including health and wellness propositions.

In addition, retailers have become much more sophisticated marketers and advertisers of store brands, accelerating store brands success. Indeed, more than 99 percent of Americans buy at least one store brand product, and 47 percent more Americans were buying store brands at the end of 2012 than before the last recession began, according to IRIs November 2012 Times & Trends report, \"Reversal of Fortune: National Brands Pick up Gains on Private Label.\"

Despite the phenomenal growth of store brands, there are still many untapped opportunities. Store brand unit share of total spending within U. S. households remained relatively flat for the second consecutive year, at 17.1 percent in 2012, compared to 17.3 percent in 2011 and 17.4 percent in 2010, the Times & Trends report states.

However, store brands are growing in importance as they relate to total share of store and among key shopper segments, which is a challenge the national brands will have to address. IRIs 2012 EconoLink shopper segmentation by income found that while the U.S. economy is somewhat improved, a significant amount of purchase volume occurs from the two most pessimistic groups: the \"Downtrodden\" and the \"Cautious and Worried.\" Among the six segments into which EconoLink divided shoppers, these two groups accounted for 43 percent of survey respondents in 2011 and 39 percent in 2012.

Downtroddens, 14 percent of shoppers in IRIs 2012 EconoLink survey, have a median household income of $38,000 and a generally pessimistic view of the economy and their personal financial situations both today and in the future. They tend to skew their shopping trips toward Walmart and dollar and convenience stores. Downtroddens are driven to save money and collect coupons from both newspapers and online, like loyalty card discounts and use store kiosks and touch-screen digital signs to find deals. They also are willing to try new brands and store brands to get a lower price.

Representing 25 percent of respondents, Cautious and Worried shoppers have a median income of $42,000 and have an outlook on the economy and their personal financial situations similar to the Downtroddens. They tend to concentrate their shopping trips on Walmart and are very price-sensitive, but dont actively collect coupons. They are not overly influenced by store circulars, signs or displays like their Downtrodden counterparts are; however, they are willing to try store brands to get a lower price.

Even among other respondent groups that are more financially stable, shoppers are exhibiting price-sensitive activities that open the door to store brands. Even \"Savvy Shoppers,\" with the highest median annual income at $81,000, visit mass merchandisers, shop with a quest for value, tend to be heavy users of coupons and store circulars, and like loyalty card discounts, the EconoLink survey found.

Reflective of the growing importance and opportunity of store brands is ConAgras recent purchase of Ralcorp Holdings for approximately $5 billion earlier this year, which serves as a proof point for the continued potential for store brands. ConAgras bid of $90 per share of Ralcorp represented a 28 percent premium over the companys closing price on the day of the bid.

\"This really recognized that private label is going to be probably the biggest growth sector in the food industry for years to come,\" ConAgras CEO, Gary Rodkin, noted in an interview with Bloomberg last November when the bid was accepted.

As store brand marketers continue to build on their successes, the quality of the insights on which they make their decisions will remain critical. Below are six strategies that can help ensure marketers receive the highest ROI for their spend on shopper insights.

1 - Ensure insights address questions critical for store brand successes: These include core questions such as \"Which shoppers should we study?\" \"Who within the organization will use the insights?\" and \"How will they use the results?\"

2 - Insights should focus down to the household level: Store brand marketers should take advantage of todays shopper segmentation solutions that allow them to view decision-making down to the household level.

3- Insights should address the various phases of the shopping experience: These include when the shopper is at home researching products and making lists, while they are traveling to the store, and once they are in the store making their final decisions.

4 - Factor in growth and profitability: Insights should assist store brand marketers in supporting existing products and in introducing new ones that contribute to retailers growth and profitability targets.

5 - Pay extra attention to digital, social and mobile: These new communication platforms are increasingly important parts of the marketing mix. IRIs April 2013 DigitaLink research divides shoppers based on their use of digital marketing. The \"DigitizeMe!\" segment, those who are most comfortable integrating digital capabilities into their shopping experience, was the fastest-growing category, accounting for 22 percent of surveyed shoppers, as compared to 12 percent in IRIs 2011 study.

6 - Recognize the different \"paths to purchase\": Marketers should understand which types of shoppers receive information from which media – website research, online ads, mobile ads and/or in-store circulars, for example.

Changing shopping patterns resulting from the last recession; the explosion of digital, social and mobile solutions to segment and reach specific shopper segments; and changing econometric conditions combine to make securing accurate and actionable insights more important than ever for store brand marketers. High-quality shopper insights that are accurate and actionable are focused down to the household and store level. This enables integrated campaigns across the various phases of the shopping experience that focus on profitability and growth so marketers can identify and take advantage of the new \"paths to purchase\" that are invaluable in meeting todays challenges.

Robert I. Tomei is president, consumer & shopper marketing, for Chicago-based Information Resources Inc. (IRI). He oversees the growth, development and management of the companys Panel, Testing and Loyalty businesses.