Post-pandemic retail marketing needs closer evaluation – Moneycontrol

Technology enables marketers to present consumers with a variety of realistic packaging or promotion depictions in order to measure consumer purchase intent.

Technology enables marketers to present consumers with a variety of realistic packaging or promotion depictions in order to measure consumer purchase intent.

Marketers of fast-moving consumer goods (FMCG) such as soap, toothpaste, shampoo and other items spend a lot of resources trying to influence consumers’ purchase decisions at the point of sale in retail outlets and supermarkets. This investment is necessary because the tactical activities reach consumers while they are present in person in the store and ready to make a purchase. The question many marketers fail to ask, however, is whether or not these efforts accomplish their objectives that include driving incremental purchases and impulsive decisions. More importantly, how much of this will contribute to profitable consumer response?

After more than two years of pandemic lockdowns and reduced footfalls to retail outlets, marketers must really need to know the reality today of spending at the point of sale in a brick and mortar retail space. To get some answers to the above questions, marketers should measure the sales response and the returns on their in-store marketing investment.

Retail marketers embrace several tactics from discount stickers to in-store TV ads to influence the purchase decisions of shoppers. There are a few different research methods that can measure the sales responsiveness and return on investment (ROI) of the in-store activities. For instance, for marketing events that are done frequently in-store and are routinely tracked via marketing databases, statistical modelling is an effective and reliable tool. Sales information is available for most retail channels and includes details about a product’s sales and price variants. When using them in conjunction with known in-store marketing activities, marketers can develop analytical models that quantify the sales response associated with each in-store activity.

Most B2C marketers deploy marketing mix models such as the ones discussed above to measure the consumer responsiveness arising out of their in-store marketing initiatives including taste counters and discount coupons. Temporary price discounts, secondary product displays and in-store contests are some other tactics marketers are using.

Marketing mix frameworks help quantify how each critical activity adds to sales growth over a period of time. Once quantified, the rise in sales resulting from the in-store activities can be compared to the money investment to calculate the ROI of marketing. Moreover, marketing mix models are useful to forecast future sales performance from similar activities. Since marketing response is quantified for each marketing activity, the model can be used to compare and analyse various proposed marketing tactics to optimise sales and ROI as part of the business planning process. Such simulation capabilities give marketing mix models a useful shelf life well beyond that of other research tools.

However, such modelling need not necessarily be the right solution when the marketing activities are subtle or more long-term in nature. This is the case with a new package design or various forms of in-store advertising and in-store couponing. Under those situations, SME marketers should think of designing an in-store experiment to gauge the sales response to marketing activities.

Here’s a way to do the experiment: Divide a retail chain into one or more test cells, based on the number of marketing vehicles to be measured. Once it is done, select a cluster of stores comparable to the test stores where there is no promotions are planned. After a specified time period of marketing activity, quantify the sales difference between the test stores and control stores. Use statistical techniques for evaluating controlled experiments.

While designing such experiments, it is best to keep objectives simple. Trying to measure too much and too many at once will create more complexity in the measurement and will disable the ability to grasp what elements really worked. Select one or two key marketing activities and test for responsiveness and ROI. Take cognizant of the impact of purchase cycles and seasonality for the product on sales and therefore on the marketing effectiveness. Plan to give the experiment enough time to neutralise such variations.

In order to ensure that the intended in-store marketing tactic actually occurred, constitute a periodic in-store audit. The audit will confirm if the appropriate marketing activity was in place at the appropriate time during the test cycle. Sometimes the intended sales result of a test is not achieved simply because the in-store marketing event was not executed correctly – or was implemented only in a few stores and for less duration than planned. By accounting for this sort of errors early on during a test, one can make adjustments and salvage the testing effort.

muneer column smart growthAll in-store measurements in the post-COVID era have to be practical and inexpensive. If not, it is better to stay with consumer testing as usual. For instance, if multiple package designs have to be tested, some with and some without associated on-pack promotion tie-ins, it could turn out to be too costly to produce all the varieties of packaging of interest for an in-store test. A consumer survey technique could be used to assess consumer responsiveness. Technology enables marketers to present consumers with a variety of realistic packaging or promotion depictions in order to measure consumer purchase intent. By using augmented reality or virtual reality and metaverse technology, marketers can simulate multiple designs at very low costs and conduct the most inexpensive research.

This design technology, along with consumer choice modelling tools such as conjoint analysis, allows marketers to measure the efficacy of a variety of in-store marketing activities at relatively low costs. Metaverse simulations such as the WowCity created by India’s first metaverse company (WowExp) can be helpful for SMEs as well as FMCG marketing giants.

Whatever be the marketing vehicles used for driving in-store purchase decisions, look at investing the time and money to measure the impact of such efforts. This will help fully understand what works and what doesn’t. It will also optimise spending across all in-store marketing options and learn from past failures or successes. It is critical in current times to quantify both the sales response and ROI of most in-store activities, especially when the lockdowns have disrupted buying behaviour and attitudes.

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