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Recently, I attended the Shopper Insights in Action conference in Chicago. The conference centred on strategies for improving data gathering, segmentation and execution inside CPG retailers, with the goal of more effectively understanding and reaching consumers at the point of sale. A short recap of the event is available here.
The improvement of shopper marketing techniques has a particular relevance for the soft drinks industry. High value categories like carbonates and juice have been in a state of decline in the developed markets of North America and Western Europe. Global brands are finding more growth opportunities in emerging economies, but healthier lifestyles are having a global impact on the appeal of major soft drinks brands. Traditional forms of brand building and consumer engagement – TV advertising, billboards, or sponsorship – do not seem to have the same impact when consumers are inundated with many channels of content and unprecedented product choice.
The increasing prevalence of smaller, impulse beverages (as opposed to larger, take-home servings), the shifting landscape of retail channels and the consistent importance of seasonal purchasing behaviours make in-store activation the best way of reaching potential beverage consumers.
The soft drinks consumer is more impulse driven, as immediate consumption grows relative to packaged drinks consumed later, in the home. As nutritional information and healthier lifestyles become a more important part of the decision making equation, the trend towards impulse in the store may seem counter intuitive, with attitudes to sugar, calories and product quality largely shaped by information obtained outside the home. Yet for sweeter, high calorie beverages (particularly carbonates or juices), single-serve purchases in convenience channels (a CSD bottle purchased on a whim at a forecourt retailer or corner shop) have outperformed the multipacks and multi-serve bottles that used to be on family grocery lists. Smaller package sizes and ‘once in a while’ appeal as a refreshing treat have contributed to this shift.
Brands with particular ‘impulse’ appeal have been the recent winners in otherwise slow growth categories. In quarterly reporting this week, PepsiCo reported positive US growth for its Mountain Dew Baja Blast and Naked packaged juices: two products that break down very differently in terms of consumer segmentation and pricing, but both beverages that have succeeded from the chilled impulse cooler and – in the case of Baja Blast – in partnership with fast food retailer Taco Bell.
A natural consequence of impulse purchasing is more shopper decision making at the point of sale. A consumer that was not planning to make a purchase before entering the retailer may be convinced to indulge through effective in-store materials, promotion and enticing presentation. Placement is also key: in the case of many chilled single-serve juices, products benefit from their location next to fresh fruits and vegetables, with complimentary displays helping to convert fresh foods shoppers into juice consumers. Chilled juices merchandised in supermarkets next to natural or fresh produce have outperformed ambient juices in other parts of the store. In c-stores, impulse coolers have never been more crowded in terms of available products and mix. In this environment, brands must stand out on the busy shelf, enticing and educating the consumer through strong packaging, trial and displays.
The second reason for more in-store marketing focus is geographic: as emerging markets take on more importance to beverage company bottom lines, the retail environment that global soft drinks brands attempt to serve becomes more fragmented, and more traditional. Many of the newest consumers of packaged soft drinks are encountering a brand for the first time in a traditional retailer (whether that means traditional, independent grocer in Latin America or traditional Indian fairs.)
The big, integrated marketing campaigns of major global brands can be adjusted to these retail channel changes: but one size does not fit all. Earlier this summer, Coca-Cola worked to win shoppers in-store through a combined brand/shopper marketing campaign around the FIFA World Cup in Brazil. Both modern and traditional retailing channels were involved in the Latin American region of the campaign. The company identified zones of the typical independent convenience store: near the entry way, in the aisles of centre-store next to complimentary foods or snacks, and next to the beverage products themselves. Each zone obtained a specific type of in-store display for TCCC brands. Additionally, individual displays were created for leading retail partners in each region. Materials were tweaked and tailored (sizes, licensed images, colours) to the needs of a specific channel or retailer, while retaining the cohesive brand message of TCCC’s FIFA World Cup campaign.
The unique seasonality of the drinks industry also increases the significance of marketing in-store. Warm summers, holiday weekends and other social, outdoor occasions are still periods of high volume for soft drinks relative to the rest of the year. As multipacks of soft drinks are dropped from the weekly shopping list, it is important to craft shopper campaigns that instead persuade consumers at the point of sale, but through some other method than unsustainably low seasonal discounts. Event marketing can be important, particularly surrounding events that are large scale social or family events that coincide with these seasonal periods of high traffic. Coca-Cola and its rivals have placed a tremendous amount of emphasis on its sponsorship of major sporting events or major awards ceremonies. While traditional engagement and awareness through TV and billboards still help to keep these brands top-of-mind, it is the in-store element that drives transactions.
Despite a slower growth environment for high value beverages, not all channels or shopping missions are created equal. Planned shopping trips may be changing, but impulsive purchases to satisfy a need for refreshment, energy or hydration remain an opportunity. In this environment, engaging the shopper at the point of sale is the best way forward. Strong packaging paired with intelligent, attractive and informative merchandising at the point of sale remains the most effective way for brands to succeed.