brandcentric blog

Well, it was over before it really even started.  This week’s announcement that Nielsen has suspended the PRISM in-store data program was unexpected, but not terribly shocking.  The goal of PRISM was to define generally accepted metrics for in-store marketing and merchandising along with syndicated data from a network of participating retailers.  This program would have set the stage for a massive reallocation of marketing dollars from traditional media to in-store activities.  CPG marketers, including Procter & Gamble were very excited about the prospects for PRISM and the in-store visibility it would finally provide to the industry.

That was until Walmart unceremoniously backed out of the program last month.  This single move took the wind out of the sails for Nielsen’s ambitious plans.  Getting this program off the ground without Walmart will be difficult at best, given that many manufacturers source up to 25% or more of volume through this single retailer.

So where does this leave an industry that desperately needs deeper in-store marketing and merchandising visibility?   Continuing to throw dollars at legions of in-store merchandising audit teams doesn’t scale and isn’t cheap.  Inferring in-store compliance from the patchwork of retail POS and syndicated market data won’t deliver a consistent, comprehensive set of causals to rely on.

Ultimately innovation will prevail and save the day.  Perhaps an idea like Store Eyes, which I blogged about recently, will provide that right balance of rich store-level data in an affordable and scalable fashion.  I sure hope someone capitalizes on this opportunity, and real soon.

From a CPG manufacturer perspective, Wegman’s has consistently held an open and progressive approach to working with the vendor community.  Specifically in the area of pricing and promotion strategy, the upstate New York retailer has been a leader in adopting new approaches that eventually extend out to the mainstream retailers.

In 2007 Wegman’s shifted from a Hi/Lo (higher base price with frequent promoted price points) pricing model to EDLP (everyday low price) program throughout the store.   Danny Wegman, CEO of the independent grocery chain, did a little preemptive damage control and had this video posted to YouTube outlining the strategy shift rationale.

His audience is clearly the consumer base and the script is somewhat forced, but I thought Mr. Wegman did a decent job of explaining why the shift is ultimately good for consumers.  As added entertainment, pay attention to the Ross Perot-like charts that Wegman creates to drive his points home.

It’s hard to deny that digital coupon distribution is poised for a breakout year.  According to Scarborough Research, 11% of US households printed coupons via the internet in 2007 (up 83% since 2005!)  That figure has no doubt grown since this study was executed, given the multiple price advances manufacturers were forced to take in the first half of 2008. 

To add some perspective to this, newspaper FSIs still reign supreme for reach in coupon delivery, with 53% of households obtaining coupons through this medium (up just 8% since 2005).   And other delivery vehicles such as in-store, direct mail and product packaging will continue to have their place.

But CPG marketers now have some pretty interesting choices with how to deliver coupons to consumers in the digital realm.  Here are three different approaches that all have their pros and cons:

1. Printable coupons -  Consumers visit coupons.com (or one of their distribution partners), select desired coupons, print locally and then redeem during their next shopping trip.  The initial fear some manufacturers (and many retailers) had with printable online coupons is print fraud.  And to an extent, the concerns are still very real.   Coupons, Inc. has invested significant R&D into minimizing unauthorized prints, but fraud persists. Still, this approach accounts for the vast majority of digital coupon distribution to date.

2. Loyalty card integration- This approach is intriguing, as it eliminates the print fraud concern and provides a more streamlined consumer experience.  In this case consumers select desired coupons online and electronically “deposit” the coupon as stored value onto their retail loyalty card.   During their next shopping visit, the value is automatically deducted from their card if the qualifying item is purchased.   The big hitch with this approach is that participation today is limited to Kroger and its affiliate retail banners.  AOL’s Shortcuts and SoftCoin’s eCoupon program for P&G are the two technology providers driving this innovation.

3. Mobile delivery – This model is still in its infancy, but offers a rich opportunity to engage consumers in a more meaningful way.  One entry point is to offer and deliver mobile coupons to consumers during the shopping trip, while a buying decision can be affected.  Companies like Cellfire  can push discount offers to a mobile phone and/or leverage electronic value deposit to select retail loyalty cards, as in approach #2 above.

It’s an exciting time to be driving a digital marketing strategy for today’s consumers.  And within the world of digital coupon delivery, brand marketers have a pretty interesting array of choices to draw from.

Catalina Marketing made a pretty sizable investment upgrading their printer network from black & white to color in 2007.   I have to say, the color coupon print outs are more attention-grabbing and engaging.   Catalina has since focused their message to brand marketers around the network as a viable alternative to traditional media.  Using Catalina as a targeted marketing vehicle is indeed one way to reach a defined demographic more efficiently based on purchase history.  My experience is that Catalina coupons can redeem at 5% or higher, vs. the half-point to 1.5% redemption (on a good day) for FSIs, albeit off a much smaller distribution.

This video is a pretty interesting overview of how Catalina is marketing the service to brand folks focusing on the targeted marketing message.  My only real question is, what’s up with the caveman harrassing the shopper at 1:03?