Consumer needs Vs shopper needs … the balancing-act for suppliers

By Brian Moore

In the last issue of C&I, we floated the idea of suppliers treating independent convenience and specialist retailers as marketing outlets as well as sales outlets. In order for both parties to make the most of the potential joint-opportunities of a policy change of this size, it is vital that they each understand and integrate the consumer marketing and retailer marketing programs of their trading partner. This is especially important in a grocery market that is as highly concentrated as that in Australia.

To reach this level of cooperation, it is important to admit the potential conflicts of interest between suppliers and retailers: The retailer wants the consumer to shop in his store and is less interested in what product is purchased, whilst the supplier wants to sell his product, irrespective of where it is purchased.

Whilst the major chains are sufficiently powerful to insist that their agendas are incorporated within joint business planning, it is especially important in the case of independent and specialist retailing that these potential conflicts of interest are resolved by a joint-understanding of the consumption-shopping process. This means recognising that consumers have two need-sets or appetites - consumption needs and shopping needs - that have to be satisfied in-store.

Consumption needs

Consumers are looking for product performance, quality & reliability related to cost, brand reputation, value for money, status, pride of ownership, fashion and security.

For Australian suppliers this means understanding how their target consumers behave as shoppers in different channels and in different types of store.

Suppliers then need to use this insight to develop shopper strategies that will grow categories to the benefit of products, consumers, retailers and shoppers. Suppliers then face a very complex challenge in influencing and managing consumers' consumption needs - all wasted unless shopping needs are effectively addressed.

Shopping needs

As shoppers, Australian consumers are looking for choice, availability, price, convenience, opening hours, atmosphere, display, and opportunities for impulse purchase - all wasted unless the product performs to expectation. This means that suppliers and retailers have a high degree of mutual dependency and no more so than in independent and specialist retail.

Suppliers have always focused on satisfying the consumer's consumption needs, leaving the retailer to meet the consumer's shopping needs. But, in the current economic climate, state-of-art suppliers can achieve more by looking at things from the retailer's perspective.

The need for collaboration & cooperation

Meanwhile, independent and specialist retailers can increase profit by understanding more about the shopper's consumption process. This means that supplier should actively partner with retailers who are currently attracting the customer mix the supplier is looking for.

They should collaborate with partner-retailers in order to produce an in-store environment aimed at maximising the basket-size of every store visit, by making sure that the consumers' shopping needs are met in full. For independent and specialist retailers, in-store theatre such as displays and demonstration and sampling can do better than in supermarkets.

Major retailers have their own marketing agendas, which makes it more difficult for suppliers to influence the retailer's management of their target consumer. This will probably result in weakening the consumption marketing program, in-store.

However, it is obvious that the supplier can exert more influence within the independent and specialist retail environment. Here the retailer can help in evolving a consistent marketing-mix. Because of their large-scale buying of in-store promotional materials, suppliers can afford to provide and manage point-of-sale display materials that match the needs of the product. They can also raise the quality of in-store theatre at outlet level, in return for total compliance by the retailer.

This degree of consistent execution of a supplier's product marketing message, tailored to outlet needs, across most of the independent and specialist retail sector is bound to benefit both parties in terms of profitable satisfaction of consumer need.

All else is detail….

Optimising the consumer-shopper store visit

To make the most of a consumer-shopper's in-store presence, it is crucial that a supplier recognise that consumers have two need-sets or appetites, consumption needs and shopping needs, that have to be satisfied in-store.

The recession has made consumers more 'savvy' and, in turn, more demanding in their buying. These shoppers make higher demands of the retailer. Consumers are now beginning to understand the past 18 months of financial troubles, and are developing increasing confidence in their common sense when making purchasing decisions.

As a result, they are relating every dollar of 'discretionary' expenditure to their current and future earnings, assessing the opportunity-cost in terms of other uses of the money like never before…and providing major opportunities for pro-active suppliers.

Demanding value for money

These 'savvy' consumers are raising their own performance standards, and using them as a benchmark for every purchase. They are also refusing to outsource or allow marketers and retailers to make decisions on their behalf. Savvy consumers are becoming managers of their own consumption-need and shopping-need satisfaction, like never before.

As the newly emerging primary driver of demand, the savvy consumers need to be persuaded that their needs are being met, at a fair price, and that their purchases deliver more than expected. In other words, this new Australian consumer, if willing to spend, will no longer accept anything short of good value for money.

Combining brand marketing & shop marketing

In attempting to meet these enhanced needs, it is important that suppliers integrate their 4-P Marketing Mix (Product, Price, Presentation and Place) with that of the retailer in terms of the 8-P store Marketing Mix: Products & Assortment, Pricing, Promotional activities, Place (store location), Personnel, Physical distribution & handling, Presentation of stores & products, and Productivity.

The savvy consumer is providing an entirely new basis for suppliers to benchmark every SKU in their portfolios. This means ruthless removal of anything that does not clearly demonstrate a total match with latest consumer needs.

Suppliers and their retail partners need to make the consumer brand available in a way that shoppers want to buy, and do it better than the competition. It means a re-assessment of the customer portfolio from the same point-of-view. It means identifying and cultivating trading partners that are capable of expressing and demonstrating the brand-offering in a way that can meet consumer-shopper needs at point-of-sale, profitably.

Brian Moore bmoore@namnews.com www.kamcity.com