What happens when that is wrong?  What does marketing do when it STARTS with the purchase?

This is an extreme version of what Procter calls “store back”.  However, based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it.  In those cases, it all STARTS with the purchase and ENDS with awareness.  The purchase funnel is totally flipped.

When it all starts with the purchase, the role of marketing communications changes.  Now marketing must get the product noticed at shelf and impart meaning to it instantaneously for the shopper.  Packaging, shelf placement, thematic displays, signage, mobile messages that are location-aware, shopper offers based on that shopper’s history, and master brand familiarity become the main vectors for creating meaning.  In this communications model, when someone encounters a product they were unfamiliar with they should be able make sense of it instantly; to tell YOU (the marketer) what the product is about, rather than you having to tell them in a concept statement.  After the product is bought and being used, there is more sense-making that occurs.  If the consumer is really into the product as they are using it, now you have an opportunity to build engagement:  they might join a community, become a fan in Facebook, share comments, start seeking out advertising and recalling it, seek out the brand’s “creation story”, etc.  In this scenario, the impact of brand narrative, brand values, social media engagement, etc. come AFTER the purchase, so they solidify rather than precondition the brand-customer relationship. 

Could it really be that it all starts with the purchase?  Well, for certain types of products and retailing situations, I believe it does.  Consider this:

• Conduct a study to measure the percent of products bought for the first time that are discovered in-store (I got 50%+)
• Do you think the products bought for the first time on impulse in a Kroger’s, Trader Joes, Costco, Target, etc. are all the same and were previously known? If not, then you believe that brand adoption can START via the shopping experience.
• Consider shopping styles that people have, reflecting their relationship with a product category.  Can you imagine categories (e.g. artisan cheeses) where shoppers like to explore and find new interesting products to buy?

This last point is perhaps the most important.  People have different shopping styles for different product categories which means that the heuristics they use to make decisions are systematic.  You might not ever buy carbonated soft drinks the way you buy interesting dips that you just tried at a tasting station.  This is where behavioral economics intersects marketing; the study of how people decide is often more interesting than theoretical purchase intentions.  Hence, some products will predominantly be bought via a process that starts in-store.  Others will be bought based more on the traditional marketing model requiring awareness built via mass media. You need to study HOW people decide in order to understand when to start from the traditional end of the funnel and when you start from the other end of the funnel.

When it all STARTS with the purchase, everything that you thought was upstream becomes downstream and the thing that was the most downstream of all, the purchase, becomes the most upstream event. 

This is “store back” on steroids.

Now, the researcher in me has to ask the rhetorical question, “Does the marketing community have the research tools to act on this new way of thinking?”  Rhetorical because, I don’t think we do.

In fact, it’s happening already as Stop & Shop rolls out Scan It! (by Modiv, Inc.) to more and more stores.  You walk into a store, scan your frequent shopper card, and take a handheld device.  Offers that are customized to your purchase history and to your exact location in the store pop up on the screen.  You can scan and bag your groceries as you go and then check out becomes a breeze.

Comments I found online at a forum called couponmom.com are generally positive.  Here’s an example.

“I do it all the time at Giant Food. I love it. Gives me extra discounts on items. It takes inventory of what you buy and then the next time you come in it might give you .50 or 1.00 off that item, and you can use coupons with it. When you get to the register the cashier has a special barcode she scans to let the register know a self scan is checking out…It does make your trip slow…But it’s well worth it. The first time I used it I bought a oven ready roaster $ 4.99, scanned it and about two minutes later the thing went cha’ching and bam BOGO free roaster. It was a huge chicken. (So) I got four that day.”

In addition to (or in replacement of) a dedicated device like Scan It!, a smart phone brings the whole internet and social web into the store.  Already iPhone apps are here like Redlaser that allow you to scan a UPC code and price comparison shop.  In Asia, QR codes (2-dimensional bar codes) are everywhere and they are starting to come to the US.  If your smart phone has the right (free) software downloaded, these codes on packages or ads bring you to a website, offer opinions, and deliver the rich experience of augmented reality on demand.  Layar (based in the Netherlands) has created eye-popping augmented reality for Android phones where you choose your “layer” (e.g. restaurant ratings, or subway stops, etc.) as you walk around a city. (Click here for video). It would be easy to imagine how a shopping application could bring brand stories to the shopper right at the point of purchase that can be told via sight, sound, and motion.

Marketers, retailers, and shoppers will all want this marketing convergence to happen:

1. For most products, a high percent of purchases (50% or more) are still up for grabs as people shop so there is tremendous potential for digital mobile marketing to provide leverage at exactly the right shopping moment.
2. Shoppers are probably more likely to actually SEE ads on their mobile devices then on the shelf.  Paco Underhill says people don’t look up when they shop but anyone walking in Manhattan knows that people constantly look at their cell phones.
3. In store messaging offers attractive reach relative to many other media properties in our long-tail media world.
4. Both retailers and manufacturers will want this to work. Retailers like anything that drives sales in their stores and manufacturers will want to extend their brand stories, meal solution suggestions, etc. into a retail environment over which they otherwise have little control.
5. Marketers will be excited by the possibilities of precisely measuring ROI.  Especially if this is tied into frequent shopper data, we would know which messages got served up to which shoppers, and what they bought.  That seems pretty airtight.
6. Last but certainly not least, shoppers are time-pressed and budget-constrained.  Bringing addressable messages, information on demand, and discounts right to the point of purchase on one of the most important devices in their lives just seems like a trifecta that most shoppers would welcome.

It’s coming.  As William Gibson said, “The future is here.  It just isn’t widely distributed yet.”

Now some are making a convincing argument that marketers are starting at the wrong end of the funnel.

Marc Pritchard Procter’s CMO calls this new thinking “store back”, and told P&G agencies (not just the shopper marketing ones) that it means that marketers must ALWAYS have the store in mind when developing a new product, a new idea, a new statement: if it does not work at the store, it’s a miss”.  Peter Hoyt from the In-store marketing institute calls it “shelf back”, and The ARF (and others) calls it path to purchase.  Leo Burnett (the man) said, “Plan the sale as you plan the ad”.  This certainly seems to make sense when half or more of purchases down to the brand level are determined at point of purchase.

As this thinking takes hold, I see three mega-marketing trends

• Merger of digital and shopper marketing

Now, we’re told that digital marketing and social media are the hottest things on the media landscape, so how does that tie together with starting at the other end of the funnel? I think that digital marketing and shopper marketing will increasingly merge together.  Mobile devices will allow people to bring information, offers, and friends (virtually) into the store with them.  The internet is no longer only on your desktop, it is everywhere including right in the store. This gives manufacturers another way to reinforce their relationship with the shopper right at the decision moment even as that shopper is in an environment they otherwise do not control. Consider the apps on the iPhone (like Kraft’s recipe app); early days but shows what can be.   Consider the use of QR codes in Asia.

From a retailer perspective, they know they need a digital presence but aren’t sure how clicks translate into bricks.  However, we are still thinking of the digital store and the physical store in some disjoint way and they need to be merged into a more seamless experience.  They will be.

• Manage mega-brands across all media, activate product sales at retail

Marketers will increasingly emphasize the growth of mega-brands with consistent meaning across product categories and across borders.  Traditional and other media (including social media) will be used to make these brands are salient as possible and point of purchase activation will be used to close the sale so that, even when a new SKU is encountered in the store by that known brand name, it has immediate acceptance.

• From a research perspective, more emphasis will go towards understanding people as shoppers.

The mating dance of consumer preferences and shopper experience resulting in purchase outcome is what the “path to purchase” concept is all about.   I imagine that more research approaches will also test a product’s (new or existing) message by what it looks like at retail rather than what it looks like in its own print ad or TV commercial.

We are truly at the precipice of new marketing thinking. On Thursday, the ARF will talk more about this at its Shopper Insights council.

However, brand extensions are not always a good idea.  Through the years, I have been involved with forecasting the sales potential of hundreds (maybe thousands) of line and brand extensions and wanted to share what I think are some important insights.

Insight #1—a brand extension strategy for launching a new product only works if your existing brand has high enough parent brand penetration.

The success of a brand extension as has much to do with pre-existing brand equities as it does with the characteristics of the new items.

In the early 80s, General Mills launched a new flavor of Cheerios called “Honey Nut Cheerios”.  Concept test results were good but not off the charts yet when this new flavor was launched, it got an unpredictably high level of purchase trial given its modest advertising and promotion budget.

When I analyzed actual in-market results regarding trial rates for Honey Nut Cheerios and many other line extensions separately by those who bought the parent brand buyers vs. non-buyers, I found that parent brand buyers had a 2-6X HIGHERHIGHER trial rate (e.g. 18% trial among parent brand buyers vs. 3% among non-buyers).  Furthermore, it was only partially explained by higher purchase intent.  The big factor was that the conversion of positive purchase intent into trial among parent brand buyers was much higher.  In fact, the knife cut both ways; people who did not buy your brand were LESS likely to try the new line extension relative to their stated purchase interest than if it had a new brand name.  Hence, overall trial for your new brand is the mixture of trial rates (one much higher, one a little lower), weighted by what percent of households buy your existing brand.  It’s easy to envision that there is a tipping point that denotes when your parent brand is big enough that a brand extension approach makes sense to consider.

Insight #2—Brand extensions that are not connected with the meaning of the base brand are destructive even though they might hit year one sales targets.

If you launch brand extensions that don’t reinforce the parent brand image you might be turning your brand into a Frankenstein’s monster of spare parts. That’s why naming Spaghetti Sauce “Prego” rather than “Campbell” or calling a premium line of autos “Lexus” rather than “Toyota” made so much sense.  It’s also why I question Starbuck’s instant coffee. What the marketer thinks is a brand extension the consumer might not view the same way. Here is how you can tell. In concept testing, if positive purchase interest towards the new product isn’t at least 30% higher among parent brand vs. non-parent brand buyers that means that your buyers are not seeing the connection between the new product and your existing brand.  This is a warning sign that, while the sales potential for the new product might be acceptable, unconnected products will share the same brand name.

Insight #3—Emphasize brand-building (e.g. advertising, social media) to build the master brand and shopper marketing and couponing to sell the brand extension.

The key point is that line extensions are bought out of preference for the brand and acceptability for the line extension, not preference for the line extension.

An extension of a brand someone buys enjoys instant credibility because users trust anything they connect with that brand. For new flavor and size line extensions you might not need anymore than to be visible in the store or offer a coupon.  Because line extensions are bought out of acceptability, there is random component to whether they buy it or not.  Therefore, the more SKUs your brand already has, the lower the trial rate will be among your own parent brand buyers.

Marketers want to use brand extension strategies as much as possible today because it is a more affordable way to introduce products but the key is having enough rocket fuel, i.e. brand equity, to get the rocket (i.e. brand extension) off the ground.

• Media habits approach: How does a marketer’s target consumer spend time with media and specifically, which media properties are “target rich” environments?  For example, online publishers often use a media habits argument to explain why they should get a share of ad dollars that is closer to share of media time.
• Touchpoints influence approach: Services like Integration or Compose are centered on self-reported approaches to prioritize which brand communication touchpoints influence someone’s brand choice regarding a particular type of product/service or in conveying a certain brand benefit.

Let me add a third approach to the mix that comes from the field of shopper insights that would have a big impact on the allocation of media spending.

• “Path to purchase” approach:  Understand the journey by which shoppers come to buy a particular brand, product, or service.  Did they decide before or after entering the store? Did they do research as they started their shopping process? How did they research their purchase?  What are the media touchpoints that best map to each leverage point in the path to purchase process?

Understanding “Path to Purchase” will change marketing and media priorities.  In most cases, it is likely to increase the budget for search, comparison shopping, and particularly in-store shopper marketing vs. using a media habits approach because those places don’t have a big share of media time but they are where the “lean-forward” action is.  Shopper insights research shows that, for many products, 50% or more of purchases and brand choices are decided on right in the store.  For such products, to put it in terms that media planners can relate to, shopper marketing is like recency on steroids.

The touchpoints influence approach might miss the mapping of a touchpoint to a brand objective.  Brand teams should have two broad classes of communication goals: creating and maintaining desired brand meaning, and reminding people of the brand as close to the decision point as possible (recency). If different touchpoints best map to specific marketing goals, the logical implication is that impressions and “reach points” across media platforms are not interchangeable or additive; this suggests that multi-platform reach calculations, a main purpose of media habits studies, become more of a media insight than a quantitative measure needed for creating a media plan.

A more important media calculation might be to create meaningful recency and  “likelihood to see/hear”  (LTS)factors for different media.  For example, in comparing TV to shopper marketing, TV might have a higher LTS factor (20 or so commercials in a show vs. 40,000 SKUs in a grocery store) but a lower recency factor vs. advertising that is right at the point of purchase.  Hypothetically, cinema advertising might have the highest LTS of all touchpoints (you’re sitting in the theatre waiting for the movie to start) but a really low recency factor.  However, the recency factor itself might be less important when marketing’s main objective is “imparting brand meaning” (say during the launch of a brand).

To address these issues of how to begin integrating shopper marketing and off-premise advertising into a well-informed media strategy, on August 20^th, the upcoming ARF Shopper Insights council will bring together gurus from their respective worlds who have not been on the same panel before to discuss this issue.

• Herb Sorensen –  Ph.D., Global Scientific Director, Shopper Insights TNS-Sorensen Associates (legendary shopper guru)
• Erwin Ephron – Partner, The Ephron Consultancy (father of recency)
• Paul Donato – EVP, CRO, The Nielsen Company (media industry leader)
• Mike Hess – Director of Research, Carat Insight (branding, shopping, and media expert)

ARF members can register for this event at no charge by going to MyARF.  For those who can’t make it, I’ll report back via this blog on what should be an amazing and long-overdue discussion.