Activation of the shopper at the point of purchase
From picture of success to activation programs
In traditional and fragmented channels, including on-trade and immediate consumption channels that do not belong to chains, the point of purchase activation is normally done based on a picture of success. With the picture of success as a template the brand, product and service can be activated in line with shopper marketing guidelines. The picture of success template has to be developed by type of point of purchase.
Sales channels and points of purchase differ by market and activation guidelines need to be locally adapted.
The key difference between the picture of success and category management is the collaborative aspect. In category management the output is the result of a collaboration between retailer and manufacturer, normally with a third party to ensure the objectivity of the analysis. Traditional and fragmented sales channels do not have a centralized negotiation position, nor negotiating power. The development of the picture of success is the responsibility of the manufacturer, and the implementation is often done through a sales force, or through
Figure 5.12 Types of kiosk
Example of an Eastern Europe kiosk sales channel with points of purchase with different roles.
instructing those at the point of purchase. The more important the manufacturer and his brands, products and services, the more possibilities there are to impose the picture of success over other suppliers. Many manufacturers also design pictures of success for the modem retail channel as a guidance for the sales force. Depending on the level of freedom of local points of purchase within the retail chain, more or less parts of the picture of success can be implemented by the manufacturer’s sales force. The picture of success is normally adjusted to the category' management and planogram guidelines for each retailer in these cases.
The building blocks of the picture of success are centered around the type of offer in terms of product, package, price and promotion, and the activation at the point of purchase in terms of equipment, place, presentation and the prescription (i.e. recommendation). As a basis, the target consumption need states and the mix of shopping missions have to be understood. The basic offer is more associated with the consumption need state, and the detailed offering, e.g. formats and packages, and activation of the point of purchase, with the shopping mission.
Regardless of the optimum activation of each segment of the point of purchase in line with the consumption need states and shopping missions, the level of investment needs to be considered. Some points of purchase are more attractive than others in terms of sales and sales increase potential. The investment in picture of success implementation in the chosen route to market strategy and resources needs to be gauged against the sales potential to optimize the investment.
Activating a point of purchase is more than just the picture of success. It includes programs to develop the point of purchase and its staff, as well as to build loyalty and preference toward the supplier. In addition, the salespeople at the point of purchase play' an important role in building preference for brands, products and services through recommendation. The picture of success and activation program also need to be adapted over time, depending on changes in shopper behavior or due to specific seasonal events.
Figure 5.13 8Ps of the picture of success
Example of the main dimensions (8 Ps) when defining the picture of success in traditional channels.
Figure 5.14 Structure of a picture of success
Structure of a picture of success for the traditional channel. Shopper behavior is driven by the shopping missions and the consumption need states, which influence the zones and the type of activation, as well as the material and media to be used, which again are driven by the strategy of the brand, product and service.
The aim of the activation program is to optimize the profitability by point of purchase by optimizing the investment in relation to the potential value.
A big challenge in managing the picture of success is the implementation, not only the negotiation with the point of purchase, but the implementation itself to put the products and services and material in place, especially when other manufacturers are competing for the same space. Unlike the situation in modem retail, there is normally no manufacturer appointed as category captain to lead the development of the category at the point of purchase level. All manufacturers, depending on their importance to and relationship with the individual point of purchase owners, can influence the presentation and activation of their
Figure 5.15 Investment in activation programs depending on point of purchase priority and value Level and type of investment at the point of purchase depending on then priority and value.
Source: Author brands. In addition, the focus of the owner of the point of purchase is not a specific brand, product and service, but the total performance and the optimum use of space. The different brands, products and services are merely there to support that objective. The challenge is thus to align with the interests of the point of purchase and gain the preferential position to implement the picture of success. An important decision is who will be responsible for the implementation and the management of the picture of success. It is associated with investment, either the manufacturer’s as it has to invest in resources, its own or outsourced, or time and effort of the owner or the salesperson at the point of purchase. There are digital solutions, where the points of purchase can receive information on how to activate the store, including collaborative programs, where the point of purchase can send images of the implementation of the picture of success to control the implementation. Depending on the performance, there can be compensation from the manufacturer if the presentation is in line with certain standards.
Monitoring the implementation of the picture of success can be complicated due to two reasons. First, what to measure, i.e. which are the key parameters that would define a successfill implementation of the picture of success? Secondly, how to measure it, as it is often difficult to have access to the relevant data at the right moment. A monitoring system needs to be simple, easy to execute and cost efficient. The objective of the picture of success is to enhance the conversion of the shopper into a buyer. The assumption is that a well-presented picture of success will facilitate this. The picture of success is thus a mediator between shopping and buying. Still, there are many other important factors involved that influence the decision of the shopper, e.g. price, promotions or competitor activities. Information is scarce in traditional and fragmented channels and normally not shared. A manufacturer might know his own sales at the point of purchase, but if the sales are through third parties or through several suppliers, the sellout of the point of purchase is not equal to the sell-in by the manufacturer. There are often unreported, unofficial sales in the traditional sales channels that makes it even more difficult to receive the correct information. One possible way to evaluate the implementation of the picture of success is through indirect monitoring systems, where the basic assumption is that a well-presented picture of success will have a positive impact on shopper conversion and sales. Such systems are sometimes referred to as merchandising scores. Merchandising is the name of the management of products and services, and associated material and equipment at the point of purchase. Merchandising scores convert the picture of success into key rales for the presentation at the point of purchase and specific scores are associated with these rales depending on the level of implementation. Rules can refer to the right portfolio of products and services, the number of SKUs presented, the location and position on shelves, the presence of material and equipment, as well as the presentation in comparison to the competition. Compliance scores are assigned to these rales to assess the level of implementation of the pictur e of success. The challenge is not only the design of a merchandising score, but also its implementation and cost. The coverage, i.e. number of points of purchase served out of the relevant universe, and the frequency of monitoring need to be defined in the most costefficient manner. Finally, it needs to be defined how to use such scores to be able to improve the implementation of the picture of success, e.g. should it be linked to the compensation system of the sales force or of the point of purchase, or should it be used for specific actions to improve activation?