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Madhukar Sabnavis: Retail - The next marketing frontier

Madhukar Sabnavis  |  New Delhi 

Mass retailers provide an integrated marketing weapon that an innovative mind can use.
Last year Coke wanted to introduce a diet soda called Coke Zero. Wal-Mart thought they had a better idea""a drink that contained splenda, the artificial sweetener that had been selling extremely well at Wal-Mart, especially among women shoppers. Coke went back to the drawing board and in May, introduced Diet Coke with Splenda.
Similarly, Wal-Mart pushed Coke to change the way it distributed its sports drink, Powerade. It pushed a laundry manufacturer to make a super-concentrate version that occupied less pack and shelf space. All three examples illustrate the role of the retailer in actually influencing both "product" and "place" decisions within the marketing mix and going beyond just being a distribution and availability point of a brand.
While many supermarkets typically collaborate with large food and beverage manufacturers and marketers to promote products and create special in-store displays, Wal-Mart plays a role in influencing new product offerings and how products are distributed. The retailer has lots of latent power""hidden assets""waiting to be unleashed!
Clearly, the retail revolution is bringing retail a full circle in the world of marketing and selling. Before the manufacturing and marketing eras of the 20th century, the retailer was the king. He was actually the brand the consumers bought into and it was his word that convinced or dissuaded prospects. "Product" branding, as it evolved in the 20th century, changed all this. It suddenly shifted the power from the retailer to the marketer, as the marketer started creating brand pull through remote-controlled yet effective brand-building measures like mass media advertising. Consequently, the retailer had to stock what consumers asked for and this "asking" was triggered by marketing. Push strategies gave way to pull strategies. The marketer could dictate to the retailer, who had little choice but listen and stock. This was the theme through much of the 20th century. The emergence of Wal-Mart as a mass "retail" brand is perhaps a milestone in the world of both marketing and branding. It is not a case of "death of branding" as much as one of emergence of a new marketing weapon.
The power of the retail comes from four distinct elements:
  • It is the new technology playground. While the nineties was the period when technology was used mainly to bring efficiency, tomorrow the power of technology will be used in enhancing experience. And this is where "product" brands have the opportunity to use it at the retail store to deliver to more human senses than they could previously""through innovations. While RFID (Radio frequency identification) technology-based "smart tags" have helped retailers in inventory management and thus improved store value efficiency, new technology innovations by marketers can help them give their products and brands a cutting edge at the point of purchase. Companies like McDonald's and Procter and Gamble are experimenting with "targeted audio" technology that enables delivering audio content only an individual consumer in a store can hear""in her ears, in her head. It may no longer be a fantasy to imagine, for example, the development of a chip that enables a brand's pack to emit "aromas" to the nose of a consumer as sooas she sees the brand on shelf""perfect sync between visual and nasal senses""thus helping to engage another sense to stimulate purchase by enhancing the brand experience at the final point of contact with the consumer. Many other such technological advances may be in the offing!
  • It is the new consumer research centre. Retail is the final moment of truth in a brand's life. It is becoming more and more necessary to get closer to the moment of purchase to actually understand consumer motivations for brand preference, rather than depend on consumer claims or memory. The retail space provides the ideal centre to actually get in touch with consumers and understand them. Paco Underhill uncovered a lot about consumers by just sitting and observing behaviours at the retail outlet. The feedback received from buyers at this point perhaps represents the richest and most relevant insights into their minds about the brand and the category!
  • It is a new media channel. Consumer communication is moving from monologue to dialogue; from story telling to conversations; from just equity building to action orientation. Clearly, while media like the internet and mobile provide marketers and brands opportunities to interact with prospects and carry on dialogues, the retail environment is also a powerful place to catch the consumer and talk to her. After all, it is where the consumer makes the decision""to buy or not to buy. It provides opportunities to do all kinds of communication""from one-way to dialogue to interactive; from educational to informational to entertainment. Marketers need to recognise this as a formal channel and communication specialists need to understand this medium for best use""with the right content and with enough hard data to gauge channel effectiveness.
  • It is the new brand. Frightening though this may sound, "retail" brands pose a threat to "product" brands. By their sheer physical presence, their size and their continuous delivery of experience through the ambience and salespeople, brand values and connections get built with its consumers. They don't need conventional advertising! And this equity is strong enough for it to sell any category. With technology driving product parity and outsourcing becoming a part of life, smart retail brands can easily move up the value chain and offer many products under the store brand label. And this can be done at highly competitive rates to traditional "product" brands.
  • Is this a distant phenomenon in India? Not really. The retail boom is for real. The growth of "Big Bazaar" is not an aberration but the signal of a future trend. And clearly this is not going to be restricted to the big cities only. As infrastructure develops, personal transportation grows and the consumer habit of "outing" increases, it will all aid in making shopping a ritual. And this will give impetus to retail chains. And as they grow, so too their power!
    Mass retailers provide an integrated marketing weapon""from understanding consumers to developing products to delivering messages to actually triggering end purchase. It needs an innovative mind to use this weapon.
    Something worth thinking about.
    Madhukar Sabnavis is Board Partner-Discovery and Strategy, Ogilvy and Mather, India. Madhukar.sabnavis@ogilvy.com

    First Published: Fri, April 07 2006. 00:00 IST
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