Making effective investment decisions is not the decision to spend money! It is a decision to say where am I going to get the best return? What is the quantum of return I am likely to get? And how many dollars am I going to invest to get those returns?
When working towards effective investments, it is very important to elevate your understanding of shoppers, so that you fully understand who you are targeting, and the behaviours, changes and motivations to which you need to link.
For instance, the intersection of the three customers:
– The consumer
– The shopper
– The retailer.
If really think through and truly understand the intersection of these three customers, you have a roadmap to effective investment.
Rethink your spend
This is essentially about you determining where you should spend your next dollar to get the biggest benefit. It may mean that you need to revisit your legacy of allocating dollars, and rethink how you allocate your spend.
The notion of re-thinking funding allocation to drive better growth now that the shopper is more central in the equation, will help make you investment decisions and where to spend your money. By taking a more shopper-centric view to marketing consumer goods, you will be a step closer to making proper investment decisions.
The process of marketing to a shopper is a productive process as you spend time and effort to understand shoppers, understand how you might change shopper behavior as well as determine what the best activities are to make that happen.
When you do implement those activities, one of two things happen; either their behaviour changes or it doesn’t. If that behavioural change happens, and it is positive, you will see a change in your sales profile. In theory, this means the liberation of more profit, which would mean a real return on investment.
Top-line growth is scarce
We have heard over and over that organizations are struggling to drive top-line growth – a universal principle across the globe. Admittedly, driving top-line growth is more difficult but the notion of growth capture is critically important. It is, therefore, imperative to say “how am I going to flip my business model to be able to do that?”.
People will say there is no more growth but there is growth! You just have to be more nimble and agile as marketers to identify smaller pockets of growth.
Perhaps a big scale growth is harder to come by – but if you are strategic, you can capture lots of those small pockets. A clearly articulated shopper strategy is one way to do that – and making the investment choices that can help to convert the highest potential demand opportunities.
The answer is not to simply spend more!
Perhaps you are thinking “we are already spending LOADS of money in retail!” … but is it effective?
Here’s the thing about an effective investment decision. It is not about doing more of what you did last year in last year’s retail channel. An effective investment decision is about knowing “We are targeting THIS shopper group, who is behaving in THIS way in THESE environments.”
If you put money behind the activities that change that behaviour in a positive way, you will enjoy a return.
It is not about spending more money or spending more of the same money. It is about making smarter investment decisions.
So, if you are running a brand, and 80% of your volume is on promotions, we are not saying up that to 90%.
What we are saying is that you probably need to think really hard about who it is that you are actually targeting, what behaviour you want to change – because you are probably not achieving growth with that expenditure.
This blog is taken from the last of our 4-part video series on 5 keys to thriving in a disruptive retail environment. Co-author of best-selling book The shopper marketing revolution, Toby Desforges caught up with Patrick Fitzmaurice from Caterpillar Farm Inc.
Login or sign-up to watch the full video on “Part 4: Effective investment” for more insight on this topic.