Category Marketing Must Be Idea-Driven, Not Item-Driven

Mel R. Korn is president/CEO of Saatchi & Sattchi collaborative Marketing, New York.

Co-marketing is fine as far as it goes. Unfortunately, with so much power now in the hands of the retail trade, it just doesn't go far enough.

America is rapidly reaching a point where as few as a dozen retail chains--grocery, mass and drug--dominate the packaged goods marketplace. Actually, we may well have reached that point already.

As if this consolidation into power retail chains weren't startling enough, consider that it follows the long drumroll of fragmentation of mass media and consumer lifestyles. Ponder that for a moment. Stores are consolidating while traditional media are fragmenting. What does that mean? It means the store is no longer a mere point of distribution; it is a marketing medium.

It means that the traditional mindset of simply shipping more goods doesn't cut it anymore. When the store is a marketing medium, the focus must shift away from product shipment and toward brand consumption. Just-in-time delivery requires just-in-time demand.

When brand consumption is the goal, brand marketers--in concert with retailers--have to make serving consumer needs their top priority. This may hardly sound radical to the average marketing person. But it is nearly revolutionary if you consider the acrimonious, buyer-versus-seller history of the retailer-manufacturer relationship. And it demands more than the cooperative approach of co-marketing; it demands collaboration.

Co-marketing was a viable solution when packaged goods companies were pursuing sales volume strategies, which can fairly be summed up as a "volume at any cost" mentality. It didn't matter what the consumer wanted; the goal was to increase shipments.

Co-marketing also worked for retailers, as long as they were following a procurement strategy. Their whole orientation was toward making profits buying goods from manufacturers, not selling those goods to consumers.

Like local marketing and account-specific marketing before it, co-marketing generally managed to move what was shipped. But let's be honest. Rolling brand and retail imagery together in a modified co-op television, print or direct mail communication has little or nothing to do with anticipating and satisfying consumer needs. Ultimately, co-marketing is not marketing at all. It's simply a means to generate sales volume. It does not create meaningful bonds between brands, stores and consumers.

It's time to flip the pancake. It's time that the advertising supported the store, as opposed to the store supporting the advertising. The manufacturer and the retailer need to maximize the shopping experience first, and support that experience with advertising.

The new mandate, as most marketers now recognize, is to present brands as part of a solution to consumer needs. This is most effectively accomplished through category marketing, which unlike category management is idea-driven, not item-driven.

Where category management brought efficiency, category marketing brings effectiveness. Category management drives costs down, while category marketing drives consumption up.

The end game is to position the store as a destination through differentiation and create every-day loyal consumers--not just every-day low cost. Are we there yet? No, not nearly. But the most progressive retailers and manufacturers are beginning to collaborate as marketers. Forward-thinking brand marketers have stopped presenting to retailers and started listening to them. They are providing the kind of flexibility required to serve the retailer's needs. They are backing their commitment with necessary funding. They are bringing to the table business-building ideas based on consumer insights.

When the store is a marketing medium, packaged goods companies have to begin to view the relationship in ways not unlike their operational mode with the television networks, for example. The view has to be long-term: two- and three-year deals, planned out in a multiyear calendar.

The long-range goal is to build the brand's image, equity and sales within the context of a maximally satisfying shopping experience.

A collaborative marketing approach also means the whole reward-and-incentive system has to be revised. When consumption is the goal, it obviously makes no sense for manufacturers--and retailers--to base incentives on shipments.

The manufacturers' days of volume at any cost and retailers' making money on the buy must come to an end. Consolidated power retailers are making packaged goods marketers feel the heat.

When you feel the heat, you begin to see the light. When you feel a little heat, you do some co-marketing. But now that the blast furnace of retail consolidation is kicking on, packaged goods marketers had better be ready to collaborate.

COPYRIGHT 1999 BPI Communications, Inc.
COPYRIGHT 2000 Gale Group