Point of purchase - Duets singing from the same hymn sheet

07 January 2010

Attracting customers at the point of purchase (PoP) is vital for brands as they compete for attention in the crowded retail space. As brands vie for customer attention, Marketing Week’s inaugural PoP Attitudes Research indicates that in-store material is more strategically important to businesses than ever. So much so that brand owners want the PoP industry to take a more strategic role in developing materials, not just executing them.

Almost three-quarters of client respondents say they want suppliers to take a strategic role in projects at least some of the time, while PoP producers believe they are playing an important role as brands look to use retail marketing in a more considered way. Almost all of the PoP suppliers polled believe they have strategic input at least some of the time.

Beyond executing instructions
As one respondent explains, they are being asked to take a role by their clients that goes beyond merely executing a range of instructions. They say/ “We’ve seen a growing emphasis placed on PoP activity… Using PoP as part of seamlessly integrated campaigns ensures more customer buy-in and empathy, and promotes a cohesive brand strategy.”

Another respondent believes their strategic involvement in projects puts them ahead of their competitors and it is this that will ensure business will remain strong despite economic pressures. They say: “We’re well positioned to respond to these changes through focusing on insights delivered through shopper marketing. An understanding of innovation, technology and keeping abreast of the pressures and demands on the client and market are key to ensuring that we understand the challenges clients are facing.”

Cost reduction
Cutting costs also appears to be a priority for brand owners in 2010. The average amount spent globally by companies on PoP material in the past 12 months is £2m. However, companies expect to reduce this cost next year, anticipating PoP spend to fall 28% to just over £1.4m.

One supplier says this continued pressure on price is reducing the value of quality. “Large-scale work was usually placed with us based on our design and quick turnaround skills. Now we are finding that we are being more frequently compared on price.” Another simply says: “Price, price, price, quality less of an issue.”

Saving money has undoubtedly become a bigger issue for businesses over the past 12 months as the recession has deepened. Many PoP producers responding to the survey bemoan that price is now the dominant criteria for most projects. Many are concerned that cost is set to dominate into 2010 at the expense of quality design. One respondent comments that PoP is seen as a “print job” rather than a “design job”, which puts pressure on the company to lower prices further. “Clients are still loathe to pay design fees for PoP. You wouldn’t commission a graphic design agency to produce a brochure and only expect to pay for print,” they say.

The pressure to reduce costs or source difference materials appears to be forcing PoP suppliers to outsource some projects abroad. However, the majority say less than 25% have PoP projects produced abroad.

Most of the suppliers that brands named in the survey are based in the UK. The fact that only a minority of brands are choosing overseas suppliers shows that clients still appear to appreciate the value they receive from British-based PoP groups.

The spread of spending predictions for 2010 is vast when it comes to PoP installation. A quarter of respondents expect to spend under £10,000 on materials, but another quarter of respondents expect to spend between £250,000 to £999,999.

This reflects the spread of brand owners filling out the questionnaire, from small start-ups using PoP to establish themselves in a retail environment, to major multinational corporations with large marketing budgets. The picture is similar in retail marketing and store development as well as field marketing, with a wide range of budgets earmarked for these services in 2010.

Despite concerns over too much emphasis being placed on cost, 7% believe the main buying criteria for brands is still design, compared with 11% that think the main buying criteria is price. One supplier comments: “Good design is a given,” and another says being “greener” is a key reason that clients choose them to supply PoP.

Retail marketing decisions
Surprisingly, a minority of brand owners didn’t appear to know who was responsible for key retail marketing decisions in their department, with 4% of client respondents not knowing the job title of the person or the department that deals with PoP installations.

And 5% don’t know the job title of the person or the department that deals with store refurbishments, range reviews or merchandising. Of those who do know who is responsible for retail marketing requirements, the range of job titles varied widely from “retail merchandising manager” to “marketing director”, showing there doesn’t appear to be a set business position for decision makers in the retail arena.

Many marketers searching for a new PoP supplier are relying on word-of-mouth recommendation as a key decision-making factor, with 15% saying this is their preferred method. A further 10% rely on recommendations from manufacturers or other suppliers. Trade shows and exhibitions are used by 6% of marketers looking for a new supplier.

Those companies that advise suppliers about shopper marketing appear to be feeling cheery about their prospects. And the services being provided are clearly appreciated by brand owners judging by the high scores given in the latest PoP tables (see page 26 and above).
It’s clear the PoP industry has been feeling the squeeze from the recession over the past 12 months. Pressure on prices and clients’ lack of focus on quality appear to be the key problems that suppliers have faced in 2009.

However, the signs are that as the UK edges out of recession, more positive times lie ahead for the retail industry. The clear desire from businesses for suppliers to work closely with them on projects in a strategic way means that there is significant potential ahead; the smartest PoP operators will be those that make themselves invaluable to their client brands in the year ahead.

About this survey

• This research was conducted during November 2009 among readers of Marketing Week magazine and users of MarketingWeek.co.uk.
• Respondents were drawn from all types of organisations, with supermarkets and high-street stores the largest groups among these.
• Not all tables add up to 100 as there may be more than one answer given or no answer provided.
• The tables are constructed based on the answers given by client marketers about their suppliers. Invites to participate in the league were sent to a list of more than 20,000 brands and suppliers among Marketing Week’s readership. The survey was also generally available on the website for two weeks.

Key Findings
The percentage of suppliers’ projects that come directly from the end client, rather than intermediaries

The percentage of respondents that say word-of-mouth is the favoured way of sourcing a new supplier

The percentage of suppliers that think their customers’ main buying criterion is price, compared with 7% of suppliers that think design is the main buying criterion for PoP

The percentage of brands that find new PoP suppliers through trade fairs and exhibitions

The average amount - in pounds - that a PoP project is worth to suppliers

 

 

Industry attitudes

28% The amount that PoP spend is expected to decline in 2010 compared with 2009

25% Of PoP suppliers in the UK have outsourced projects abroad

10% Of marketers searching for a new PoP supplier rely on recommendations from manufacturers and other suppliers

7% Of PoP suppliers consider a brand’s main buying criteria is design

4% Of client respondents do not know the job title of the person or the department that deals with PoP installations