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In-Store Media: How Effective Are They? Evidence from the Philippines

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In-Store Media: How Effective Are They? Evidence from the Philippines Philippine Management Review 2008, Vol. 15, pp. 65-82. IN-STORE MEDIA: HOW EFFECTIVE ARE THEY? EVIDENCE FROM THE PHILIPPINES Ben Paul B. Gutierrez* This paper investigates the effectiveness of an in-store radio in urban Philippines. Measures of international in-store media effectiveness studies are first reviewed. Then, this study replicates the Arbitron Retail Audio study using a sample of 600 Filipino shoppers who were interviewed to obtain shopper perceptions, attitudes toward in- store radio and the corresponding effect on purchase behavior. Implications about making in-store media more effective are described at the end of the paper. Keywords: marketing communication, in-store media effectiveness, shopper marketing, in-store radio I. INTRODUCTION Retail merchandising1 or “in-store identify them once in the store. Ronald media” is a science that encompasses a huge Fernandez, the shopper insight manager of number of marketing practices and Unilever Philippines, claimed that point-of- techniques such as deploying point-of- sale (POS) materials help customers purchase (POP) displays, optimizing in-store accomplish five functions: “navigation product presentation, creating cross-sales (helping them find what they need), promotions and product adjacencies, and facilitation (helping them decide what may also include product packaging and own product to buy), education (teaching them store’s internal and external branding (Gerba, how to use the product), inspiration (making 2006). Neff (2007) also referred to retail the shopping experience exciting and merchandising as shopper marketing.2 From interactive) and repetition (reminding simple signage of retailers hoping to promote shoppers on what items they forgot)”3 specials, in-store media has evolved into (Arceo-Dumlao, 2008). various incarnations including ads on Walmart has had in-store television shopping carts, cart straps, aisles and talking network since 1990s while Subway tested in- shelves, end-aisle displays, floor signage, store video system in 2006 (Manners, 2006). kiosks, interactive flat panels, in-store audio United Kingdom’s Tesco rolled out its and video transmissions (Kotler & Keller, narrowcasting program in 2004 followed by 2009). Kroger (Breen, 2004). Tesco TV’s trial run in Lempert (2005) asserted that in-store three stores was done with an average of 50 media can be easily tailored to current plasma screens throughout the supermarket merchandising and promotional executions, in 2003 (Grande, 2003). Advertisements on which can be targeted to specific consumer Walmart TV run on 125,000 TV screens in groups through use of technologies, which 3,100 stores and appear three times an hour ________________________ * Professor of Marketing, College of Business Administration, University of the Philippines, Diliman, Quezon City. (E-mail: [email protected]). 66 IN-STORE MEDIA: HOW EFFECTIVE ARE THEY? EVIDENCE FROM THE PHILIPPINES with a potential audience of 127 million is anchored on the premise that most brand shoppers per week. The Walmart airtime decisions are made at point of purchase, 74 costs between $50,000 and $300,000 for a percent according to one study (POPAI a) four-week flight of ads, depending on and Peter Hoyt, executive director and frequency (Petreca, 2007). Furthermore, founder of the In-Store Marketing Institute Moorhouse (2008) described a “Scent- based in Skokie, Illinois (Schenker, 2008). emitting LCD Display” system of NTT Once inside the store people are in a Communications in Japan that is capable of purchasing mode versus the entertainment emitting a variety of scents which could mode in most traditional media available at make possible unmanned demos, reduced home. Thus, the best place to impact the product breakage/spillage, and more consumer is when the consumer is in the experiential marketing. aisle, reaching for the product. Inside the Several factors have contributed to the store is the most effective way to reinforce or growing popularity of in-store media. Firstly, change consumer behavior (Harris, 2006). consumers are busier than ever and encounter A recent global study, “Shopper many distracting alternatives in in-home and Decisions Made In-Store,” by the Ogilvy out-of-home media (Breen, 2004). Group was based on more than 14,000 Traditional mass marketing media audiences shopper interviews conducted in 700 retail are declining as TV loses long-term share outlets across 24 markets worldwide and newspaper readership decreases (Grande, spanning five retail channels across six 2003). It is becoming more difficult to get the product categories. The study found that attention of a shopper in a fast-paced nearly three of ten shoppers around the world environment when time is short, so wait until they are inside the store to decide advertising should occur close to the product which brand they will buy (Cooke, 2008). location to ensure relevance and to avoid According to Point of Purchase confusing the consumer (Morrison, 2008b). Advertising International, total U.S. spending Secondly, consumers have developed ways on digital signs, in-store media and other of screening out distractions in the traditional point-of-purchase advertising was $17B in media options (Breen, 2004). Morrison 2004, $18.1B in 2005 and $19.3B in 2006 (2008b) is a proponent of the view that the (Manners, 2006). Clean-Store policies have beauty of in-store media is its ability to reach restricted number and types of in-store shoppers at the point in which they are advertisements or mechandising displays. making a choice. Thirdly, one U.S. The total number of retail displays declined demographic segment, the 18-to-34 year old by 4.4 percent in 2006 and by 9.1 percent in males have shunned traditional media, and 2005-2006 (Neff, 2007). The need to reduce even the television network NBC agrees that display clutter has opened possibilities to Best Buy, the electronics gadget retailer, is other in-store media options such as audio the logical place to find them (Breen, 2004). and video transmissions. Nelson and Ellison (2005) cited that Neff (2007) noted that shopper marketing Procter and Gamble (P&G) believes that the is the fastest growing medium, even three to seven seconds when a consumer outpacing the Internet, citing results of a notices an item on a store shelf is one of its United States Deloitte Study for the Grocery most important marketing opportunities. To Manufacturer’s Association released in capture what it calls the "first moment of September 2007. It grew from three percent truth," P&G created the position of Director of overall marketing budget of 19 package- of First Moment of Truth (FMOT), to goods manufacturers in 2004 to six percent in produce in-store displays that can command 2007. This growth is expected to reach eight a shopper's attention. P&G’s FMOT strategy percent in 2010. The compound annual BEN PAUL B. GUTIERREZ 67 growth rate (CAGR) of shopper marketing is (Harris, 2006) show that 70 percent are 21 percent versus 15 percent for Internet frustrated with traditional media and 90 advertising and two percent for traditional percent are actively seeking alternatives. media in TV, print, and radio (Neff, 2007). Table 1 details alternative media explored by Over the past 11 years, Neff (2007) estimated the managers. While 72 percent have the P&G spent at least $500 million of its $8 explored in-store media as an option, 48 billion of its global advertising spending on percent rated their ability to measure the shopper marketing. effectiveness of retail and other media Results of a Reveries.com Survey of 192 alternatives as only “fair” or “poor”. senior-level marketers in the United States Table 1 Alternative Media Explored Versus Traditional Media Alternative Medium To Reach Customers Percent Online (e.g., blogs, email, search engine, video games, 81.5 micro sites) In-Store Retail (e.g., in-store TV, radio, point-of-sale, 72.0 kiosk) In-Market (e.g., events, branded entertainment, 65.2 placement, satellite radio) 3rd Screen/Mobile (e.g., cellphone, podcasting) 35.4 Others 10.8 Source: U.S. Reveries.com Survey of Marketing Managers (Harris, 2006). The apprehension about in-store media in to traditional media make it harder to make the Philippines was also highlighted by spending decisions (Harris, 2006; Neff, Roberto and Roberto (2008), when both 2007). responded in their weekly Philippine Daily It is in this light that the present study Inquirer Marketing Rx column to a bottled addresses the research question of measuring cosmetics manager’s concern on the high effectiveness of in-store media. Marketing cost of in-store media and promotion managers could then compare the materials and the local practice of practically performance of in-store media versus changing these materials every month. This traditional media based on their experience of manager had talked to supermarket and effectiveness of traditional media for their drugstore operators, including in-store media own brands. Related managerial questions agencies and promo material designers who may include how in-store media is perceived could not furnish reliable evidence of the by retailers and customers and the issue of sales effectiveness of in-store media how in-store media is managed in the materials. organization. Two major issues hold back marketing The study is significant because being managers from spending more on in-store aware of the effectiveness of in-store media media. First, 46 percent of shoppers ignore could lead to more acceptance and in-store media (Harris, 2006). Secondly, lack applications in the Philippines. Moreover, of audience-reach measurements comparable being aware of in-store media limitations 68 IN-STORE MEDIA: HOW EFFECTIVE ARE THEY? EVIDENCE FROM THE PHILIPPINES could bring about more realistic expectations results of international in-store media about its capabilities. Consequently, effectiveness studies while Section III manufacturing and retail managers should describes the method of the Philippine study. realize the need to achieve synergy and Section IV presents the Philippine results and integration of traditional media and in-store finally, Section V identifies implications for media in their organizations.
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