• by Sarah Mahoney  @mahoney_sarah, November 25, 2010

Shopper marketing has been getting plenty of buzz lately, as both retail and national brands try to figure out better ways to reel in increasingly price-savvy consumers. Turns out some of that consumer cunning, first inspired by the recession and now fueled by technology, might be permanent after all. Marketing Daily asked John Ross, CEO of Shopper Sciences and former CMO of The Home Depot, for an update.

Q: First, what exactly is shopper marketing?

A: Shopper marketing is the process of understanding how a consumer goes from undecided to decided. The research we do comes from an algorithm, originally based on the political arena -- what makes an undecided voter go in and pull a lever? We've adapted that to shopping.

Q: Has the recession undermined retailers' credibility with consumers?

A: The economic downturn taught consumers that discounts are widely available and under their control. They've got access to information online about where to find lower prices, and there are social discount sites, like Groupon. Consumers see retailers behaving in panicked and unpredictable ways, and they know the rules have changed.

Q: Will a post-recession shopper still expect the same level of discounts?

A: For certain categories, it's probably going to get even tougher.

Q: How can retailers improve shopper marketing -- actually earn back that brand loyalty?

A: They can be better editors. Consumers have come to know they can't just get a great price; they can get a great item at a great price. So stores that are using customer reviews to actually edit assortments are doing better. Take Home Depot's toilet aisle -- not all toilets flush as well as others, and even 18 months ago, that aisle would have been full of products at different price points, but also with very different ratings from user reviews. Today, the vast majority of the toilets are there because they have high rankings from users. Smart retailers are taking that review information back to manufacturers, and saying, "We want more like this, and less like that."

Q: Somehow, that doesn't seem so radical. Why is it?

A: The job of the retailer is to stay in touch with the shopper, and as chains got bigger and bigger, that became harder and harder to do. Customer preferences can vary radically by region. Scale, which brought price down, also made it harder for retailers to drive performance and quality. But good shopper marketing means listening to consumers about lots of things, including what brands they want you to stock.

Q: Consumers have been flocking to private labels. That's good for stores, right?

A: In some categories it actually creates a conflict in the shopper. We see a decline in credibility, as private-label prices have come down and quality has gone up -- you can get a store-brand analgesic for half the price of a name brand, and it's completely comparable in quality. Shoppers feel silly or stupid for having bought the name brand in the first place! It also makes people question whether the retailer has been overcharging them.

Q: What types of retailers are the best at shopper marketing?

A: Believe it or not, auto dealers -- a much-maligned category these days. It's easy to blame the retailer, but often failures or successes are taking place in other arenas. A significant amount of the decision takes place before the shopper ever shows up at the dealership -- but we know dealers are doing a significantly better job.

Q: Who scores poorly?

A: Wellness products tend to get very poor scores. The amount of information you need is pretty much out of balance with what stores give you. That expands into food products. Also, home improvement stores, or any category where the work begins when you get the product home. If I buy a sweater, I take it home and wear it and that's pretty much it. But things like paint are different. Consumers think that stores that sell such products do a worse job.