"Smart Shopper Marketing" - How smartphones change the rules of the game between brand manufacturers, retailers and consumers

Dr. Nikos Kotalakidis, Christian Morisse, Christoph Mittendorf / September 2018

The Smartphone has significantly changed the interaction between consumer, ‘shopper’, retailer and manufacturer. Users are not only constantly accessible. They research around different topics, products and brands and can immediately complete a purchase online. For companies this means a large variety of new possibilities to reach the shopper with a relevant message at the right time.

Search Development for “Supermarket near me” in the United Kingdom:


Especially in the FMCG industry shoppers show less loyalty towards brands. Instead they are loyal towards their own preferences and choose brands that are mentally and physically available to them.1 To strengthen mental availability and to influence the decision and buying process advertisers should send clear messages in moments in which these are perceived as relevant and useful by the shopper.

84 percent of the population in the United Kingdom uses the internet for personal purposes and three quarters already own a smartphone today. People don’t go online anymore - they live online and so they are also available when purchase decisions are made.2 We call this constantly through a smart device (e.g. smartphone, Google Home or smartwatch) connected shopper the ‘Smart Shopper’.  The customer journey of a Smart Shopper is fragmented into numerous different intent-driven moments in which different messages are relevant. Manufacturers need to aim to understand their customers’ needs in real-time in order to be present in the relevant moments and to influence the buying process.

“Digital media allows us to reach the consumer in the relevant moments along the entire customer journey - until the final conversion offline or online”

Moment people start researching grocery purchases:


Shopper Interaction at the Point of Sales

The increasing usage of smartphones opens a variety of possibilities to the manufacturer to reach the shopper at the Point of Sales (POS). While in Germany only about every 10th grocery purchase is researched or made online it is six respectively three times as many in countries like South Korea and the UK.3

Did people research or purchase their product online or offline?


Traditionally manufacturers invest substantially in so called shopper marketing activities  that are either executed directly by the retailer or in cooperation with these. In these cooperations the generated data, learnings and insights are often exclusive to the retailer which increases the retailer’s negotiation power towards the manufacturer. In this case it is beneficial to the manufacturer to source and use its own data, because trading data comes with major disadvantages, e.g. transaction costs, usability and fungibility.4 The smartphone allows manufacturers to overcome the retailer’s intermediary function and to own the lower-funnel communication. The smartphone can be used by the manufacturer to advertise one of its products while the shopper is already inside a physical retail store.

By controlling this communication manufacturers can create additional sales and insights  on their customers. This helps to adapt the offered products to the shopper’s needs and strengthens the negotiation power towards the retailer.

“Digital Technologies and especially smartphones give the manufacturer the opportunity to further interact with the consumer. Manufacturers can better understand the consumer’s needs and positively influence the sale of their products”
quote 2

The strategies vary depending on who owns the POS (manufacturer or retailer) and whether it is an online or offline POS. As shown in the illustration above the POS can be segmented into four quadrants.

1. Online Retailer (A) and E-Commerce-Shop (B):

In a retailer’s webshop the shopper can complete a purchase without having to go to a physical store. Smartphone allow this at every hour of the day and in almost any situation. Products are almost always available online and additional product information as well as reviews are directly accessible. The manufacturer has the opportunity to send relevant messages that directly lead to a purchase on the website. If the manufacturer operates and manages the digital marketing campaigns they can collect valuable insights on the campaign’s success and their customers, which are usually exclusive to the retailer (e.g. Click Through Rate, View Through Rate, Cost Per Click, Cost Per View etc.).

An e-Commerce store that is owned and operated by the manufacturer has some additional benefits compared to an online retailer. The design and set-up of the website matches the brand’s identity and an the manufacturer can independently decide on a pricing strategy. The manufacturer can also evaluate the shopper’s interaction with the website and generate additional information that helps to increase the manufacturer’s efficiency (ROI, Conversion Rate, basket size, etc.). This additional data can directly impact manufacturer’s costs, e.g. media cost can be reduced through the creation of own targeting lists. In North America Nestlé was able to reduce their cost per acquisition by more than 30% by selling bottled water through their own e-commerce channel and analyzing the collected data with Google Analytics 360 and the Doubleclick Campaign Manager.5

2. Offline Retailer (C) und Flagship Stores (D)

Smartphones enable manufacturers to address shoppers in a physical store or guide them to it using Affiliate Location Extensions. This way shoppers can be reminded of a brand immediately before a purchase and be influenced in their purchase decision. For example, a deodorant manufacturer can increase its search activity on a hot day and answer the question “what helps against sweating?” with a search ad for its antiperspirant and guide the shopper to the next retailer that lists this product.

The manufacturer can increase sales for its own products and learn more about the impact of digital marketing campaigns while collecting more insights on the shopper. When owning a flagship store additional data points can be evaluated (e.g. store visits, sales uplift, etc.)

Similar to own e-commerce stores the manufacturer can adjust prices and product presentation in its interest. On a hot day the coffee shop chain Costa Coffee, for example, used programmatic advertising to reach people with an advertising message on their iced drinks range. They specifically targeted people that were close to either one of their own locations or a competitor store. The campaign outperformed previous activities with an uplift of 82% in reach and a 32% higher click-through rate

To holistically use the advantages of mobile technologies close to the moment of purchase manufacturers need to invest in their digital infrastructure and build up capabilities in data collection and analysis. Additionally mobile pages need to be further optimized. Therefore advertisers can use the free tool TestMySite. This offers the possibility to compare optimal loading times for a given industry and suggests individual optimization recommendations. Besides additional sales, important data and insights on the consumer and their behavior can be collected. With an increasing number of connected devices the number of moments in which potential shoppers can be reached increases. Smart home, smart watches and Google Home with the Google Assistant will help to collect more relevant data and open up new possibilities to connect to the shopper.

To further evaluate the influence digitalization has on the entire CPG value chain and especially sales and marketing, Google partnered with Bain & Company to work on a well-founded study. About 40 uses cases along the value chain will be identified by industry experts and sorted into the respective technology clusters. After that the paper will illustrate and focus on opportunities in marketing and sales based on the ABCD-Frameworks introduced in this article to activate the POS. It will also elaborate on which shopper marketing activities can already be managed by the manufacturer using Google products and technologies and identify the most important moments for relevant messages in the FMCG industry.

In 2018 Smart Shopper Marketing is at its turning point!

What Google execs around the world learned from navigating the pandemic