The Value of Integrating Marketing and Merchandising Teams
Consumer empowerment is the name of the game today. Companies across industries are beginning to transform the way they buy, market and sell products and services.
Why? Consumers are getting smarter. They're in charge of the conversation, using social networks, mobile devices, websites and influencers to help them make buying decisions. More importantly, they're using social media to broadcast their opinions. IBM data shows that consumers pay a lot of attention to these opinions. Consumers referred to a retailer's site from social media are nearly twice as likely to buy than visitors who arrive via other channels. This suggests that consumers are heavily influenced by the opinions of those in their social networks.
All this makes it very tough on marketers, who need to be in more places at more moments with more relevant communications. You need to anticipate customer behavior and center yourself and your marketing and merchandising on what they — not you — think is important. In this context, retailers can't operate with the narrow, traditional view of marketing as advertising and promotion.
In traditionally product-centric organizations, merchandising and marketing typically have the same goals, but different processes, applications and databases. This makes it nearly impossible for retailers to create and execute the kinds of multitouch campaigns needed to reach and influence consumers today.
These shifts in buying behavior have had significant implications for retailers. To adapt, retailers need a better understanding of customer preferences and insight into what it means for their business, their products and services, and their channels. It's clear that consumers today expect personalized shopping, tailored promotions, consistently available products, and overall better quality and value for their money.
So why are some retail merchandising and retail marketing groups still siloed? A lot of it depends on the strategic focus of the business. For some, retail expansion globally may be the top priority. For others, store operations may be the biggest concern. An important area of change like this typically takes time to take hold in the marketplace, but we're seeing signs that change is coming.
For example, Wal-Mart recently announced that its U.S. marketing team would work under the leadership of its chief merchandising officer rather than as a separate group. The reason? There's a need for better coordination between the two groups. Shopping and advertising are being quickly transformed by the internet, social media, smartphones and other shifts in shoppers’ behavior.
The good news is that it really is only some retailers that are still siloed. More retailers are integrating merchandising and marketing activities in multiple ways. They have joint, collaborative event planning, and in a growing number of cases both merchandising and marketing departments report to the same executive.
Even for innovators, there's still opportunity for improvement. What can help you improve? Things like targeted marketing campaigns aligned with in-store promotional events, a strategic marketing mix and coordination of marketing vehicles including printed circulars, direct mail and mobile phone promotions.
The bottom line? Retailers can no longer think of their customers in traditional, demographic-based segments. Developing deeper insights through more sophisticated approaches to segmentation is a key step toward creating a more customer-centric shopping experience. Retailers need to know how their customers make decisions, where they shop, and what their needs and preferences are for a given set of shopping occasions.
With these insights, retailers can develop merchandising, marketing and store service strategies that are better matched to their target customers. The more tailored and personalized the experience that retailers create for consumers, the greater the differentiation from their competitors and, ultimately, the greater the success.
To adapt to the changing marketplace and the empowered consumer, retailers must be able to do the following:
- sense customer buying behavior and improve operational visibility;
- align products and services to predicted customer behavior; and
- deliver with consistency and agility.
For retailers who can adapt to this changing demand, the rewards are significant. Research shows that consumers are willing to collaborate with retailers and spend more money with those that implement their suggestions. Direct customer collaboration such as co-development and testing opportunities, along with product ratings and reviews, provides valuable insight into a customer's expectations.
IBM's Smarter Commerce initiative is redefining how companies are transforming their commerce processes by marrying merchandising and marketing to become more forward thinking, plugged into the customer and able to rapidly shift to market changes. There's no turning back. Businesses today need to better market, sell and deliver the right product at the right place at the right price.
Yuchun Lee is vice president and general manager of the IBM Enterprise Marketing Management Group.