Apr 10, 2009

Winning at Retail: It's the Consumer, Stupid!

In the rough and tumble world of bland consumer products offerings, thin-margin retailing, and global economic crisis, Diageo is breaking from the pack. Not rocket science here, but good,solid marketing and channel strategy thinking. They started with a basic question that other consumer market players facing horrific results would be wise to focus on.

How do we improve the customer’s experience?

Beer bought at grocery is usually consumed within a few hours of purchase. It’s also usually drunk cold. Diageo, the alcoholic beverage giant, has put those two facts together and come out with a new display space it calls a pod to act as a mini-liquor store right in the middle of a standard grocery aisle. How well it fits with grocers’ standardized formats (see photo), we will just have to see. At least one chain has already pledged to try it.

What I applaud is that Diageo isn’t going brewers’ standard route: splashier ads placed in more media. It’s looking for real differentiation at the point where consumers (and retailers) benefit directly. If its bet pays off, Diageo could boost participating retailers’ store magnetism considerably. If you as a consumer need to buy ten grocery items, one of them being beer, where will you shop today?

An business question left unexplored in the Wall Street Journal story is who is funding the innovative Diageo merchandising solutions. At over $10,000 a unit and many valuable square feet of floor space, it’s certainly worth running some numbers to estimate value-added and value-derived for each partner. Diageo and its partners should share costs just as they already practice with co-op advertising.

Here, though, the costs and the benefits are tangible.

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