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AUGUST 2008

SHOPPER INSIGHTS

Simulated Supermarket Helps Frito-Lay
Understand Shopper Behavior

Where Does 'Shopper Insights' Report in an Organization?

ConAgra Consolidates Departments
To Enhance Collaboration with Retailers

Unique Shoppers Call for Custom Marketing: Study
Simulated Supermarket Helps Frito-Lay
Understand Shopper Behavior

By John Karolefski

Frito-Lay may dominate the snack aisle of the grocery store, but it is always looking for a competitive edge to increase sales. 

What’s providing that edge nowadays is its S.M.A.R.T. Learning Center in Dallas, a 15,000 sq. ft. simulated supermarket that tests the effectiveness of various marketing solutions to drive impulse purchases. Through automated observation and other research methods, the marketer studies the behavior of actual consumers as they shop the aisles and react to different merchandising tactics.

“All of this learning changed what we were doing. We were going down one path for merchandising for 2008, and took a big turn based on what we learned. We really understood why we had to change direction for our overall aisle merchandising,” said Rob Clancy, formerly group manager of consumer strategy and insights with Frito-Lay North America, a unit of Pepsico where he now serves as the insights manager for multi-cultural sales

Clancy was in charge of a series of tests in the learning lab last year that laid the groundwork for the ongoing research that continues to pay off for Frito-Lay. He provided a glimpse inside the simulated supermarket in a presentation at the Shopper Insights Conference in Chicago recently. The event was hosted by the Institute for International Research.   

Frito-Lay built the learning lab to answer three fundamental questions:
  • What would lure shoppers to the snack aisle?
  • What merchandising solutions would encourage people to go down the snack aisle?
  • Once there, how could the shopping experience be improved?     
“The key thing we struggled with in the past was how shoppers would react when they were actually in that environment. You can observe them in stores, but this was the first time we could do it on our own. We could create whatever we wanted to. We could change the merchandising, the product, whatever we wanted. 

“My job was to think of and implement new research methodologies,” he went on to say. “We wanted to understand what happened to shopping behavior and the perception and purchase of our brands when we made certain changes to our aisle”

Some of the changes were using different product sets, creating sub-sections in the aisle, and re-merchandising with new displays and various graphic elements.   

Frito-Lay sought to determine the effectiveness of displays in attracting shoppers and to understand the relative performance of different merchandising concepts in driving impulse purchases. Overall, the simulated store served as a platform for transforming
in-store marketing.

Clancy said the in-store behavior of shoppers reflects their actual response to different elements of marketing and merchandising. So, an important element of the lab was measuring shopper responses using various solutions such as transaction tracking (loyalty data, sales, household panels), survey research, cart tracking, manual observation, and automated observation.

“I wanted to do as many multiple methodologies as possible. We didn’t know which ones would work or how they would work. So we had quantitative, qualitative, and observational. We did five methodologies to see which one would work better for our needs. But the overall learning was that putting them all together worked best. Our learning was so much deeper that it would have been had we just gone down one path.”

Clancy singled out the important contributions of VideoMining, State College, Pa. The firm’s in-store technologies and analytics form a scalable measurement platform designed to deliver precise metrics on shopper response at every retail touchpoint.

“VideoMining could quantify all of the shopping and tell me that people were lingering a lot more at certain points in the aisle. ‘Heat maps’ showed where shoppers were spending more time. It really helped us understand which merchandising was working and which was not.

“The way we merchandised the aisle made shoppers look for new things and spend some time in different sections – really browse as opposed to search,” Clancy said. “Browse is a good thing, and search is not a good thing. That was a key learning for us. Knowing where shoppers were going in the aisle helped us optimize the product set and sometimes change the flow a little bit, too.”

He listed the following benefits of studying shoppers in the simulated supermarket:
  • Understanding the “shopability” of various marketing strategies
  • Deeper understanding of shopper behavior
  • Understanding display effectiveness by type and location.
  • Appreciating the power of observational techniques.

Clancy said other CPG manufacturers could use the learning center if they are non-compete companies.


Market Watch
Where Does ‘Shopper Insights’
Report in an Organization?

By Lynne Cooke

Shopper insights may be an important area of focus nowadays, but this function reports to different departments in CPG companies.   

An Instant Poll on the home page of the June edition of CPGmatters found that about four of ten respondents (43%) said shopper insights reports to Market Research in their companies, while more than one of three (36%) said Marketing. Meanwhile, 16% said Sales, with the rest opting for Other.

“Shopper Insights needs to report into Market Research and this function should have the capability to do both Shopper and Consumer research,” wrote on respondent in the Comments section of the survey. “Marketing is not versed in the shopping environment and how to impact it. Sales is not versed in how to take shopper insights to action. Net: Market Research needs to be the center of expertise.”

Not all of the respondents agreed.

“Depends on what is trying to be accomplished,” wrote one executive. “It is not a true marketing function, but one that is split within sales and marketing. Market Research has a tendency to sway toward a marketing perspective.”

Finally, one respondent writing in the Comments section of the Poll said Shopper Insights should report to the Trade Marketing department with information shared with Brand Marketing.

Measuring Shopper Emotions
You can learn a lot from a shopper’s body language. That is the basis of new technology that measures the emotional response of shoppers to products on the shelf. The methodology was developed by VideoMining Corp., State College, Pa., provider of in-store observational measurement services for manufacturers and retailers.

The new technology uses automatic facial expression and behavior analysis to rate the interest of shopper for a particular product. The automated methodology also includes the analysis of shopper interaction with adjacent, competing products. It uses a proprietary “video analytics” software suite for tracking shopping behavior, gaze, and detailed facial expression. 

Profiling Consumer Personalities
What specific personality traits drive consumer buying behavior and brand affinity? The answer is now available from The Nielsen Company, the first firm to provide consumer personality profiles to the CPG industry. These “Mindset Profiles,” provided by Mindset Media, are combined with Nielsen’s consumer panel information, enabling CPGs and retailers to identify specific personality traits , such as optimism, creativity and pragmatism, driving purchasing behavior and brand affinity.

Nielsen will incorporate this proprietary psychographic panning and buying standard into its Homescan Consumer Panel. This will
enable CPGs to profile any desired target audience, such as pet food buyers and heavy snack food buyers, on more than 20 elements
of personality.

Wal-Mart Understands Community
The world’s largest retailer is leveraging an understanding of its shoppers and the community around Wal-Mart stores. This understanding is reflected in several custom formats in Texas: a Hispanic format in Garland; a high-end store in Highland Village; and the “Ballpark” store in Arlington, near the home of the Texas Rangers.

“A store of the community is about respect. Understanding the customer and understanding the community helps us save money and live better,” said Mike Moore, senior vice president, president
of the West Division of Wal-Mart, in a presentation in Chicago at
the Shopper Insights Conference hosted by the Institute for International Research.

Gas Prices Hurt Spending
More consumers in the U.S. are altering their spending habits to make up for rising gas prices, according to new research from The Nielsen Co., which recently conducted a survey of nearly 50,000 consumers. Results show that almost two-thirds (63%) of consumers are reducing their spending, up 18 points since June 2007 and up 14 points in the last six months alone. About three-quarters are combining shopping trips (78%), and more than half of consumers are now eating out less (52%) and staying home more often (51%), the research indicates.

Increased fuel prices are leading nearly one-third (32%) of consumers to use more coupons as a way to save money, up from 25% in December 2007. In a quest to get most of their errands done while using less gas, 28% of consumer report doing more of their shopping at supercenters, where more items are in one store. Nielsen also says that more consumers (35%) are buying less expensive brands, up 12 points since December 2007.


JULY 2008

ConAgra Consolidates Departments
To Enhance Collaboration with Retailers

By John Karolefski

In these troubled economic times, Rick Abens of ConAgra Foods believes that collaborative shopper marketing is more important than ever. Why? Because consumers are closely watching their money and are depending on price discounts to stay within their food budget.

“But if we collaborate with our retailers, then we can develop segmented programs to serve the consumers better without relying solely on price,” says the director of advanced analytics for ConAgra and vice president of research for the Promotion Marketing Association (PMA).

To better equip itself for collaboration, the Omaha, Neb.-based food giant recently consolidated four departments under the umbrella of Integrated Customer Marketing. Coming together are Shopper Marketing, Shopper Insights, Category Management, and the In-Store Center of Excellence.

“We can work together more efficiently and then go to our customers with one voice, one approach, which would include all these related functions,” he explains. 

The results so far have been encouraging. According to Abens, ConAgra is developing a broader engagement with retail customers rather than talking with one buyer at a time about specific merchandising programs. 

“We’re now able to get the marketing department to the table with multiple buyers and work on strategies and programs that expand categories and store sections. It’s a team-to-team approach. A lot of it starts with top-to-top meetings which we’ve been doing for years like everyone else. But now we have working sessions that typically follow the top-to-top where we can develop programs collaboratively with our retailers.

“I don’t want to make it sound like we’ve cracked the nut completely,” he hastens to add. “But we’re making really good progress, and it’s our vision to continue improving this area.”

Shopper marketing at ConAgra has evolved dramatically since Abens joined the company five years ago. Back then, there was small team dedicated to the top retailers. Today there are multi-functional teams in place at the headquarters of all the leading chains.

“We are evolving to meet the demands primarily from our customers,” he explains. “One of the things that we’ve done is realizing the importance of collaboration.”

Abens learned a lot about the value of collaboration from the results of a national Shopper Marketing survey of CPG manufacturers and retailers. It was released recently by PMA (scroll down to see the story in the June edition of CPGmatters). 

“The study clearly shows that collaboration is the key to effective shopper marketing,” reports Abens, who served as the co-author of the study. “All of the constituents are benefiting because we’re realizing that marketing to consumers in a shopping mode is different than marketing to shoppers in the traditional way.

“Traditional marketing tends to focus on getting consumer preference, awareness, attitudes – getting your message out,” he goes on to say. “Shopper marketing tends to say that when consumers are in a shopping mode, they are making choices about categories and brands. And when they’re in that mode, they have different needs and they have different media consumption. So let’s market to them differently in store than when we’re marketing to them outside of
the store.”

CPG marketers benefit because they’re spending money more efficiently, he adds, and retailers benefit because marketers are helping them close the sale when their customers come into
the store.

Abens was surprised by the study results that showed how much each trading partner wants to collaborate and how little they are satisfied with how it’s done today.

“The reason for the gap is that they don’t know how to collaborate,
he says. “For retailers, collaboration is if the manufacturers buy
more of our programs, then we would have better collaboration.
For manufacturers, it is if retailers would just go along with our recommendations on the program then we would all collaborate better.  Well, that’s not really collaboration.”

One of the results of the study was that traditionally retailers focus on shoppers, while manufacturers focus on retailers. For shopper marketing to succeed, both need to focus on the shopper together. 

“It really provides common ground for both of us on which to collaborate,” stresses Abens. “Everybody wants to collaborate, wishes that they were collaborating, and are searching for ways to collaborate.  And one of the keys is that recognizing that we do have a common denominator and that is the shopper.  If we were to put our focus on that jointly, that would improve our collaboration.”

That is the path that ConAgra is on, and Abens looks for improved results. While he isn’t able to quantify the benefits so far, he reports that “our performance has improved with our shopper marketing programs versus our traditional trade promotion programs.”

And that’s the bottom line of collaboration.


Market Watch
Unique Shoppers Call for
Custom Marketing: Study

By Rose Anthony

Shopper marketing campaigns are not created equal, says a
new study.

Why?  Every retailer has a unique shopper base. CPG marketers should tailor programs to their shoppers’ preferences and include media that influences them to purchase. That is the view of BIGResearch, which revealed results of a study of comparative shopper habits at the Promotion Marketing Association’s first annual Shopper Marketing Summit.

“Consumer insights are an important building block for shopper marketing campaigns,” said Kim Rayburn, senior vice president of BIGresearch. “Marketers should base promotions off what their shoppers actually want, not what they think they should want to increase ROI.”

Case in point: BIGReaserch found that seven of ten (71.6%) of shoppers at Kroger supermarkets say coupons influence their
grocery purchases while only six of ten (59.2%) of Safeway shoppers say the same. Findings presented at the summit included a deeper look at grocery, specifically the shopper habits at stores operated by these retailers.

Although Kroger shoppers are more influenced by coupons than Safeway shoppers, this promotion is most likely to influence both groups in their grocery purchases. Newspaper inserts follow (51.1% for Kroger shoppers and 48.5% for Safeway shoppers), while in-store promotion rounds out the top three (45.9% of Kroger and 43.5% of Safeway shoppers said the media influences their grocery purchases).

Kroger shoppers say that the in-store promotion that “influences/greatly influences” them the most is product samples (60.6%) followed by shelf coupons (47.8%) and store loyalty cards (47.6%).

Product samples (58.5%) are also most likely to influence/greatly influence Safeway shoppers; however, reading product labels (48.9%) was second for them. Store loyalty cards (46.6%) came in third.

Grocery shoppers tend to “date around," says the study. More than one-third (34.3%) of Kroger shoppers buy their health and beauty products at Wal-Mart; 22.5% of Safeway shoppers pick up their prescriptions at Walgreens.

More than three-quarters of both Kroger and Safeway shoppers indicate that gas prices are impacting their spending. Close to a third of both retailers’ shopper base said they are spending less on groceries as a result of costs at the pump.

Economy Doesn’t Affect Alcohol Purchases
Alcoholic beverage purchases may be recession-proof, according to research by The Nielsen Company. The declining economy is having only a mild impact on consumer purchases of alcoholic beverages at such locations as grocery, liquor, convenience stores, warehouse clubs and other stores.

About half of the consumers surveyed report that the struggling economy has had no influence in the amount they are spending for beer, wine or spirits at off-premise outlets; less than 20% indicated a significant impact. More than eight of ten (80%) consumers are spending the same or more on these purchases compared to a year ago, according to the research released at Nielsen’s Consumer 360 conference in Phoenix recently. 

Who Are ‘Green’ Shoppers?
What types of consumers purchase “green” products, what do they buy along with them, and how far they are willing to travel to attain them? The answer to those questions is the goal of Information Resources, Inc. (IRI) and TNS, a provider of market and consumer insights and information.

They are drawing on data from both TNS “Shades of Green” segmentation methodology and IRI’s Consumer Network Household Panel. The former is a grouping of consumers by their attitudes
and behavior towards environmental issues and motivation to purchase green products. The latter is an accurate reflection of
U.S. demographics, providing data on actual purchase patterns, product selections, trip missions and related shopping information. The combination will enable IRI clients to monitor category and
brand purchasing dynamics across the full range of green
consumer segments.

IRI Expands Services
Information Resources, Inc. (IRI) has enhanced its commitment to consumer research panel innovation with the release of several cutting-edge solutions. While most panels focus on the purchase stage, IRI wants to help manufacturers see more clearly, from start to finish, the four stages in the product cycle: in-store consideration, purchase, inventory, and consumption.

Some of the company’s recent releases include including panel-based Virtual Shopping, Web-based individual usage surveys, needs-state analytics, price monitoring and optimization and new applications of scanning technology. The focus here is on leveraging this technology to arrive at the next generation of consumer insights and change the dynamics of longitudinal purchase panels. Specifically, IRI aims to provide its clients with the following: advanced understanding of the consumer decision-making progress; continuous price monitoring and optimization; needs-state consumption intelligence; and deeper, faster individual usage insight.
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