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SEPTEMBER 2008

SHOPPER INSIGHTS

Dr Pepper Snapple Group Scores
With Targeted Shopper Marketing

Most Shoppers Won't Trade Quality for Price: Survey

Simulated Supermarket Helps Frito-Lay
Understand Shopper Behavior

Where Does 'Shopper Insights' Report in an Organization?
Dr Pepper Snapple Group Scores
With Targeted Shopper Marketing

By John Karoleski

Dr. Pepper Snapple Group is embracing shopper marketing while working closely with its retail partners. The mutual goal is to build more relevant and effective marketing strategies through shopper segmentation.

To that end, the Plano, Texas-based beverage marketer is partnering with retailers by overlaying shopper data with consumer data to create targeted marketing programs that build loyalty and drive traffic.

“Everything we do is shopper-centric,” said Rob Colarossi, vice president of customer development for Dr. Pepper Snapple Group. “We’re driving volume for the current year with account-marketing programs and we’re also trying to change behavior over time. Our retail customers want a greater understanding of shopper needs. How can we build an expertise at the POB: the Point of Buying?”  

Dr. Pepper Snapple Group markets more than 50 brands of carbonated soft drinks, juices and ready-to-drink teas. The brand portfolio includes Dr. Pepper, Snapple, 7UP, A&W, Canada Dry, Hawaiian Punch, among others.

Colarossi outlined his company’s program recently at the Shopper Insights Conference hosted by the Institute for International Research (IIR). He is scheduled to speak in Atlanta in October at the Category Management Conference hosted by the Category Management Association (CPG CatNet).  

By deploying a sophisticated targeted process, the beverage marketer aims to learn:
  • How each shopper segment responds to promotions and    new products
  • Which segments have become more or less loyal over time
  • Which segments have the greatest long-term value to both trading partners.

The goal of the trading partners is to build customized activation plans that resonate with shoppers. “One size for all does not fit anymore,” he said. “National programs are not working anymore.
The retailer wants {programs} that are customized.  We’ve got to understand what’s important to Kroger and what’s important to
Wal-Mart. They have platforms and are very clear about what they want to do.”

Colarossi gave the example of partnering this summer with Kroger on a direct mail campaign for Dr. Pepper in one of the chain’s divisions. The target was Kroger shoppers with a high propensity to buy the category. A insight that the manufacturer brought to the program was that shoppers considered Dr. Pepper as an indulgent beverage that they savored and drank slowly. 

“We had to marry our brands and categories with their shopper segments,” said Colarossi, describing how the foundation for the trading partner relationship was laid. “It took nine months, but now we are looking at our brands and categories through the Kroger lens. We’re talking to their buyers, marketing and analytic people.”

He listed three criteria for selecting retail partners:
  • Do they have scalability?
  • Do they truly understand consumer-centric marketing?
  • Are they truly trying to build loyalty with their core shoppers?

“Every situation and customer is different,” said Colarossi. “We’re constantly thinking of innovative ways of doing things. At some point in time, there is a behavior change. Not with the shopper, but with the customer and how they’re looking at us and behaving with us as a manufacturer. It’s a magical moment. I call it a ‘seat at the table’ at the beverage category planning meeting.”

He outlined the three steps that Dr. Pepper Snapple Group uses in the shopper marketing programs:
  • Step One: Assessment  What are the wants and needs of the shopper (Nobody knows it better than the retailer). Where do we want to target our energies?
  • Step Two: Planning  Build a three-year custom strategic business plan with the retailer that can accelerate category revenue and profit.
  • Step Three: Activation  The plan could be one-to-one marketing, sponsorship platform that is important to the retailer, direct mail, email marketing, or others.  

The shopper marketing programs are created by the Customer Development Department that consists of 40 people – compared to six people when the department started five years ago. Alongside this department is Category Management with 50 people – compared to six when the department started 15 years ago. 

Colarossi spoke of the powerful synergy between the departments. “We call Category Management our reason for being and Customer Development our reason for staying. Category management is all about building a foundation. Then leverage shopper insights for the right assortment, pricing, space and display program.

“Once we have the foundation and right assortment in the store, we think about the reason for staying,” he went on to say. “What are the most important things to our retail customers? Two things: they want people to be more loyal to their brand, and once they’re in the store, they want them to buy more. So we created a department to understand the right shopper insights, the right strategic business plan and the right activation plan.” 


Market Watch
Most Shoppers Won’t Trade
Quality for Price: Survey

By Rose Anthony

Despite rising food prices, nearly eight of ten (79%) of U.S. adults say they do not want to compromise on the quality of the food they buy, according to a new survey. Seven of ten (70%) are continuing
to buy the same amount of natural and/or organic foods as they always have.

The survey, conducted by Harris Interactive, also found two in three adults (67%) prefer to buy natural and/or organic foods to conventional foods if prices are comparable, and they would like to find ways to be able to buy these foods within their budget (66%).

Surprisingly, the survey results were similar across geographic locations, despite the varying regional impact of the housing slump and economic downturn.

“It is reassuring to see these results as they confirm we’re on the right track in highlighting our value offerings for our customers,” said A.C. Gallo, co-president and chief operating officer for Whole Foods Market. “We’re reminding shoppers that they don’t have to trade down on quality to save money. They can continue to choose high-quality foods and stay within their grocery budgets.”

The survey also found many adults are now preparing more meals at home (43%), using more coupons (40%), or going out of their way to look for lower-cost items (37%) as a result of higher food costs.

Clorox Scores by Tailgating
Clorox kicked off its three-month “off-season” tailgating promotion for Kingsford charcoal in August by leveraging the shopper insights learned in 2007. The goal of the promotion is to inspire and empower shoppers to create home meal experiences. These programs can serve to combat center store declines for retailers. Using consumer and shopper insights, Clorox aims to understand and influence consumer demand and the shopper in the store. 

Backyard tailgating drives incremental category sales, according to Suzanne Cheves, director of shopper marketing, speaking in Chicago at the Shopper Insights Conference, hosted by the Institute for International Research (IIR). A market basket with Kingsford charcoal is twice as valuable as the average market basket, she said.

Shopper Metrics Online
A new web-based analytics tool called VideoMining Online enables real-time access to a rich set of shopper metrics generated by the measurement platform from VideoMining.  The online tool will provide a means for CPG manufacturers and retailers to analyze and monitor how shoppers respond to various marketing and merchandising strategies.

The tool provides a multi-dimensional analytics framework where sales data is integrated with a suite of shopper metrics representing causal information on the purchase decision process. It thus greatly expands the scope of the analytics for optimizing all aspects of a retail strategy.

Emotional Connection Rules
Shoppers determine “value” emotionally, not primarily by rational means, according to Dan Hill, president of Sensory Logic, a consulting firm whose methods include eye tracking and facial coding. This has implications for determining which in-store media engages shoppers emotionally.     

“We feel before we think. Emotions are the key to understanding shopper decisions,” he said in a talk in Chicago at the Shopper Insights conference hosted by the Institute for International Research (IIR).

Less BTS Spending
There will be less traffic in the stores aisles this back-to-school season, according to the NPD Group annual Back-to-School 2008 survey. Twelve percent of consumers said they would do their BTS shopping in grocery stores vs. 14% last year. Warehouse clubs were selected by 12% vs. 11% last year, as the preferred venue for school-related items.

Shoppers were asked what motivates their BTW purchases. The number one reason was “value,” followed by the fact that the item
was “required.”


AUGUST 2008

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.
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