Coca-Cola Rolling Out Global
Shopper Segmentation Protocol
By John Karolefski
In an ambitious move notable for its wide scope and marketing implications, The Coca-Cola Company is rolling out a shopper segmentation protocol that can be applied around the world.
This sweeping global tool has been launched in multiple countries across Europe, Asia, Africa, and the Americas, with more in planning for 2009.
The reason for the global protocol, says Karen Gryson, Director of Marketing Strategy & Insights, is that local markets were each developing their own tools. These different methods not only represented redundant development efforts, but also would make cross-country comparisons difficult for the $29-billion company that markets 2,800 beverages and 450 brands in over 200 countries.
“Development of a standardized global protocol would therefore not only improve productivity, but would also enable a common language for shopper understanding across the company and facilitate cross-country opportunity identification,” she said. “The challenge, though, is how do you balance the global needs and the need for commonality and comparability with the need for local actionability?”
Gryson said the goal was a common global approach for shopper understanding that would enable Coca-Cola to identify not only
the local opportunities, but also regionally or globally scaleable opportunities.
“These opportunities might be at a channel level or for a particular retail customer,” she explained. “So we needed a standardized, yet flexible, Best Practice protocol that could be implemented in any market around the world without local reinvention.
“When we looked at all the work that had been done locally around the world,” she went on to say, “we found that fundamentally people shop for the same reasons regardless of where they live. Relative importance of the various missions may differ from market to market, and the channels may differ, but fundamentally the needs are similar. This gave us reason to believe that a global segmentation would
be feasible”
Gryson said that Coca-Cola’s ultimate Shopper Marketing objective is “to create the perfect shopping experience, one store at a time. So we want to use all the merchandising and marketing activities that will motivate a shopper and drive purchase.
“Are there things we could be executing better in stores today to deliver better results for us and for our retail partners? Where are the places where we may be under-performing today? Where are the opportunities for us to drive even more value out of our brand? If we do all of this well, we achieve the win-win-win: we drive more profitable sales in our categories, using segmented execution strategies that benefit us as well as our retail partners, and the shopper ultimately benefits because we have made the right brands available in the right packs in the right places at the right time” said Gryson in a presentation at the Shopper Insights Conference. The event was hosted in Chicago by the Institute for International Research (IIR).
To gain a comprehensive understanding of shoppers, Coca-Cola utilizes multiple sources of data, including a proprietary large scale quantitative tool that leverages the global segmentation. According to Gryson, it informs a holistic understanding of the shoppers’ lifestyle, channel usage, shopping missions, category and brand purchasing behavior, and consumption occasions.
“It’s critical to understand how the product is ultimately going to be used when you’re thinking about how you might apply strategies,” she said. “The ability to look at the intersection of multiple dimensions is where there’s real power in this tool because – since we’ve got a single source database – all of this information is linked. We can slice it and dice it any way we want to.
“We can look at any combination or aggregation of channels, missions, shoppers, categories, any way that we want to look at it,” she continued. “We can potentially profile any type of visit. We can look at a particular mission within a particular target segment, and understand how we are performing versus competition.”
According to Gryson, there’s a tremendous amount of analytic depth associated with the tool. It is a strategic tool that enables Coca-Cola to identify and prioritize opportunities.
“With this information, we can develop quantitative revenue maps for almost any combination of the elements,” she said. “We can diagnose our performance gaps. We can understand within which missions and which channels we are strong and we are weak, and then go in-depth and understand why and what we need to do to improve our performance. All of this can help inform our brand, price, pack, and channel strategies.”
Gryson said this work facilitates collaboration with key retail customers. Because Coca-Cola collects information down to the retailer level, it is able to bring shopper insights to trading partners and give them insights about their shoppers that they might not have otherwise. It also enables retailer comparisons to help them understand how they are performing compared to a competitor and where there are opportunities to differentiate. .
Shopper marketing is an area of renewed focus for Coca-Cola, according to Gryson. “We’re a consumer marketing company,”
she said. “Our focus has traditionally been on consumer and
brand marketing.
“We are building on our past knowledge but in the context of today’s demanding shopper. We’ve got the passion, the drive and the talent to develop the kind of marketing muscle with shoppers that we have with the consumer. And in collaboration with our bottling partners
and key retail partners, we will achieve this to our mutual benefit,”
she said.
Market Watch
New Shopping Patterns Emerge
To Cope with Sagging Economy
By John Karolefski
More than three of ten consumers are eating at home more and eating out less, while four of ten feel economically worse off than a year ago, according to a new study by Unilever. The report, called “Winning Shoppers in Turbulent Times,” uncovers how different demographic groups will change their shopping habits in the midst of a challenging economy.
“There are different levels of anxiety over the economy that varied – as you might expect – according to income level,” Mike Twitty, director of shopper insights at Unilever, told CPGmatters in an interview.
“The lower socio-economic groups are more concerned than the higher ones.”
Even though consumers are tightening their budgets, they don’t
wish to compromise on product quality. The study shows that most consumers will continue to seek out trusted brands across the
store, with most shoppers declining to switch to a private label to save money.
Consumers also want manufacturers and retailers to be creative in product packaging and sales approaches. Some shopper preferences uncovered in the study include: larger pack sizes, smaller package sizes at lower price points, and modestly reduced package sizes with the same price point. The introduction of slightly lower quality items with the same price point was the least desired among respondents.
“It used to be that stocking up in order to save money was the province of the mid-tier and upper income shoppers,” he said. “Now we are seeing a phenomenon where lower income shoppers might jointly buy a membership in a club store and shop there in groups. When they make purchases, they may split up those purchases outside of the store so they can capitalize on the value offered by those kinds of outlets.”
Unilever has talked a lot about “quick trips” and how important they are to the buying of consumer packaged goods, according to Twitty. “One of the things we are seeing is that the lower socio-economic groups have recognized for a long time that quick trips are a convenience. They are expensive and somewhat of a luxury; that is, buying something when you need it as opposed to putting it on a list and waiting until you go shopping.
“The lower socio-economic groups – out of necessity – have minimized that kind of behavior,” he continued. “But we are now seeing that all socio-economic groups in the current economy are beginning to do the same thing.”
To become more frugal, about half of the study participants would “reduce spending a lot” on entertainment and vacations. The top two savings tactics reported by shoppers include “only buy when it’s on sale” and “use coupons whenever I buy this product.”
The top dozen categories shoppers will not abandon include anti-perspirant and deodorant; batteries; canned vegetables; fresh meat and seafood; hair care; household cleanser; laundry detergents; margarine; pain relievers and cold medicines; personal wash; pet food; and tissues and toilet paper.
The top five categories where shoppers would reduce spending if the economy continues to struggle include air fresheners, cookies, beer/wine, frozen dinners, and soda/pop.
Wal-Mart Scores with Virtual Stores
When Wal-Mart wanted to find out how people shopped its stores, the world’s largest retailer turned to a process called Visual Intelligence in a Smart Store Real-time Analytical Environment(VISSRAE). In three months, twenty-three 215,000 sq. ft. virtual stores were “built” by Red Dot Square and stocked with intelligent packages.
As Wal-Mart had hoped, reported company executive Candace Adams, the virtual store experience measured in-store marketing initiatives in real time, engaged and collected data, and delivered world-class shopper insights. Wal-Mart is quick to point out that it “cares about the brands, but cares more about optimizing the category itself,” said Adams, speaking in Chicago at a Shopper Insights conference hosted by the Institute for International Research (IIR).
Interbrand Urges Unified Insights
Shopper research, shelving principles and package design can combine to form a powerful approach for activating purchases and increasing brand loyalty. The starting point for these unified insights is for manufacturers and retailers to listen to shoppers better, according to Bruce Dybvad, president of Interbrand, the well-known branding consultancy.
To maximize unified insights, he said environment, shelf and package must optimize four things: attract, focus, persuade and involve. “It’s a sea of sameness on food, drug and mass shelves. We’re trying to bring energy into this environment. There is energy from both manufacturers and retailers to work together connecting with shoppers,” he said in a presentation in Chicago at the Shopper Insights conference hosted by the Institute for International Research (IIR).
SEPTEMBER 2008
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.”
