Diageo Expects Sales Growth After Focusing on Shoppers
 
By Dale Buss

Shopper marketing in the spirits business has come a long way from the days when dancing bottles on cardboard displays at the point of purchase, animated by little battery-powered electric motors, would compel shoppers to check out a brand. But even at Diageo, the spirits-industry giant, shopper marketing remained relatively undefined and unrefined until about three years ago.

That’s when the London-based parent company of brands including Guinness, Smirnoff and Captain Morgan “made a commitment to customer marketing as a way to drive growth,” explained Jonathan Nell, Diageo’s director of shopper marketing, who came on board two years ago.

And today, harnessing new insights about its customer demographics and usage occasions for its brands, Diageo is proactively working with its retailer-customers on a number of shopper marketing programs that show early promise of generating double-digit sales increases at fully participating outlets when they’re eventually rolled out completely.

“All of the test results we’ve gotten are directionally consistent not only with growing our brands, but also growing the entire category,” Shawn Fitzgerald, Diageo’s director of shopper planning, told CPGmatters. “This is a journey. We’ve got some really large-scale tests in place right now. The bottom line is that our [retailer] customers gain from the insights behind the tests, and we’re fulfilling shopper needs.”

To embark on their journey, Green, Fitzgerald and their colleagues first had to make sure that everything about Diageo’s shopper marketing efforts were aligned internally even as they had a clear mandate from the top of the company to jump start efforts to improve point-of-purchase motivation, marketing and merchandising.

“It’s a lot about getting aligned behind what you’re trying to achieve,” Nell said, “and sometimes even at the senior level we hadn’t really worked through, internally, what that meant.”

So Nell and Green spent considerable time working to integrate their shopper marketing aims and programs with Diageo’s brand marketing programs. “We needed to make sure it connects with what we’re doing in consumer marketing, and maximizing investments,” Nell explained.

At the same time, Diageo had to “sell” its retailer customers on the notion of embarking on a new and different journey in search of improved shopper marketing. Understanding how decision making works at large retailers was one key. Also, Nell and Fitzgerald took care to run thorough single- and multiple-store tests with retailers to validate the exercise and get their partners excited about rolling out the innovations in shopper marketing.

“Another thing is that it has been critical to work with those customers because they have the data that can really validate the performance of the exercise,” Nell said.

Diageo also worked with retailers to help ensure the success of the shopper marketing initiatives all the way back to consumer consideration of their purchases before shopping trips. Many Americans now use retailers’ web sites to get information about products and to help plot their purchases when they actually enter stores, and Diageo was able “to integrate into the retailers’ platforms with solution ideas, suggestions of food pairings [with spirits products and brands], and types of cocktails they could make,” Nell said.

Working with retailers in that way, Diageo also could heighten the attractive aspects shopping experiences that always have been a cut above typical CPG shopping for many Americans.

“People are on autopilot when they’re shopping for, maybe, bread or other grocery staples,” Fitzgerald said. “But [spirits] are a more engagement-oriented shopper experience, more similar to personal- or beauty-care items. It’s more fun. So the insights that are driving our strategies and activiations in the store are really around how do we tap into the state of mind that the consumer is in?”

Understanding who the shopper is because a hugely important learning about what the shopper is thinking. And in that regard, as Fitzgerald and Nell delved deeper into Diageo’s customer base, they found something huge that surprised them: Women are the primary shoppers for spirits and liquors, not men, as had been the assumption.

“Our shoppers are – more so than anybody had thought – the typical shopping moms,” Fitzgerald said. “It’s women who are making the purchasing decisions in our category and going on the shopping trips. And it’s a globally consistent framework. It helped us produce a model that we used to really change people’s way of thinking about who we should be talking to – and why females are important.”

Further, Diageo learned much more about when and why Americans shop for spirits. The industry long had appreciated that occasions largely drove purchases – including obvious ones such as New Year’s Eve, Christmas-holiday parties, and family celebrations of birthdays and other major holidays. What Nell, Fitzerald et al freshly learned was that the consumer’s definition of an “occasion” significant enough to drive a spirits purchase was much looser and more casual than Diageo had imagined previously.

“We had a tendency to focus on the big events – big parties where spirits in particular play a prominent role,” explained Fitzgerald. “But the reality is that those occasions are the minority of the occasions. There are a lot of other, more frequent occasions that happen throughout the year, and tapping into shoppers for those occasions is a bigger opportunity.”

Like what? Informal get-togethers with friends, maybe even spontaneous ones, on the front porch or patio, or hosting a Thursday-evening party. “It wasn’t that we didn’t understand those were going on,” Fitzgerald said, “but we reframed our thinking about how to focus on more year-round events.

“It sounds simple after the fact, but it’s actually a very powerful change and transformation in our thinking.”
Harnessing those and other shopper insights to a new resolve to create more effective shopper marketing programs with its retailer partners, Diageo has been developing, among other things, a “Simply Cocktails” merchandising initiative aimed at “infrequent purchasers” of spirits.

The idea is simple: Create a display and merchandising area for retailers where shoppers are drawn into curiosity about making cocktails out of Diageo spirits brands and complementary products. “Our insight was that cocktails are appealing to people, but there is an intimidation factor if they’re making cocktails for themselves or others,” Fitzgerald said. “Anything we could do to make that easier or less intimidating would help that shopper purchasing the products that they need.”

The Diageo displays have a “Simply Cocktails” banner and, in their fully deployed mode, three adjacent displays of different types of spirits, soft drinks and other complementary products. Each of these displays comprises a particular “level of difficulty” for shopper who wants to make cocktails. “Ready/Pour” is one, “Simple Mix” is the next step up, and “Easy Shake” is the highest level.

“’Easy Shake’ is the most complicated, but even it is relatively easy to do,” Fitzgerald said. “The idea is to provide different solutions to help people with different types of occasions or different levels of sophistication” in preparing cocktails.

Retailers have the option of customizing the displays or using their own nomenclature, and of selecting from among the modules that Diageo has designed. For example, a retailer with a large footprint and a big variety of shoppers will be more likely to engage the whole Simply Cocktails model, whereas an outlet with a smaller footprint and a more specialized clientele might be more selective – such as convenience stores, which are tending to opt for just the “Ready/Pour” and “Simple Mix” modules.

In any event, tests of the Simply Cocktails concept with selected retailers showed an average 11% return across the Diageo brands involved. And Fitzgerald said that the company is looking for “directionally consistent” results at its retailer partners as more test and roll out the concept.

“It’s amazing,” said Fitzgerald, “to see how embedded it’s become in just a year or two.”


National Syndicated Program Launched
To Provide Grocery Shopper Insights

By Jack Grant

A national syndicated program called Grocery Shopper Insights (GSI-1) has been launched by VideoMining Corporation, provider of in-store marketing intelligence for consumer packaged goods (CPG) manufacturers and retailers.

Tom Sullivan, who has joined VideoMining Corporation as President, will rely on his veteran leadership in the industry to spearhead the company’s move into syndicated shopper metrics.
 
The program will deploy VideoMining’s breakthrough in-store measurement and analytics technology in a carefully-selected sample of stores in 15 U.S. markets to analyze over 25 million grocery trips this year. The large behavioral data set, integrated with transaction data and attitudinal surveys, will provide unprecedented visibility into the path to purchase of grocery shoppers and factors that impact purchase decisions.

The overall objective of the program is to help participants gain direct feedback on precisely where to focus their efforts for improving shopper engagement and conversion for each grocery trip type and for each shopper segment, explained Rajeev Sharma, Founder and CEO of VideoMining.

The program’s components, each aimed at optimizing different elements of the grocery channel, include:
  • Center of Store Merchandising Optimization (COSMO)
  • End-Cap Optimization (ECO)
  • Aisle/Category Optimization (ACO), and
  • Front-End Merchandising Optimization (FEMO).

“We are delighted with this opportunity to bring the true ‘voice of the shopper’ to grocery retailing,” said
David Haubert, Vice President of Business Development at VideoMining and former Director of Manufacturer Collaboration at Safeway. “We fill a major industry void by providing a scalable platform to measure shopper responses to each merchandising and marketing vehicle, so retailers and manufacturers can collaborate to meet shopper needs.”

Sharma of VideoMining added, “Our prior work has demonstrated that grocery stores may be quite successful in engaging shoppers at different points of the trip, but not necessarily in converting them. This program will focus on understanding purchase barriers and ways to overcome those barriers effectively, so grocery stores can become more productive.”

The program will benefit from VideoMining’s experience with a successful ongoing syndicated program in the convenience store channel as well as retailer-specific in-store learning and testing programs with several major chains.

Speaking of the addition of Sullivan to the VideoMining team, Sharma said, “We are very excited to have Tom on board, especially at a time when there is a strong industry need for creating standardized shopper metrics and solutions. He will also play a key role in our Grocery Shopper Insights program.”

Sullivan, whose resume includes 35 years of experience at research, consulting and consumer packaged goods companies, said, “I am excited to join VideoMining at a point when it is making a transformation from a project orientation to a syndicated model.”  

His most recent position was Vice President of Customer Development and Services, Nielsen In-Store, at the Nielsen Company. His background includes positions with BD3 Consulting, NCH Nuworld Marketing, Information Resources, Inc., Marketing Corporation of America, Colgate-Palmolive Company and Unilever.   


FEBRUARY 2011

Category Leadership Has Evolved into Joint Business Planning

By John Karolefski

Category leadership has evolved from basic analytics to strategic joint business planning, says Alison Chaltas, Executive Vice President of GfK Interscope. 

Parallel to this evolution have been steps along the way: ECR, category management, cross-functional teams, shopper insights and shopper marketing – “the historic pathway for fast-moving consumer goods.”   

Chaltas defines category leadership as “insight-based engagement with retailer partners applying best practices and capabilities to drive mutually beneficial category results.” In a presentation in Chicago at a category leadership conference hosted by the Institute for International Research (IIR), she listed four key developmental stages of category leaderships:

  • Opportunity Assessment
  • Initiation and Activation
  • Overcoming Roadblocks
  • Driving Wins and Scorecarding

When assessing the opportunity, she recommended first analyzing the strategic importance of the category and its potential for growth. What role can marketers credibly claim – captain, advisor, none? What will it take to lead? Retailer receptivity to collaboration must be determined as well as the opportunity to open up adjacencies. The goal is to ladder up to collaborative business planning.

“Category management is not enough anymore,” she said. “Shopper insights alone don’t tell the whole story. The real category leadership potential lies in synthesizing insights around the consumer, the shopper, the category, key competitors and company capabilities. Winners will be those that can connect the dots across their insights base and develop a clear category leadership strategy with highly actionable plans customized
by retailer.”

According to Chaltas, initiation spans the key stages of setting the foundation, getting started and codifying capability. In the first stage, two building blocks emerge as vital to customer leadership startup:

  • Clear Mission and Roles According to the 2010 Futurescope survey by GfK Interscope, two of three respondents (67%) agree that it is not always clear who owns each tactic.

  • Support from the Top In the survey, 93% say it’s important to have high-level support.

Effective departmental missions provide clarity, she explained. For example, for consumer marketing the keys are building brand equity and trial, and moving the customer closer to shopper mode. For shopper marketing, they are driving the trip, closing the sale, and building brand/retailer equity. Funding to motivate in-store execution is the key to trade marketing, while insight-based best practice execution is the key to category management.

“Effective category leadership requires a cross-functional perspective,” said Chaltas, “but finding personnel with cross-functional experience is a challenge.”

Using outside sources can be an accelerator, she said, because this enables a patient capability along with an immediate market impact. The four steps to a start-up roadmap are: start at the top, ready the team, build integrated insights, and activate creative solutions.

She advised conference attendees to choose carefully when selecting engagements. The “opportunity priorities” are transforming merchandising, right-sizing assortment, optimizing seasonal promotion plans, and developing “best practices” for new item launches. “Pilot” wins, she adds, can later be deployed more broadly. 

According to Chaltas, training is vital to building broad and lasting leadership capabilities. Her training roadmap consists of fundamental selling skills, category management 101, advanced category management, and strategic customer development.

She listed the four most common roadblocks to customer leadership and gave fictitious examples of how typical executives would comment, along with specific response strategies to address the roadblocks: 

  • Reluctant Retailer “Not sure doing category management in this category is going to make much of a difference. I don’t need the distraction.” (Response: Dollarize the impact of “hittable” improvements; carve the lowest-hanging wins to build a track record of success; structure engagement for minimal drag on retailer resources.)

  • Organizational Overload “We’d like your team to lead a complete revamping of our merchandising approach across the whole aisle.” (Response: Create more bite-sized project phases; forge non-competitive partnerships to help shoulder the load; use outside resources.) 

  • Dug-in Incumbents “Ted and his team have really helped us keep this category chugging along. Thanks, but we are in good shape right now.” (Response: Start in “validate” role to keep the captain honest; develop unique and transformational “door-opener” insights; carve out an issue you can unique own given your capabilities and resources.)

  • Dearth of Data “Sorry, but it’s our policy not to release category level data to our vendors.” (Response: Use alternative sources such as shopper research insights and household panel data to illuminate category opportunities; obtain a one-time limited category data slice to diagnose key issue and build toward an ongoing view.)

“An ROI perspective can turn today’s wins into tomorrow’s customer leadership momentum,” said Chaltas, illustrating her point of view with results from the Futurescope survey. For example, more than a third of respondents to Futurescope survey (38%) said that the inability to demonstrate shopper marketing’s ROI is a “major roadblock,” while slightly less than half (46%) said it is a “minor roadblock.” More than a third of respondents (37%) agreed that their organization is supporting Shopper Marketing with adequate resources and funding, while the same number (37%) disagreed with that notion.

“The bottom line: the bar for category leadership continues to rise and we all need to get better at defining
our joint goals across trading partners, developing and integrating the right insights to understand the opportunity, and collaborating to activate operationally viable solutions that bring the plan to life at retail,”
Chaltas summed up. 


Market Watch
Shopper Insights Provide Actionable Intelligence

By Lynne Cooke

Shopper insights are a valuable resources when applied within merchandising, marketing, pricing, trade, product development, and other retail disciplines, according to a study titled “Shopper Insights: Actionable or Academic?” released by DemandTec at the recent annual convention and expo of the National Retail Federation.

Key findings from the research include:
  • Nearly half of executive manager respondents use shopper insights regularly.
  • More than three of four (80%) of retailer and manufacturer respondents say shopper loyalty program data is considered the most actionable type of shopper insights for improving retailer performance.
  • Nearly three of four (70%) of retailer and manufacturer respondents score both behavioral and life-stage shopper segmentations as “most valuable” segments within merchandising processes.
  • More than nine of ten respondents consider the application of shopper insights in most business processes as a shared responsibility between trading partners.
  • Nearly seen of ten retailer respondents say that shopper insights should be solely funded by the retailer or come from trade funds.
  • Shopper insights are considered “highly valuable” in almost every business function, with category management emerging as the leading function.

“Today’s most progressive retailers and their manufacturer trading partners understand that shopper-centricity is the new foundation for effective collaboration,” said Marc Dietz, Vice President of Marketing for DemandTec. “Recognizing the importance of shopper insights, retailers are now retooling their approaches to merchandising, creating competitive advantages and differentiating themselves in the highly dynamic retail industry.”

The research was commissioned by DemandTec and fielded by RetailWire.com in September 2010. The survey polled nearly 600 RetailWire community respondents, spanning across both retailers and manufacturers, from executive management to category managers.

Steps to Thrive
“Despite an improving economy, 81% of shoppers will not go back to shopping the way they used to in the glory days of double-digit retail growth. Instead shoppers have written a new play book with rules that will let them buy what they need (and occasionally want) with new limits and a focus on moderation. There are eight concrete steps that grocery retailers and manufacturers must take to thrive as Americans shop the new way,” Wendy Liebmann, CEO of WSL Strategic Retail told attendees at the Food Marketing Institute Mid-Winter Executive Conference.

Among the steps food retailers and manufacturers must take to follow shoppers’ new rules are:

#1  Don’t let her out the “door.” Retail is not real estate.
#2  Own health & wellness (holistically). Food retailers have a significant edge.
#3  Understand the real and timely value of minority shoppers. They are coming back to shopping sooner,
and in new ways.
#4  Create a transparent, relevant and flexible value strategy. It’s not just about price.
#5  Enhance service at every point of shopper contact. It’s not only about a “body” in the store. 
#6  Integrate “green” into your everyday story. It is now “wallpaper” for every retailer.
#7  Break every rule. Reassess and stretch your brand.
#8  Experience really matters now. It the essence of value.

More Online Purchases
Purchasing products in brick-and-mortar stores has been trending downward while purchasing online has increased steadily in recent times, according to an ongoing shopper experience study by The Integer Group and M/A/R/C Research

The study revealed that age plans a role in how consumers make purchases online. While 18-24-year-olds seem more comfortable shopping online, they continue to gravitate toward categories that have had a more establish history online, such as electronics, clothing, books and music.

The study also found that most shoppers across all age groups still have difficulty adapting to purchasing consumables online. Nearly of shoppers are currently saying they “have not and never will” use the Internet to buy anything from the food and beverage category.

SHOPPER MARKETING

Diageo Expects Sales Growth After Focusing on Shoppers

National Syndicated Program Launched to Provide Grocery Shopper Insights

Category Leadership Has Evolved into Join Business Planning

Shopper Insights Provide Actionable Intelligence
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March 2011
               
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