Kraft Foods Develops ‘Emotional Profiling’
To Help Guide Marketing Efforts
By Dale Buss
If a shopper strolls down the cookie aisle and then stops to ponder purchasing Keebler Elves or Nabisco Oreos, what finally makes her decide for one over the other? Is it just a matter of brand equity? Packaging? Pricing? Icing color?
To answer those questions, Kraft Foods has been developing a sophisticated new science of “emotional profiling” to provide actionable answers both for the CPG giant and its retailer partners.
“The theory behind emotional design is uncovering the difference between ‘liking’ something and ‘preferring’ it,” Melissa Knorr, principal scientist for Kraft Foods Research, Development & Quality, told CPGmatters. “The idea is fairly basic. Even if an individual likes two different products, they may still prefer one over the other. We’re trying to figure out that difference or gap so that we can make the best possible products that consumers will truly prefer.
“Knowing what exactly our consumers prefer also helps us better communicate those attributes and, in turn, can help guide our marketing efforts.”
Knorr declined to share details as they apply to specific Kraft brands or products – such proprietary information would be too valuable to competitors – or how the pursuit of emotional design affects Kraft’s marketing, advertising, merchandising and other functions. But she said that the company has been working on emotional profiling for three years as part of its sensory and consumer-testing work.
There’s been an explosion of emotion-research articles published in journals over the last five years about innovative research tools, scaling techniques, how these methods distinguish mood from emotion – and research companies have responded with ways to measure all of these dimensions of emotional profiling. Food has always affected the way human beings feel, of course, based on personal experiences, family, tradition and culture, Knorr explained.
But today, traditional research tools may not be enough to capture the implications of emotion on food shopping. That’s because in part consumers are increasingly worldly thanks to more travel, a proliferation of ethnic and artisanal foods, an explosion of new products in general, and other factors. These same factors also help explain why two identical-looking products could achieve the same score in acceptability tests, but perform wildly differently in the marketplace. And emotional research may be able to help pin down the implications.
“We were doing some testing on a new formula for an established product,” Knorr said. It was a reformulation for an iconic brand, modifying a functional attribute with the idea of expanding the product’s usage and contemporizing it. The results of consumer acceptability and ”liking” tests conducted at a central location “suggested we had a parity product, so we were feeling good about it,” Knorr said. “But we wanted to get insights beyond liking, so we did some qualitative home tests and emotional profiling over four days and looked at the consumption experience and realized we might have a problem.”
Indeed, after ascribing emotional differences to the products, key differences emerged despite the fact that both the new and the old product performed well on ‘liking’ tests. So before the home-use test phase, the Kraft team inserted an emotional-profiling evaluation of the proposed new product and the old one.
“Emotional profiling gave us critical direction,” Knorr said. “Traditional tools were not enough. We used emotional research to define unique points of difference and create a new hierarchy of attributes that go beyond ‘liking.’ The failure of consumers to make an emotional connection [to the reformulated product] was driven by changes to sensory attributes we hadn’t measured before.
‘’In the test product, emotional attributes appeared early, but were weak and faded fast, leading to a disappointing experience. So we reformulated again to get closer to the original sensory profile.”
Kraft took a detour in overhauling this product based on these indicators that there would be a problem with the new SKU based on emotional reactions to it. Knorr’s team veered into qualitative research that included interviews over four days, consisting of seven two-hour sessions with 21- to 60-year-old women who represented a variety of positions along the brand-loyalty scale. They evaluated the new and old products in various ways.
The researchers found that flavor, texture and mouth-feel experiences with the new product weren’t as satisfying as with the old one, based on consumers’ emotional responses.
The new product’s “failure to make the right emotional connection was driven by changes in ‘unmeasured’ sensory attributes,” Knorr explained. Once those emotional attributes were identified, “the product was restored to a more enhanced experience, similar to the original.”
The bottom line: If Kraft had not used emotional profiling to go beyond the initial “liking” reactions, the marketer couldn’t have made changes that rescued the product and sent it on the way to becoming a success instead of a failure.
CPG Puts Shopper Marketing Stake in the Ground: Futurescope
By John Karolefski
Shopper marketing has become a widely practiced and transformational approach in the consumer goods industry, says the 2011 Futurescope survey from GfK Interscope.
Ninety-five percent of those responding to the survey are actively engaged in Shopper Marketing, with more
than eight of ten (82%) saying the emerging discipline is vital to their company’s success. Half of the respondents say Shopper Marketing is driving innovation, and more than six of ten (63%) say it is driving collaboration with retailers.
The online survey polled over 300 industry practitioners representing retail, food, beverage, personal care, healthcare, beauty, general merchandise and electronics. The survey was established in 2006 to profile the attitudes, approaches, and best practices of practitioners as they activate Shopper Marketing.
“Shopper Marketing is starting to drive innovation and we‘re starting to get results. Those are all great things for the future,” says Alison Chaltas, Executive Vice President with GfK Interscope. She defines Shopper Marketing as “strategy- and insight-driven in-store or retailer-specific marketing that includes some form of equity-building messaging.”
The survey found that financial investment in Shopper Marketing continues to increase. Three of four respondents (76%) reported that their company devotes at least 5% of its marketing budget to Shopper Marketing – compared to 69% last year and 56% in 2009.
This upward trend will likely continue. When asked if Shopper Marketing will get significantly more resources and focus, 28% say that is already happening, while nearly half of the respondents (47%) predict more investment within the next two years.
“More resources are expected to come,” says Chaltas. “As we formalize and become an institution, the
budgets follow.”
Apparently, so will confidence in the discipline. More than six of ten (63%) of respondents believe their company is capable or rising to the top tier of Shopper Marketing leadership – up from56% of those saying so in 2009.
The research found that digital/mobile technologies are exploding with lots of testing being conducted. Internet coupons/offers is the leading tactic currently in use, say half (52%) of survey respondents. Thirty-seven percent list mobile websites, with a third of respondents each naming QR codes on in-store displays and POP, coupons sent to mobile phones and participation in retailers’ mobile marketing.
Two of three executives (65%) responding to the survey “agree” or “strongly agree” with the statement that digital/mobile will transform shopping in next four years. However, more than half of respondents say such advances in digital/mobile tactics will shift power to shoppers by empowering them to the detriment of manufacturers and retailers. A third (33%) say that’s already happening, while more than a quarter (27%) say it will happen within two years. Finally, two of three respondents (65%) “agree” or “strongly agree” that digital/mobile will transform shopper behavior in the next four years.
“That’s a big number,” says Gary Schanzer, Executive Vice President at GfK Interscope. “But almost everybody says we lack best practices for leveraging digital/mobile in store. We haven’t learned enough yet. We have to have a lot more trial, a lot more understanding of what works and what doesn’t work. So there’s a big opportunity in the industry.
“The place to start is with the commitment of people, organizations and resources,” he continues. “We have long way to go. There is lots of room to grow and get better as an industry.”
Other results of the survey underscore that notion:
- 33% of those responding to the survey say they are dedicating less than 1% of their marketing budgets to digital/mobile
- 48% “disagree” or “strongly disagree” with the statement that their organization is prepared to manage impact of digital/mobile
- 53% “disagree” or “strongly disagree” with the statement that their organization dedicates adequate focus and resources to leveraging digital/mobile.
Marketers need four new skills for Shopper Marketing to operate at peak performance in the future, said Chaltas and Schanzer, speaking recently at the Shopper Insights in Action conference in Chicago where they presented results of the Futurescope survey. The skills are:
- Think creatively about shopper intimacy
- Embrace technology leadership
- Generate and activate big ideas
“Shopper intimacy fuels Shopper Marketing success,” said Chaltas. “A robust shopper insights foundation is key. However, there is a shopper insights capability gap. Only half of respondents (48%) say their organization’s shopper insights foundation is strong, but nine of ten (88%) say shopper insights is “important” or “extremely important.”
Shopper intimacy is increasingly elusive, according to Chaltas. The industry has gone from a simple, linear path-to-purchase process with clear steps made pre-store, in-store, and in-aisle to a multi-stage influence web of evaluating, sourcing, selecting, maximizing, and advocating. Along the way, there is a “dizzying array of shopper touch points” from online, mail, in-store and word of mouth.
“All of the touch points are impacting that shopper throughout the day – pre-shop and post shop – and you need to think about these not as consumer touch points, but shopper touch points,” she said.
According to Chaltas, dimensionalizing shopper intimacy requires creativity in four areas:
- Shopper Behavior, blending traditional data sources (ethnography, eye tracking, in-store intercepts) and new higher tech methodologies like web mining and mobile
- Shopper Attitudes (in-person qualitative, online communities, virtual interviews)
- Advanced Analytics (category management, loyalty card mining, POS databases)
- In-Store Environment (mystery shopping, tracking, virtual shopping, controlled store testing).
Digital/mobile has added a new dimension to Shopper Marketing, says Chaltas. The change is from “outbound selling” from manufacturer and retailer to shoppers and prospects, to “inbound insights” from shoppers and consumers to trading partners.
“Those in fast-moving consumer goods have gotten really good in pushing out digital promotions and digital advertising,” she said. “But we’re really rotten at the two-way street. How do we pull together the insights to fill that relationship, so that I’m sending promotion out and engaging out, but giving me information back? And then send better promotions out and get more information back?”
Mobile methodologies offer a range of possibilities, according to Chaltas. Accessing and engaging shoppers with mobile solutions at the point of experience collects richer insights. People are willing to open their lives and share in a way that is immediate, personal, portable and relevant. Now that technology can mimic human senses, mobile provides attitudinal and behavioral feedback in the moment.
“When you listen to what shoppers and consumers are saying about that intersection of your brand and your retail customer’s brand, it’s amazing how much spontaneous stuff you can pick up,” she said. “What are people saying about Barilla pasta at Kroger versus at Walmart? What is the intersection of the two? There’s a lot of information you can pick up. It’s more passive listing and exploratory perspective; asking is more traditional. You need to do them both. The two together can be really powerful.”
Chaltas urged marketers to generate and activate big transformational ideas. To improve the “hit rate,” she suggested starting with shopper insights, rethinking the vetting process, forcing in outside perspectives, collaborating and then innovating.
“Big ideas typically support a multitude of touch points from at shelf and across store to mobile and online,” said Chaltas. “They have the power to reframe the shopper journey.”
The shopper journey is not confined to the U.S.
“If you’re not global today, you will be. And that’s the reality,” she said. “The growth is in developing markets. Retailers are starting to think globally, and insights are very valuable. We’re hearing manufacturers respond to the call. There are examples of American companies doing neat things around the world and sharing best practices.”
Among those global best practices:
- Meeting local market needs
- Driving the business near term
- Building strategic insights
- Measuring and improving ROI.
“If you think about waiting until the market’s developed, then you are playing the game that the retailer has established for you or that the market has established,” said Chaltas. “But if you get in early, there’s a lot of value in helping shape what’s taking place.
“One of the things I learned in my years at P&G is that you are better off writing the rules than playing by somebody else’s. So think about how you can do that as marketplaces develop.”
JULY 2011
Change Management by the Numbers
By Brian Ross
Corporate history is rich with tales that heed the need for proper change management to drive value from new strategies, plans and tactics – so much so that over the past few years we have seen a tremendous rise in the prevalence and credibility of the discipline.
Given that in retail all value lies in execution, this should not be surprising.
Shopper-centricity has been one of most significant trends driving retail growth globally. And while there has been much success, there are an equal number of challenges that cause many organizations to rethink their shopper-centric strategies. This presents the risk of not realizing the significant strategic and financial benefits available.
But research and experience demonstrate that shopper-centric strategies do not fail because companies don’t know what to do – they fail because companies don’t know how to execute, or lack the support to execute.
For a retailer or manufacturer to adopt a shopper-centric approach – whether through pricing, promotion, assortment, store design or marketing – it takes more than data, shopper insight and a memo. Rather, it requires a comprehensive and committed set of tools, people and processes.
Such change can be daunting to many, but it doesn’t have to be. At Precima, we rely on a tried-and-true process that has worked for many clients. But it takes a measured approach to planning and prioritizing backed by management’s commitment across ranks. First, let me define what shopper-centric change management means within our organization. We believe it stands on three pillars:
A Shopper-Centric Approach to Decisions and Tactics A shopper-centric strategy requires changes in how a company makes decisions. This means integrating new shopper insights into the traditional data and development of new business rules upon which to make decisions – be it marketing, merchandising or operations.
Develop New Processes and Tools Incorporate the new shopper-centric approach into the process, make necessary changes and support this change with the appropriate data and tools.
Align the Organization We have all heard the axiom that what gets measured gets managed. For true change to be implemented, the organization must measure and manage its processes and teams in accordance with its new shopper-centric approach. The organizational structure, roles and policies – right down to how people are measured and evaluated – must change.
These pillars establish the platform upon which to build the change management plan. But the real question is how to get there, which this series will answer. In this first article, I will outline the steps to launching a “proof-of-concept” (POC) plan. The next article will guide from the POC to a full-scale organizational rollout, including change among structure, data, processes, team members and more.
A Proven Approach: Five Steps to a Successful Shopper-Centric Proof of Concept
1. Develop a shopper-centric strategy and team An enterprise-wide customer strategy requires comprehensive segmentation and insights. It is vital to get senior and cross-functional commitment so
decisions are made to meet the needs of priority customers. The organization also should establish its core Change Team, including key roles of staff members, and to establish accountability and reporting structure who will drive this change.
2. Prioritize shopper-centric tactics: Where to start? One of the most critical decisions made during change management involves picking the best-suited initiatives to drive the greatest value. At Precima, we use a formula that cross-references the potential value of the tactic with the organization’s ability to execute the plan. The result is the following matrix:
The Quick Win opportunities, those with significant insight value and high execution ability, are the primary POC targets. The Morale Boosters, with lower insight value but high ability among managers and resources, build organizational confidence and momentum. Together, the Quick Wins and Morale Boosters are prioritized as the initial proof-points, while Challengers are delayed for the longer term (once there is a strong foundation) and Resource Drainers are avoided altogether.
3. Define the shopper-centric approach Next, identify shopper insights that encourage tactics that will deliver higher sales and profits. It is key to develop a shopper-centric approach to the selected tactic and build the analytics, recommendations and test plan based on how the strategy will be executed. This will require a decision-making process based on different metrics – one that examines traditional tactics through the scope of the priority shopper.
4. Develop the proof-of-concept plan In partnership with the Change Team, a “POC Execution Team” is required to develop the plan, define the parameters and lead execution and measurement. Here, it is critical to pick the team that will be exceptionally open to change and have accountability for the tactics being executed – as both of these will be key for success. It is crucial to communicate and to work on a manageable scale – the plan will only succeed with the right-sized tools and teams in place. This plan must also include the benchmarks and definitions for success that will support a rollout.
5. Execute, measure and build the case for rollout Develop a series of tests and continuously measure the impact – from the strategic and financial benefits to process effectiveness, with lessons, best practices and opportunities to improve. The financial results support the cause for change; the organizational results provide the proof that change can be implemented.
One of the rewards of the POC approach is that it transforms the POC and Change Teams into credible advocates for change, driving organizational belief that the change can be implemented.
Indeed, the successful transformation to shopper-centricity relies on the quality of shopper insights and tactics as much as it relies on a credible implementation plan. I cannot emphasize enough the importance of a measured approach. After all, change does not end with the plan. Instead, it starts here.
In his next article, Brian Ross, president of Precima, will explain how to expand the POC companywide, through a successful rollout.
Struggling Ocean Spray Boosts Appeal
With Innovative Beverages, Sampling Promos
By Dale Buss
The juice business isn’t getting any easier for Ocean Spray, even with the brand’s powerful, authentic, and increasingly recognized better-for-you message about cranberries. The rapid decline in sales of its once-promising Cran-Energy drink is the latest example.
That’s why the growers’ cooperative is trying to counter stagnating overall sales with continuing product innovation to appeal more to shoppers. In fact, Ocean Spray recently took what is arguably its biggest leap in terms of juice diversification by introducing three varieties of a new Fruit & Veggie sub-brand and boosted them with an ambitious sampling program in supermarkets. It also rolled out a single-serve sampling initiative to promote another new line, carbonated Sparkling Juice drinks.
These recent moves are a classic example of a category leader mounting a spirited marketing offense to appeal more to shoppers and stabilize sagging sales. Analysts believe that execs in every food and beverage category should study Ocean Spray’s playbook because their turn could come soon.
Just about any way you can enjoy the juice of the North American-native cranberry, the Lakeville-Middleboro, Mass.-based giant has been serving it up. Other new products include cranberry-juice “cocktail” with a hint of lime, and 100% super-fruit juice combinations of cranberry with other dark-fruit juices.
“All of our messaging and products are about how cranberry juice tastes good and is good for you, and we’ve seen our products be quite successful,” Tara Levine, Ocean Spray’s director of brand marketing, told CPGmatters. “Because of that dual message, we’ve been able to make cranberry the No. 1 flavor in the juice aisle, which is a big accomplishment.”
Ocean Spray’s recent in-store promotions of two of its most important new line extensions illustrate how the brand has been able to keep itself relevant to American shoppers. Fruit & Veggie juices, for example, contain two full government-defined servings of fruits and vegetables, per serving, as well as antioxidant vitamins. Launched last year, Fruit & Veggie represented a significant a departure for Ocean Spray because of its first-ever use of vegetable juices.
“Consumers were looking for products that would help them with different dimensions of health,” Levine explained, “and they are looking for more ways to get vegetables.”
Supermarket sampling helped create awareness of Fruit & Veggie and confirm the brand’s long-term attributes. “Because of all the work that we’ve done with our marketing to reinforce the idea that Ocean Spray tastes
good as well as being good for you, consumers need to trust that what we give them will in fact taste good,” Levine said.
Sparkling Juice came about because many consumers add sparkling water to their cranberry juice. “People love bubbles and refreshment and so we deliver them together with taste,” she said.
Still, Sparkling Juice is enough of a new proposition to consumers that Ocean Spray stepped up its launch formula to include vast promotional sales of single-serve, 8.4-oz cans of the stuff at retailers across the United States this spring, including Walmart stores. Purchase of two 64-oz bottles of other all-juice Ocean Spray products brought consumers a free four-pack of Sparkling Juice single-serve bottles during the promotion.
Ocean Spray also went heavily into Facebook marketing for Sparkling Juice, welcoming visitors to its Cranberry Club, where the co-op distributed 125,000 samples to fulfill online requests within just a few weeks. That was
the largest such distribution ever for Ocean Spray and, Levine suggested, “may be the single largest number distributed for any new juice product. We want to be able to give people an easy way to try the product. Everybody loves bubbles.”
Ocean Spray needs them to do so. For despite a continuing stream of new products and innovations over the last several years designed to unlock seemingly every possible approach to the juice of the cranberry, Ocean Spray’s overall bottled-juice sales rose only 2% for the 52 weeks ended April 17, compared with the previous 52-week period, according to data compiled by SymphonyIRI, which tallies sales at U.S. supermarkets, drug stores and mass merchandisers except Walmart stores.
And although Ocean Spray’s performance was better than the entire bottled-juice industry for that period, it did represent a further deceleration of the once-heady growth of the brand. Ocean Spray posted a bottled-juice sales increase of 3% in 2010 over 2009, 5% in 2009, 6% in 2008 and 10% in 2007.
Moreover, Ocean Spray’s results for the latest 52 weeks also demonstrate that, as American consumers continue to abide in what’s been called a “new normal” of post-recession thriftiness about purchases of CPG products that have hit beverages hard, there is continued pressure on its returns. The average price per unit of Ocean Spray bottled juices declined by 7 cents for the 52 weeks, after dropping by 5 cents in 2010 and 2 cents in 2009.
Sales results also disclose another reason that Ocean Spray continues to press the envelope on product innovation: Sweetened Cranberry Juice Cocktail – its original star product line and still by far its highest-volume SKU – continues a struggle to add growth to its decades-long legacy of anchoring the co-op’s business. Sales declined 2% for “cocktail” during the 52 weeks, according to the SymphonyIRI data, after a 3% decline for calendar 2010, which began a swoon after sales were up 2% for calendar 2009 over 2008.
Meanwhile, the performance of some of Ocean Spray’s recent innovations hasn’t worked out. Cran-Energy, for example, peaked as a $20-million product in SymphonyIRI-measured outlets in 2009, just a year after its introduction as a healthier alternative to regular sugar-and-caffeine-dosed energy drinks. But in 2010, Cran-Energy sales crashed to just $14 million, down 31%, and for the 52 weeks ended April 17, Cran-Energy sales losses accelerated, down 37% to $12 million.
Cran-Energy burst out of the gates as Cranergy – the name was changed late last year because consumers and retailers habitually insisted on calling it “Cran-Energy” anyway – and hailed as one of Ocean Spray’s most ambitious new-product diversifications ever. It tested with retailers before release as one of the strongest concepts the co-op ever had presented to them, executives said, based on “naturally energizing” ingredients such as green-tea extract and B vitamins that support “healthy energy production.” It is sweetened with Splenda.
“Our consumers aren’t necessarily people who are consistently using Monster or other traditional energy drinks at 3 p.m., but they might be drinking a Diet Coke instead,” Levine said. “This gives them the same benefit but in a healthier way.”
Levine depicted Cran-Energy’s recent dive as predictable for an extension on the fringes of the Ocean Spray brand. “It’s really typical of a new product,” she said. “You have a great distribution drive, and then you hold onto your gains. But as you release new products, they replace some of the existing line extensions.”
Even as Ocean Spray continues to introduce new innovations, Levine insisted that Cran-Energy retains an important place in the brand portfolio. “It’s an SKU that is one of the most incremental products we have,” she said, because Cran-Energy draws most of its growth from what otherwise would be traditional energy-drink sales. “It brings people into the juice category rather than just having them trade juices.”
And Levine parried doubts about whether, having built awareness of Cran-Energy as it built distribution of the product, Ocean Spray worked at cross-purposes by shelving an “energy drink” along with its regular juices. “People expect it in the juice aisle,” she said. “That’s where consumers think about it and expect to see it.”
In any event, Levine insisted that single-serve Cran-Energy remains “a strong performer within our portfolio” and that the product continues to enjoy a coterie of “consumers who are very loyal because it is a unique product.”
Ocean Spray hopes that its newest product lines, such as Fruit & Veggie and Sparkling Juice, take off on a Cran-Energy-like trajectory, but persevere more successfully.
