Winning Retail Strategies Start with High Value Consumers

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High value consumers no longer declare allegiance to a single channel for life. The battle for these sought-after shoppers is difficult. Like any good battle plan, success relies on the quality of field intelligence and the ability to deploy assets for maximum impact. The Food Marketing Institute (FMI), along with aCNielsen, conducted a landmark research study of U.S. households and how they shop for food.

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  1. In s i g h t s t o d a y f o r t o m o r row’s d e c i s i o n s Spring 2005 Winning Retail Strategies Start with High Value Consumers Ethnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New Opportunities Jack-in-the-Tiffin-Box: Unconventional Paths to New Product Idea Development Winning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized Manufacturers Canada’s Aging Boomers: A Golden Opportunity
  2. CONSUMER INSIGHT: For More Information ACNielsen U.S. 150 North Martingale Road Schaumburg, IL 60173 800.988.4ACN ACNielsen Canada 160 McNabb Street Markham, Ontario L3R 4B8, Canada
  3. Understanding Consumers, Completely.
  4. In every issue… Volume 7, No. 1 Business Tools Featuring: ACNielsen Retail ACView CBP—Category Business Planner Spectra Distribution Builder Homescan Shopper Trends ACNielsen Target Track 2.0 TDLinx Location Information Management Homescan New Product Alert Homescan Shopper Optimizer Spectra Advantage Canada LiquorTrack Spectra Category ShareCast Spectra Targeted New Customer List Publisher ACNielsen Editor Mark Chesney Contributing Writers Todd Hale, Senior Vice President Consumer Insights, ACNielsen Chris Hammer Senior Product Manager U.S. Marketing John Skolnicki Associate Client Director Client Service Sangeeta Gupta Subhransu Rout Seemeen Khan ACNielsen ORG-MARG Steve Kapinus, Director Spectra Business Development Design & Layout Blue Lemon Design Editorial Board Joe Bucherer Josie Cirasella Laurel A. Kennedy Marketing/Communications Kathy Mancini Renee O’Malley Danell O’Neill Slack Barshinger & Partners Copyright © 2005 ACNielsen. Printed in USA. All rights reserved. ACNielsen, ACNielsen with globe design, ACNielsen Answers, ACNielsen Retail ACView, ACNielsen LabelTrends, Answers Interactive, CBP, Consumer Direct, DecisionSMART, Homescan, RDH and Scantrack are trademarks or registered trademarks of ACNielsen (US), Inc. Spectra, the Spectra logo, Spectra HispanIQ, Spectra InfiNet, Consumer 360 and the Consumer 360 logo are trademarks or registered trademarks of Spectra Marketing Systems, Inc. TDLinx and the TDLinx logo are trademarks or registered trademarks of Trade Dimensions International, Inc. Other brand, product or service names are trademarks or registered trademarks of their respective companies.
  5. 6 Spring 2005, Volume 7, No. 1 6 Winning Retail Strategies Start with High Value Consumers High value consumers no longer declare allegiance to a single channel for life. The battle for these sought-after shoppers is difficult. Like any good battle plan, success relies on the quality of field intelligence and the ability to deploy assets for maximum impact. The Food Marketing Institute (FMI), along with ACNielsen, conducted a 10 landmark research study of U.S. households and how they shop for food. 10 Ethnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New Opportunities The ethnic makeup of the U.S. grows by about 2.5 million people each year. Today, Hispanics and African-Americans comprise more than a quarter of the total U.S. population. With this demographic shift comes greater economic clout for minori- ties. Manufacturers of consumer packaged goods must increasingly appeal to minority groups and reflect their cultural preferences to succeed. 14 14 3 Jack-in-the-Tiffin-Box: Unconventional Paths to | Consumer Insight | Spring 2005 New Product Idea Development To grow, many companies today focus on new product development. Under the best of circumstances, product innovation is a challenging activity. The challenge grows when the targeted consumer is a child. How, then, can companies gather informa- tion to guide product development efforts, especially as they relate to children? In a recent effort, ACNielsen ORG-MARG researchers addressed this issue using an innovative approach to gather credible, useful data. 18 18 Winning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized Manufacturers Everyone knows the best packaging, best quality of food, and best advertising campaign gets you nowhere without distribution. With competition fierce on retail shelves, small manufacturers need insights that can help prove why they should be there. By gaining distribution in key retailers, the payoff can be huge. 22 22 Canada’s Aging Boomers: A Golden Opportunity They aren’t babies anymore. The brash, postwar generation that once lived by the anthem “I hope I die before I get old” is getting old, and is still the most influential consumer group in Canada. These baby boomers will continue to set purchasing c o n t e n t s trends for at least the next 20 years, which represents a golden opportunity.
  6. Tim Callahan President ACNielsen North America A Drive for Innovation Cultural Change. It has become a popular business term. When companies talk about globalization, branding, organizing, resourcing or outsourcing, we hear about it. Companies that are acquired (or divested) go through it. We have also seen consumer demographic shifts, right here at home, that speak to cultural change. And all of it impacts our business. At ACNielsen, we are also continuing our cultural change to meet the needs of you, our clients. Our recently completed Consumer 360 conference repre- sented a key milestone in our journey, as we shared the ACNielsen and VNU At ACNielsen, vision for the future of our industry-leading services. Just one year ago, we unveiled our Homescan MegaPanel, the industry’s largest consumer panel. 4 we are also Today, it has expanded to over 90,000 households and is ahead of schedule Spring 2005| for completion. We also introduced LabelTrends to understand product health continuing our claims at the shelf. Consumer Direct, DecisionSMART and Retail ACView are other new and exciting services now available. Spectra Marketing has also cultural change launched Targeting Plus, Spectra HispanIQ, Spectra InfiNet, and Category ShareCast, to name a few. to meet the Consumer Insight | The conference also served as a reminder to me just how much the industry needs of you, has changed and how we all have to continually work to stay ahead. We will continue to be consumer-centric, comprehensive, technologically open and our clients. flexible. Our strategy will be sharply focused on the industry’s most challeng- ing marketing and sales issues, including: • Complete coverage of consumer behavior at all levels of the marketplace— in the store, at home, on-the-go and online—along with measurement of i n s i g h t media consumption; • Deeper knowledge of consumer attitudes and preferences, built on expanded consumer panel research, customized research and other sources; • A practical and action-oriented focus on the specific marketing and sales issues that have the greatest impact on growth, including marketing ROI, new product development, segmentation and targeting, assortment, pricing, promo- tion, supplier management, consumer management and in-store execution; e x e c u t i v e • New data harmonization and business intelligence capabilities to integrate information from a wide range of sources and organize it effectively and accurately against specific marketing and sales issues;
  7. • Web-based decision-support services that place information and analytical tools in the hands of the right people at the right time in the right place; • Advanced modeling & analytical services that deliver effective and easy-to-use tools for analyzing marketing initiatives and accurately forecasting the impact of alternative approaches; • Assertive, proactive client service that helps clients challenge assumptions and develop creative solutions, based on a strong blend of broad consumer 5 | Consumer Insight | Spring 2005 marketing knowledge with deep expertise in specific business issues. At the conference, Steve Schmidt, ACNielsen’s president and CEO, put it best: “Our job, pure and simple, is to help the industry grow.” This is easily said, but in today’s complex marketplace—driven by diverse, ever-changing con- sumers—it takes focus and commitment. Our strategy is far reaching, but the associates at ACNielsen are confident and energized. Our goal is to match your drive for innovation in marketing with an equally intense drive for innovation in information services. We will continue to help you identify your best opportunities, focus your spending and reach the right consumers, at the right time, in the right place, with the right messages and incentives. To do that, we will: e x e c u t i v e Listen—to your needs, to your issues, to the things that are keeping you up at night; Learn—your business, your challenges, and how we can help solve them; Leverage—the global power of One VNU to provide you the insights and expertise unmatched in the industry, and; Lead—the industry, by taking on the issues and initiatives that will continue to supporting your business. i n s i g h t Listen, Learn, Leverage, Lead. This is our focus and commitment to you and the industry.
  8. Winning Retail Strategies Start with High Value Consumers Todd Hale, Senior Vice President Consumer Insights, ACNielsen 6 Spring 2005| Consumer Insight | s t o r y c o v e r
  9. A lthough cinematic in scope and intensity, there is Key Learnings nothing entertaining about the battle between gro- Seven areas of learning emerged from the research. Some cery and other formats for high value consumers findings were surprising. Others reinforced historical who no longer declare allegiance to a single channel for trends. Still others were encouraging signposts for predict- life. Like any good battle plan, success relies on the quality ing consumer behavior. All provide a fact-based foundation of field intelligence and the ability to deploy assets for that retailers, wholesalers and manufacturers can use to maximum impact. develop consumer-centric strategies to woo and win high value shoppers. Setting the Benchmark One of the most powerful allies supporting the 46,000 U.S. 1. Grocery Trip Erosion Continues. Everybody wants a piece retail food stores in their crusade for food basket domi- of the top-spend consumer. Grocery’s longstanding trip nance is the Food Marketing Institute (FMI). In keeping frequency advantage was based on three factors: proximity, with its charter to conduct programs in research, education, proliferation and product set. Now that competitive industry relations and public affairs, the FMI selected formats have mounted aggressive expansion campaigns and ACNielsen to “conduct a landmark research study of U.S. awakened to the pulling power of fast-moving consumer households and how they shop for food. This study is packaged goods, those traditional Grocery advantages expected to create a basic benchmarking tool regarding con- have diminished. sumer shopping behavior and attitudes.” Look for an increasing number of trip diversions to non- 7 The result of that initiative is the FMI/ACNielsen study Grocery channels as consumers combine multiple trips into a | Consumer Insight | Spring 2005 Winning Strategies for Your Most Important Shoppers, single stop, picking up packaged goods at the dollar, home which will be summarized in the pages of Consumer improvement or office supply store. Insight magazine in a two-part article. This, the first 2. Shopper Focus Is a Must. It’s a case of lifestage strategies installment, discusses research design, objectives and trumping monolithic marketing. The days of lumping topline findings. Part two will contain a more granular customers into one homogeneous segment are over. discussion of store universe trends, alternative channel The age of lifestage marketing is upon us, and shopping development, category trends and consumer-centric preferences reflect the progression of family formation retail opportunities. from young singles to maturing families to older singles. Research Objectives Household composition surfaced as a major driver of The purpose of the study was to demonstrate how retailers channel shopping and category buying dynamics. Different can leverage both behavioral and attitudinal consumer lifestage shoppers exhibited different shopping and buying insights to create competitive advantage and differentiate habits, calling for a diversified set of marketing and pro- offerings. Research objectives include: motion strategies. Know thy customers’ wants and needs, • Examine how shopping behavior differs across segments. and leverage frequent shopper programs to target top- spend shoppers and specialty sub-segments such as the • Determine the ways demographics and attitudes impact elderly and ethnic groups. c o v e r where and how consumers shop. • Detail the competitive arena for retail shopper segments, including the mix of channels shopped. • Identify the departments, categories and services that appeal to the unique needs of different retail shopper segments. s t o r y
  10. 3. Cross-Channel Shopping Opportunities. Two trends Assortment has been a pivotal tactical advantage for headlined in the business press these days afford intriguing Grocery channel, but given the growth in value- opportunities for retailers: co-opetition and acquisition. priced/reduced assortment retailers (like Wal-Mart, Club Coined by Ray Noorda of Novell, and championed by Stores, Save-A-Lot and Aldi), one must question the con- professors at the Harvard Business School and Yale School ventional wisdom of this practice. Increasing assortment of Management, the idea of co-opetition is simple: collabo- above 320 items yields an incremental 25% sales gain for rate with the competition to succeed. It’s a spot-on Hi/Lo Grocery vs. just 8% for Supercenters and 12% for approach for Grocery stores, given their high degree of EDLP formats. The challenge: optimizing assortment for interaction with other channels. maximum pull and repeat business without carrying excess In the case of Specialty Retailers like electronics, home inventory. One approach would be reducing center store improvement or office supply stores, Grocers could pursue assortment while beefing up natural and organic offerings, store-within-a-store concepts to establish a satellite operation expanding the entertainment and home goods sections. without investing in a capital-intensive Greenfield operation. 5. Attitudes Matter. Want to categorize customers by chan- Another alternative would be to propose joint promotions nel segment? Use behavioral data. But if you want to strate- that benefit both parties like specialty retailer gift cards, sam- gize how to differentiate offerings, examine shopper atti- pling stations and cross-shopping reward programs. Either tudes. For this section of the study, panelists answered a bat- way, strategic co-opetition can strengthen grocery sales while tery of questions to ascertain attitudinal differences toward 8 diverting trips from poaching formats such as Mass grocery shopping. The wide-ranging scope covered prefer- Merchandisers or Warehouse Clubs [See chart 1]. Spring 2005| ences for everything from free-form to list shoppers, from scratch to RTE meals, from the promotional indifferent to Chart 1: Alternative Channels Important to Grocery ad sensitives, from shopaholics to the shopping challenged. Trips per shopping household Enough differences surfaced by format to suggest clear, Top Top Top Top Supercenter Hi/Lo EDLP Specialty attitude-driven competitive opportunities. Some examples: Consumer Insight | Hardware/Home Improvement 8.1 8.4 8.8 8.9 Hi/Lo Grocery retailers will find their top-spend shoppers Liquor 5.6 7.3 6.5 6.6 highly responsive to ads and frequent shopper programs— Pet 4.1 5.4 4.7 6.2 Bookstores 3.9 5.0 4.0 4.4 more so than other channels. Stationery 3.5 4.5 3.7 3.7 Electronics 3.0 3.5 3.4 3.5 Office Supply 2.9 3.4 3.0 3.5 It will come as no surprise to EDLP formats that their bud- Toy Stores 2.5 3.0 2.6 2.8 get-minded customer base uses price as the dominant selec- Source: ACNielsen Homescan, Total U.S.—52 weeks ending 6/26/04 tion factor. Specialty Grocery top-spend shoppers weighed in with high scores on questions about healthy foods, Retailers might borrow a page from the manufacturer home cooking and scratch meals. Supercenter top-spend playbook (think P&G and Gillette) and consider mergers shoppers opt for one-stop shopping at large properties. and acquisitions as an alternative strategy for fending off 6. Food First—Perform on the Perimeter. Talk about a increasingly ravenous competitors. Operating advantages s t o r y good news/bad news scenario. While Grocery earns high associated with volume buying clout, and an expanded satisfaction scores on top-ranked selection attributes such footprint boosting brand presence and convenience, are as convenience, weekly specials, fresh produce, fresh meat just two of the potential benefits. and wide selection, it remains highly vulnerable to incur- 4. Trip Capture Opportunity. Grocery’s legacy strength in sion by price/value-oriented operators on the very impor- food remains a powerful force for offsetting trip decay. tant good value and low price criteria. Top-spend Supercenter customers (defined as the top As competitors push forward with aggressive expansion c o v e r one-third of Supercenter shoppers based on their annual campaigns, the current strongest point of difference for dollar expenditures within this retail format) head for the grocery—convenience—will begin to dissipate. Weekly ads Hi/Lo Grocery frequently when looking to shop the dairy, deli, fresh produce or meat departments.
  11. and frequent shopper programs serve as a means to distin- Demand was underwhelming for additional services which guish grocery formats, but at a cost prohibitive to most included drive-through pharmacy, in-store sampling, on-site EDLP retailers. The lesson: focus on what grocery does coffee shop, gas pumps and cooking lessons. Adding these best—food—while providing a diverse assortment appeal- services to the format mix might attract a marginal number ing to top-spend shoppers [See chart 2]. of new customers, but prove to be an excellent way to cement relationships with loyal shoppers by retaining their Chart 2: Areas of Strength Aren’t Driving Satisfaction and interest and patronage with intriguing new offerings. The Satisfaction With Price/Value Is Very Low Threat as price/value formats become more convenient cost-benefit equation would evaluate improved customer % Responses from Attributes most Extreme satisfaction and competitive differentiation benefits against Top Grocery Important in Satisfaction with Shoppers Grocery Store Selection Attributes incremental cost. Fresh Produce 45 33 Good Value 45 22 Fresh Meat 43 30 Weekly Specials 38 35 Low Prices 37 18 Convenient 35 52 Survey Design Wide Selection 32 30 Three primary data sources were used to acquire the necessary Source: ACNielsen Homescan input for the study: ACNielsen Homescan Consumer Panel, ACNielsen Strategic Planner service and the ACNielsen 7. Differentiate, but Don’t Forget Price/Value. Value pric- Wal-Mart Channel service. ing is here to stay, with a vengeance. The trick is finding Behavioral (purchase) information was garnered from the 9 the balance between spending on differentiating programs | Consumer Insight | Spring 2005 ACNielsen Homescan Consumer Panel, which provides longitudi- and services, without compromising the ability to price nal buying and shopping information for 91,500 U.S. households. ACNielsen Homescan information encompasses purchase date, competitively in key categories. shopper demographics, retailer/channel shopped, frequent shop- per card usage, payment method, coupon source, trip purchase Hi/Lo Grocery and Supercenters registered the highest amount, and for each UPC, the number of units purchased, price availability scores across the most services (prepared paid and deal type for each household shopping trip. food/meals, fresh flower department, banking/ATM, in- Attitudinal information was captured by fielding a 38 point ques- store pharmacist, longer store hours, natural/organic food tionnaire that investigated how ACNielsen Homescan panelists: section and in-store film development). Many services were • felt about the grocery shopping experience, available at fewer than six in 10 outlets, leaving room for geographic extension [See chart 3]. • defined and shopped the store universe, • ranked store selection characteristics such as size, assortment Chart 3: Interest in Additional Services Varies by Format— and perimeter departments, Most Do Not Appeal to Large Percentage of Shoppers • responded to price and promotion strategies such as feature Most Requested Services Ranked within Top Hi/Lo Grocery Shoppers ads, frequent shopper cards or everyday low pricing (EDLP), % Responses Top Hi/Lo Top EDLP Top Specialty Top from: Grocery Grocery Grocery Supercenter • viewed meal alternatives including home-cooked meals, ready- Self Check-Out 16 18 20 19 to-eat prepared meals and away-from-home meals, Lanes In-Store Samples 14 13 15 11 • rated overall satisfaction with services provided by the store c o v e r Coffee Shop 13 11 9 12 shopped most often for groceries. On-Premise 13 10 9 14 Gas Pumps Video Rental 12 12 6 15 Additionally, panelists were asked to select the three most impor- Drive Thru Pharmacy 11 11 5 15 tant attributes influencing the “where to shop for groceries” deci- Longer Store Hours 11 11 12 8 sion from a list of seventeen pre-determined options ranging In-Store 11 11 11 10 from fresh meet, to good service, low price and convenient loca- Cooking Lessons Pick-Up/Deliver 10 10 6 13 tion. For the store shopped most often for groceries, panel mem- to Car Service bers provided satisfaction levels with that store’s delivery against Dry Cleaning 10 9 6 11 the same seventeen attributes. s t o r y Bulk Candy & 9 8 7 12 Nut Section Continued on page 35. Red indicates: Differentiation and Shopper Satisfaction Opportunities Source: ACNielsen Homescan
  12. Ethnic Marketing by the Numbers Integrating Diverse Data Can Reveal New Opportunities Chris Hammer Senior Product Manager U.S. Marketing John Skolnicki Associate Client Director Client Service 10 Spring 2005| Consumer Insight | T he ethnic makeup of the U.S. has begun changing For manufacturers of consumer packaged goods (CPG), markedly. The total population grows by about these demographic trends add up to a timely marketing 2.5 million people each year, led recently by a opportunity. Companies must increasingly appeal to consistent, steady rise in the number of ethnic minorities. minority groups and reflect their cultural preferences to Today, Hispanics and African-Americans comprise more succeed. And the time to build such brand loyalty is now, than a quarter of the total U.S. population, and their as this growing force of young consumers begins maturing numbers continue to grow. If current trends continue, by and expanding its buying power. 2050, close to half of the population in the U.S. will be But how? The discipline of ethnic marketing, while estab- non-white, and nearly a quarter of it will be Hispanic. lished in the U.S., is still relatively new. As such, pursuing it f e a t u r e With this demographic shift comes greater economic clout presents a number of challenges for CPG manufacturers. for minorities. In the U.S., the combined buying power of For example: Hispanics, African-Americans and Asians now exceeds one • Data sources on ethnic buying habits tend to be frag- trillion dollars—an all-time high—and is expected to keep mented and segregated, making it harder to compose a climbing. Furthermore, many of these minority consumers well-rounded picture of the minority consumer and a are young. About one-third of all Hispanics and African- strategic plan to reach him/her. Americans in the U.S. are currently age 18 or under.
  13. • The information infrastructure for tracking ethnic buy- • Picking the right category segments, or drilling down ing habits is not as robust as the tools are for studying to the appropriate category/brand level to identify general market patterns. To manufacturers, that means opportunities among items that are important to not always being able to track the success of a market- Hispanic consumers. ing plan focused on minorities and not knowing if • Picking the right marketing mix, or putting together the they’re implementing the right type of ethnic marketing. right product with the right promotion to create a win- • We lack an abundance of business divisions dedicated ning ethnic brand. to multicultural business, which can make it too difficult • Picking the right execution strategy for the right place, or to gain support and funding for addressing ethnic knowing how to reach the consumer you seek in the marketing needs. store where he or she shops. Integrated Data: A Source of New Insight Doing Laundry in L.A. A case in point comes from a VNU client case study. Nearly half (48%) of the Hispanic population in the U.S. Seeking to expand incremental sales of laundry care prod- today resides in just six cities—Los Angeles, New York, ucts to Hispanic consumers, the client wanted help in Miami, Houston, Chicago and San Antonio. In each of understanding where and how best to do it. For advice, it these metropolitan areas, Hispanics comprise a significant turned to VNU, parent company of ACNielsen. As an percentage of the total population base. industry leader in market research, VNU supports about 9,000 clients in the CPG sector as they address complex In analyzing Hispanic consumption of laundry care prod- 11 | Consumer Insight | Spring 2005 sales and marketing issues. ucts for our client, VNU decided to focus its study on Los Angeles. The city is home to a large and very diverse The traditional approach to ethnic marketing has been to Hispanic population that represents more than 45% of the take fragmented approaches to target the ethnic consumer, total market. evaluate ethnic consumer opportunity, execute an ethnic marketing program and track the return on investment of To find opportunities, we started by identifying retailers implementing the program. To date, it has been difficult to with the greatest share of the Hispanic market for laundry find data integrated throughout this data process, and thus, care products on the premise that category success for key it has been a challenge to gain a fully nuanced picture of retailers would be vital to overall category success in the ethnic consumer behavior. market. In Los Angeles, one retailer holds 40% of the Hispanic laundry care product market. VNU focused its VNU’s insight into ethnic marketing has been to adopt a attention on understanding this retailer’s results. “One VNU Approach” that integrates data from multiple sources across our organization, including ACNielsen Target The next step was to identify the laundry care products Track, ACNielsen Scantrack, ACNielsen Store Level Data preferred by Hispanic consumers. VNU wanted to know: and Spectra HispanIQ. The result, for this client as well as Which brands are underdeveloped and which offer the others, has been a deeper understanding of the ethnic mar- best opportunity? ketplace and greater success in appealing to it. Gathering information on consumption by minority group Successful ethnic marketing focuses on getting four things is a growing strength of ACNielsen. Using its Scantrack right—namely: Retail Measurement Service, the company drills down into sales data by store and ethnic group, leveraging all • Picking the right geography, or studying an area where Scantrack stores in the market. The resulting “snapshot” f e a t u r e the relationship of the market to the retailer creates lets ACNielsen compare Hispanic buying patterns against opportunity. total market performance.
  14. The data showed that Hispanic consumers prefer heavily Measuring the Marketing Mix scented laundry care products in powder form. To answer that, VNU needed data in one more area: Superimposed on its data for retailers, VNU saw these Hispanic marketing execution. Knowing which UPCs preferences held true by store as well as by total market. offered the greatest opportunity for Hispanic sales, which stores to target, the demographics and psychographics The second area of analysis was consumer targeting. To of the customers frequenting those stores and the best pro- understand the Hispanic consumer in L.A., VNU used data motional vehicles for reaching those customers could help to map out a continuum of buying behavior across the the client decide where to focus their efforts. total market that it calls “acculturation segmentation.” At one end of the continuum are Hispanic shoppers who Further analysis of the databases revealed that Brand A was behave most like the market overall. This group is consid- overdeveloped in heavily scented UPCs. It had more than its ered “acculturated.” At the other end are those whose fair share on Retailer A’s store shelves, but was capturing preferences show a strong cultural influence. They are the fewer sales than could be expected from the segment. It least acculturated. In the middle is the bicultural Hispanic made sense to focus on just the SKUs with a successful track segment. Accounting for 53% of all Hispanic adults in the record to close the gap. For the retailer, that share gap repre- U.S., this group demonstrates a blend of buying patterns. sented $2.2 million in incremental sales that were possible The segmentation acts as an integration platform for link- [See chart 2]. ing databases on product consumption from Simmons, 12 Scarborough, TDLinx and Spectra Store Trade Area. Chart 2: Brand A Share Gap Represents $2.2MM Spring 2005| Opportunity for Retailer A When VNU looked across the data, it saw that Brand A, the market leader in laundry care products among • Hispanic Total Category sales=$28.2MM –Each share point reflects $282K opportunity Hispanics, had been losing dollar share for the past year • Existing share gap=8.1 share points and was an underdeveloped brand. Furthermore, its sales 31.8% slide for Retailer A mirrored a trend for the total market Consumer Insight | [See chart 1]. A gap was emerging when VNU looked at the market through all these lenses; namely, that Brand A 23.7% was missing an opportunity to capture Hispanic dollars in this product segment of heavily scented laundry care prod- ucts. But how could the gap be closed? Chart 1: Heavy Scent Powder Is Preferred Form Among Hispanics Percent of Dollars, Heavy Scent and Heavy Scent by Form 46% Retailer A Retailer A 44% Hispanic 42% 36% Category Dollar Share Source: ACNielsen Target Track, 2004 29% 25% The last step in successful ethnic marketing is execution— knowing which stores to target, which customers to f e a t u r e approach and how best to reach them. VNU’s analysis iden- tified the top 50 stores of Retailer A with declining brand sales. It targeted an additional 50 stores with heavy Hispanic Laundry– Liquid– Powder– Heavy Scent Heavy Scent Heavy Scent Total Market Retailer A Source: ACNielsen Target Track, 2004
  15. Business Tools for penetration [See chart 3]. Focusing on these two areas will Retail Tracking help realize nearly $2 million of the $2.2 million in poten- tial sales. Further analysis revealed that Feature and Trendable ACV Market Share and Display delivers the best promotional lift among Hispanic Store Count Information consumers, and Brand A’s promotions are less effective Retail ACView™ is a revolutionary trendable ACV market share than the category average. and store count reporting tool, providing retailers with an easy and reliable means to measure competitive market share for yourself and your competitors over time. Retail ACView offers Chart 3: Focus on Underperforming Brand Stores Uncovers $694K Opportunity the industry—for the first time ever—trendable, account-level market shares modeled to reflect total store sales Implementing right assortment/promotion can result in an 8 share point gain across the full food, drug, and mass channels, as well as account-level store counts incorporated Current Brand New Brand Brand $ Percent of Share Share Increase (K) Category Dollars from TDLinx. TDLinx is the industry’s premier Store 1 18% 26% 17.6 0.3% source of comprehensive coverage of retail Store 2 11% 19% 2.3 0.0% Store 3 20% 28% 10.4 0.2% location information. Store 4 26% 34% 15.1% 0.3% ------ --- --- --- --- The Retail ACView suite of reports is accessible via the secure Store 50 20% 28% 9.3 0.2% ACNielsen Answers® web portal and delivers: Total 694 13% • Executive Summary Scorecards that provide performance Source: ACNielsen results and insights at the total market and individual custom trade area levels. These quarterly scorecards are full of 13 | Consumer Insight | Spring 2005 Data from Spectra HispanIQ gave VNU a demographic insightful charts and graphs that highlight key competitors’ breakdown of the Hispanic residents in the area defined by performance, that store cluster—whether they spoke more Spanish or emphasizing ACV English, where they fell on the acculturation continuum, market shares and store counts, coun- their education level, the size and age of their families and ty-level trends, and their media preferences [See chart 4]. From that analysis, competitive threats. our client could begin to craft the messages and promo- With this level of tions to reach those audiences. Once the marketing plan is information, you implemented, the client can use Target Track to evaluate are able to quickly return on investment of the funds dedicated to this effort. isolate organic from new store growth, quantify competitive threats, and identify the relative importance of certain geo- graphic regions to your business. Chart 4: What Does Retailer A’s • Detailed reports that offer granular views of ACV market Hispanic Consumer Look Like? share, store count and cross trade area trends. These reports Less Bi- More Acculturated Cultural Acculturated help you quantify seasonal and channel trends with previous- Psychographics Shop at stores Convenient Shop at quarter and year-ago comparisons, identify market entrants (Opinions that stock my location specialty and high-growth competitors, and isolate promising or vul- and Media) favorite brands important shops Listen to radio Use Internet Use Internet nerable trade areas. for news for shopping for shopping updates information information The reports are designed to reflect the way you evaluate your busi- Read newspapers Often notes ads Magazines are a ness, and allow you the flexibility to obtain market insights by: on a regular basis at bus stops source of information Enjoy watching Enjoy watching Pay attention to ads • Channel Type: Choose any combination of food, drug and kid TV shows kid TV shows in movie theaters mass; club and dollar are also available for store counts. • Least Acculturated Hispanic consumers shop at stores • Market Type: View the market using industry-standard defin- f e a t u r e that they know carry their favorite brand. • Radio and newspapers, not the Internet, are the best itions (DMAs, MSAs, or ACNielsen SMMs) or your own way to reach Least Acculturated Hispanics. custom trade areas. • Both Least Acculturated and Bi-Cultural Hispanics enjoy kids TV shows. • Time Period: Analyze eight quarters of trendable history and Source: Spectra HispanIQ gain visibility into long- and short-term drivers of share change. If you are a retailer and wish to learn more about Retail Continued on page 35. ACView, please contact your ACNielsen Retail Services repre- sentative or visit our web site at or call 1.800.988.4ACN
  16. Jack-in-the-Tiffin-Box * Unconventional paths to new product idea development Sangeeta Gupta Subhransu Rout Seemeen Khan ACNielsen ORG-MARG 14 Spring 2005| Consumer Insight | T o grow, many companies today focus on new approach to gather credible, useful data. Although our product development. It’s not an easy route; even study focused on schoolchildren in Delhi, India, we believe under the best of circumstances, product innova- the methods used and insights obtained cross cultural and tion is a challenging activity that calls for creativity coupled geographic borders. with a sound understanding of the consumer’s socio- Background and Objective cultural needs. Mothers in India—like mothers everywhere—try each day The challenge grows when the targeted consumer is a to feed their children the nutritious foods their growing child. While often amazingly perceptive and articulate, chil- bodies need. dren can be limited in their ability to provide the kind of One way Indian mothers do this is by packing traditional socio-cultural data that market researchers seek. They are, Indian fare that they consider healthy and nourishing into for instance, disinclined to articulate their “need gaps” in the “tiffin boxes,” or lunch tins, that children carry to focus groups. f e a t u r e school. During recess and on bus rides home, schoolchild- How, then, can companies gather information to guide ren snack from these tiffin boxes—or at least their mothers product development efforts, especially as they relate to hope they do. The fact is that children and mothers in children? In a recent effort, ACNielsen ORG-MARG India—like kids and moms everywhere—don’t always researchers addressed this issue using an innovative agree on food. And so the tiffin boxes often come home containing uneaten meals. *Tiffin box: In India, “tiffin” refers to a light meal eaten during the day. The boxes in which these meals are packed are called “tiffin boxes.”
  17. Food manufacturers in the Asian Pacific region have identi- fied tiffin box fare as an opportunity for new product development. The objective of our study was to create a brief that would support idea creation by our client’s R&D and marketing teams. In this effort, our focus was not defining final product ideas so much as understanding the market and setting context for product development. The Approach Our challenge in studying this opportunity was multi- faceted. We had multiple audiences to understand; that is, children and their adults. We had multiple agendas to define—a child’s interest in food that’s fun and tasty as well as a mother’s desire for that food to be wholesome and nourishing. Finally, to study children effectively, we deemed it valuable to observe them “in the moment,” in their own time and place. Using regular research methodologies to explore this opportunity, therefore, would likely have been limiting. So 15 | Consumer Insight | Spring 2005 ACNielsen ORG-MARG suggested a different approach, Our process emphasized certain concepts and practices: called ethnography. Ethnography emphasizes studying issues “live” by making the researcher an upfront observer • Seeking out reorienting and disconfirming observations. at points of consumption. Since our study was highly To keep our observations fresh, we kept challenging our focused and comprised episodic observations at multiple assumptions about the study subject. One assumption sites, we called our study a microethnography. was that the tiffin box is important to the child and something that he or she looks forward to using. This Our microethnographic approach had several steps. First, hypothesis was soon disconfirmed. we wanted to understand the child. So we began the pro- • Revisits of the sites under study. We visited the identified ject by reading extensively from the works of noted child schools repeatedly to observe recess behavior on different psychologists about children ages 8–12 (our target market). days among the same set of students. We also visited the Next, we observed mothers preparing tiffin boxes by going same set of students at different times of the day to their homes early in the morning. Without telling them to see their various interactions with their tiffin boxes that we were there to study tiffin preparation, we watched and food. these mothers in their early morning chores. Then, when the children went to school, so did we, sitting and chatting • Participative role relationships so that inquiry is with them during recess and on bus rides to learn about unfettered. Our researchers were participative observers, their interactions with tiffin boxes. As an additional step, able to ask questions in a non-intrusive manner. For we spoke with school teachers to gather their insights example, when meeting with mothers, our researchers about the ways children use their tiffin boxes. Finally, we helped with the chores as a way to raise topics of interest concluded the study by conducting synectic groups of in an informal and natural way. mothers and children that were charged with generating f e a t u r e • Wide range of perspectives and groupings. We sought ideas about tiffin boxes and tiffin box food, based on our multiple viewpoints on the topic, including mothers, chil- observations. All fieldwork was conducted in Delhi during dren, teachers, childhood experts and even fathers who January and February 2004. were around the house in the morning.
  18. 16 Spring 2005| • Collaborative “insider-outsider” effort. We sought and One world in which the child operates—and the context for Consumer Insight | enjoyed a high degree of collaboration from both this study in consumer behavior—is school. Indian schools children and teachers. are relatively demanding. An eight-year-old’s day usually starts before 6 a.m., when he arises to catch the bus. Most • Collecting data in multiple modes. We gathered children attend classes for several hours in the morning information in many ways, including artifacts, before enjoying a short recess of 25–30 minutes. A couple photographs, spontaneous groups, etc. more hours of classes follow. Then children ride the bus • Systematic data transformation. To ensure the data home to eat lunch. It is during the brief recess and on the were examined from many perspectives, we used bus ride home that children engage with the contents of indexing, coding, decontextualizing, memoing, their tiffin boxes. These moments of recess are times of recontextualizing and more. great release for the 8–12-year-old child—time that he Many of our research disciplines were based on research would rather spend in energetic play. In this context, the by Gouldner, Barker and Kondo. tiffin is something to be done with as soon as possible. The Insights The other key player in this study is the mother. She has Children between ages eight and 12 are busy establishing her own motivations and context as she packs the tiffin a sense of self-worth while learning about their world. box, the result of her upbringing and culture. Many moth- They shift constantly between feeling competent and ers have firm beliefs about and practices in tiffin packing— f e a t u r e feeling inferior, often based on responses from teachers among these, the belief that tiffin fare should mimic the and peers. Deeply curious, children this age love fantasy, typical Indian meal, with its dal, roti, parantha, yogurt and surprises, mysteries and freedom from restrictions. sabji. So she packs such foods, even as she knows that her They possess a keen sense of humor. child probably wants something different and that the items she’s packing may come home untouched. Continued on page 33.
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  20. Winning the Case for Better Distribution 18 Spring 2005| Optimizing distribution for mid- to small-sized manufacturers Consumer Insight | Steve Kapinus, Director Spectra Business Development E veryone knows that you could have the best packag- But up against tight budgets and mounting competition, ing, best quality of food and best advertising cam- what can small- to mid-sized manufacturers do to optimize paign, but without distribution you are nowhere. No their distribution at their key retailer? The answer lies in one knows this better than Ben & Jerry’s, one of the best consumer information. known consumer brands in the U.S. First opening in a Knowing Your Retailer’s Shopper vacant gas station in 1978, Ben & Jerry’s soon began Understanding whom you are working for is important. expanding distribution throughout the U.S. and now sells For example, when you interview a candidate for a job at hundreds of millions of dollars worth of ice cream that your company, don’t you expect them to have thoroughly sport names like Chunky Monkey and Cherry Garcia. researched what your company does, what you stand for With competition fierce among manufacturers looking to and who you are? It is no different when trying to enter f e a t u r e secure their place on the shelves of Wal-Mart, Albertson’s into a relationship with your key retailer. Thousands of and the like, small manufacturers are looking for con- manufacturers are vying for distribution at the top retail- sumer insights that can help them prove to their key retail- ers. A keen understanding of your retailer’s shopper is ers why they, and not their competitors, should grace their what will help you win the battle. shelves. And if they can gain distribution in key retailers, While many retailers have a definite profile for many of the payoff can be huge, with sales often doubling or their stores, each store is a unique composition of house- tripling in one year. holds who vary in terms of affluence, household size,
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