customer insight
Insights today for tomorrow’s decisionsSpring 2005Winning RetailStrategies Startwith High ValueConsumersEthnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New OpportunitiesJack-in-the-Tiffin-Box: Unconventional Paths to New Product Idea DevelopmentWinning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized ManufacturersCanada’s Aging Boomers: A Golden Opportunity CONSUMERINSIGHT:For More InformationACNielsen U.S.150 North Martingale RoadSchaumburg, IL 60173800.988.4ACNhttp://acnielsen.com/ciACNielsen Canada160 McNabb StreetMarkham, OntarioL3R 4B8, Canadahttp://www.acnielsen.ca UnderstandingConsumers,Completely. In every issue…Volume 7, No. 1Business ToolsFeaturing:ACNielsen Retail ACViewCBP—Category Business PlannerSpectra Distribution BuilderHomescan Shopper TrendsACNielsen Target Track 2.0TDLinx Location Information ManagementHomescan New Product AlertHomescan Shopper OptimizerSpectra Advantage CanadaLiquorTrackSpectra Category ShareCastSpectra Targeted New Customer ListPublisherACNielsenEditorMark Chesney Contributing WritersTodd Hale, Senior Vice PresidentConsumer Insights, ACNielsenChris HammerSenior Product ManagerU.S. MarketingJohn SkolnickiAssociate Client DirectorClient ServiceSangeeta GuptaSubhransu Rout Seemeen KhanACNielsen ORG-MARGSteve Kapinus, Director Spectra Business DevelopmentDesign & LayoutBlue Lemon DesignEditorial BoardJoe BuchererJosie CirasellaLaurel A. Kennedy Marketing/CommunicationsKathy ManciniRenee O’MalleyDanell O’NeillSlack Barshinger & PartnersCopyright © 2005 ACNielsen. Printed in USA. All rightsreserved. ACNielsen, ACNielsen with globe design,ACNielsen Answers, ACNielsen Retail ACView, ACNielsenLabelTrends, Answers Interactive, CBP, Consumer Direct,DecisionSMART, Homescan, RDH and Scantrack aretrademarks or registered trademarks of ACNielsen (US), Inc.Spectra, the Spectra logo, Spectra HispanIQ, SpectraInfiNet, Consumer 360 and the Consumer 360 logo aretrademarks or registered trademarks of Spectra MarketingSystems, Inc. TDLinx and the TDLinx logo are trademarks orregistered trademarks of Trade Dimensions International,Inc. Other brand, product or service names are trademarksor registered trademarks of their respective companies. 3contents| Consumer Insight |Spring 20051018614Spring 2005, Volume 7, No. 16Winning Retail Strategies Start with High Value ConsumersHigh value consumers no longer declare allegiance to a single channel for life. Thebattle for these sought-after shoppers is difficult. Like any good battle plan, successrelies on the quality of field intelligence and the ability to deploy assets for maximumimpact. The Food Marketing Institute (FMI), along with ACNielsen, conducted alandmark research study of U.S. households and how they shop for food. 10Ethnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New OpportunitiesThe 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 tominority groups and reflect their cultural preferences to succeed. 14Jack-in-the-Tiffin-Box: Unconventional Paths to New Product Idea DevelopmentTo grow, many companies today focus on new product development. Under the bestof circumstances, product innovation is a challenging activity. The challenge growswhen 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 arecent effort, ACNielsen ORG-MARG researchers addressed this issue using aninnovative approach to gather credible, useful data. 18Winning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized ManufacturersEveryone knows the best packaging, best quality of food, and best advertisingcampaign gets you nowhere without distribution. With competition fierce on retailshelves, small manufacturers need insights that can help prove why they should bethere. By gaining distribution in key retailers, the payoff can be huge.22Canada’s Aging Boomers: A Golden OpportunityThey aren’t babies anymore. The brash, postwar generation that once lived by theanthem “I hope I die before I get old” is getting old, and is still the most influentialconsumer group in Canada. These baby boomers will continue to set purchasingtrends for at least the next 20 years, which represents a golden opportunity. 22 4executive insightConsumer Insight | Spring 2005|Tim CallahanPresidentACNielsen North AmericaAt ACNielsen,we are alsocontinuing ourcultural changeto meet theneeds of you,our clients. Cultural Change. It has become a popular business term. When companiestalk about globalization, branding, organizing, resourcing or outsourcing, wehear about it. Companies that are acquired (or divested) go through it. Wehave also seen consumer demographic shifts, right here at home, that speak tocultural change. And all of it impacts our business.At ACNielsen, we are also continuing our cultural change to meet the needsof you, our clients. Our recently completed Consumer 360 conference repre-sented a key milestone in our journey, as we shared the ACNielsen and VNUvision for the future of our industry-leading services. Just one year ago, weunveiled our Homescan MegaPanel, the industry’s largest consumer panel.Today, it has expanded to over 90,000 households and is ahead of schedulefor completion. We also introduced LabelTrends to understand product healthclaims at the shelf. Consumer Direct, DecisionSMART and Retail ACView areother new and exciting services now available. Spectra Marketing has alsolaunched Targeting Plus, Spectra HispanIQ, Spectra InfiNet, and CategoryShareCast, to name a few. The conference also served as a reminder to me just how much the industryhas changed and how we all have to continually work to stay ahead. We willcontinue to be consumer-centric, comprehensive, technologically open andflexible. 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 ofmedia consumption;• Deeper knowledge of consumer attitudes and preferences, built on expandedconsumer panel research, customized research and other sources;• A practical and action-oriented focus on the specific marketing and salesissues that have the greatest impact on growth, including marketing ROI, newproduct development, segmentation and targeting, assortment, pricing, promo-tion, supplier management, consumer management and in-store execution;• New data harmonization and business intelligence capabilities to integrateinformation from a wide range of sources and organize it effectively andaccurately against specific marketing and sales issues;A Drive for Innovation 5executive insight| Consumer Insight |Spring 2005• Web-based decision-support servicesthat place information and analyticaltools in the hands of the right peopleat the right time in the right place;• Advanced modeling & analyticalservices 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 assumptionsand develop creative solutions, based on a strong blend of broad consumermarketing 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 theassociates at ACNielsen are confident and energized. Our goal is to match your drive for innovation in marketing with an equallyintense drive for innovation in information services. We will continue to help you identify your best opportunities, focus your spending and reach theright consumers, at the right time, in the right place, with the right messagesand incentives.To do that, we will: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 andexpertise unmatched in the industry, and;Lead—the industry, by taking on the issues and initiatives that will continueto supporting your business.Listen, Learn, Leverage, Lead. This is our focus and commitment to you and the industry. 6cover storyConsumer Insight | Spring 2005|Winning RetailStrategies Startwith High ValueConsumersTodd Hale, Senior Vice PresidentConsumer Insights, ACNielsen 7cover story| Consumer Insight |Spring 2005Although cinematic in scope and intensity, there isnothing entertaining about the battle between gro-cery and other formats for high value consumerswho no longer declare allegiance to a single channel forlife. Like any good battle plan, success relies on the qualityof field intelligence and the ability to deploy assets formaximum impact. Setting the Benchmark One of the most powerful allies supporting the 46,000 U.S.retail food stores in their crusade for food basket domi-nance is the Food Marketing Institute (FMI). In keepingwith its charter to conduct programs in research, education,industry relations and public affairs, the FMI selectedACNielsen to “conduct a landmark research study of U.S.households and how they shop for food. This study isexpected to create a basic benchmarking tool regarding con-sumer shopping behavior and attitudes.” The result of that initiative is the FMI/ACNielsen studyWinning Strategies for Your Most Important Shoppers,which will be summarized in the pages of ConsumerInsight magazine in a two-part article. This, the firstinstallment, discusses research design, objectives andtopline findings. Part two will contain a more granulardiscussion of store universe trends, alternative channeldevelopment, category trends and consumer-centric retail opportunities.Research ObjectivesThe purpose of the study was to demonstrate how retailerscan leverage both behavioral and attitudinal consumerinsights to create competitive advantage and differentiateofferings. Research objectives include:• Examine how shopping behavior differs across segments.• Determine the ways demographics and attitudes impactwhere and how consumers shop.• Detail the competitive arena for retail shoppersegments, including the mix of channels shopped.• Identify the departments, categories and services that appeal to the unique needs of different retail shopper segments.Key Learnings Seven areas of learning emerged from the research. Somefindings were surprising. Others reinforced historicaltrends. Still others were encouraging signposts for predict-ing consumer behavior. All provide a fact-based foundationthat retailers, wholesalers and manufacturers can use todevelop consumer-centric strategies to woo and win highvalue shoppers.1. Grocery Trip Erosion Continues. Everybody wants a pieceof the top-spend consumer. Grocery’s longstanding tripfrequency advantage was based on three factors: proximity,proliferation and product set. Now that competitive formats have mounted aggressive expansion campaigns andawakened to the pulling power of fast-moving consumerpackaged goods, those traditional Grocery advantages have diminished. Look for an increasing number of trip diversions to non-Grocery channels as consumers combine multiple trips into asingle stop, picking up packaged goods at the dollar, homeimprovement or office supply store. 2. Shopper Focus Is a Must. It’s a case of lifestage strategiestrumping monolithic marketing. The days of lumpingcustomers into one homogeneous segment are over. The age of lifestage marketing is upon us, and shoppingpreferences reflect the progression of family formationfrom young singles to maturing families to older singles. Household composition surfaced as a major driver ofchannel shopping and category buying dynamics. Differentlifestage shoppers exhibited different shopping and buyinghabits, calling for a diversified set of marketing and pro-motion strategies. Know thy customers’ wants and needs,and leverage frequent shopper programs to target top-spend shoppers and specialty sub-segments such as theelderly and ethnic groups. 8cover storyConsumer Insight | Spring 2005|3. Cross-Channel Shopping Opportunities. Two trendsheadlined in the business press these days afford intriguingopportunities for retailers: co-opetition and acquisition.Coined by Ray Noorda of Novell, and championed byprofessors at the Harvard Business School and Yale Schoolof Management, the idea of co-opetition is simple: collabo-rate with the competition to succeed. It’s a spot-onapproach for Grocery stores, given their high degree ofinteraction with other channels. In the case of Specialty Retailers like electronics, homeimprovement or office supply stores, Grocers could pursuestore-within-a-store concepts to establish a satellite operationwithout investing in a capital-intensive Greenfield operation.Another alternative would be to propose joint promotionsthat benefit both parties like specialty retailer gift cards, sam-pling stations and cross-shopping reward programs. Eitherway, strategic co-opetition can strengthen grocery sales whilediverting trips from poaching formats such as MassMerchandisers or Warehouse Clubs [See chart 1].Retailers might borrow a page from the manufacturerplaybook (think P&G and Gillette) and consider mergersand acquisitions as an alternative strategy for fending offincreasingly ravenous competitors. Operating advantagesassociated with volume buying clout, and an expandedfootprint boosting brand presence and convenience, arejust two of the potential benefits.4. Trip Capture Opportunity. Grocery’s legacy strength infood remains a powerful force for offsetting trip decay.Top-spend Supercenter customers (defined as the top one-third of Supercenter shoppers based on their annualdollar expenditures within this retail format) head for theHi/Lo Grocery frequently when looking to shop the dairy,deli, fresh produce or meat departments. Assortment has been a pivotal tactical advantage forGrocery channel, but given the growth in value-priced/reduced assortment retailers (like Wal-Mart, ClubStores, Save-A-Lot and Aldi), one must question the con-ventional wisdom of this practice. Increasing assortmentabove 320 items yields an incremental 25% sales gain forHi/Lo Grocery vs. just 8% for Supercenters and 12% forEDLP formats. The challenge: optimizing assortment formaximum pull and repeat business without carrying excessinventory. One approach would be reducing center storeassortment while beefing up natural and organic offerings,expanding the entertainment and home goods sections.5. Attitudes Matter. Want to categorize customers by chan-nel segment? Use behavioral data. But if you want to strate-gize how to differentiate offerings, examine shopper atti-tudes. For this section of the study, panelists answered a bat-tery of questions to ascertain attitudinal differences towardgrocery shopping. The wide-ranging scope covered prefer-ences for everything from free-form to list shoppers, fromscratch to RTE meals, from the promotional indifferent toad sensitives, from shopaholics to the shopping challenged. Enough differences surfaced by format to suggest clear,attitude-driven competitive opportunities. Some examples:Hi/Lo Grocery retailers will find their top-spend shoppershighly responsive to ads and frequent shopper programs—more so than other channels. It will come as no surprise to EDLP formats that their bud-get-minded customer base uses price as the dominant selec-tion factor. Specialty Grocery top-spend shoppers weighedin with high scores on questions about healthy foods,home cooking and scratch meals. Supercenter top-spendshoppers opt for one-stop shopping at large properties. 6. Food First—Perform on the Perimeter. Talk about agood news/bad news scenario. While Grocery earns highsatisfaction scores on top-ranked selection attributes suchas convenience, weekly specials, fresh produce, fresh meatand wide selection, it remains highly vulnerable to incur-sion by price/value-oriented operators on the very impor-tant good value and low price criteria. As competitors push forward with aggressive expansioncampaigns, the current strongest point of difference forgrocery—convenience—will begin to dissipate. Weekly adsChart 1: Alternative Channels Important to GrocerySource: ACNielsen Homescan, Total U.S.—52 weeks ending 6/26/04Top Top Top TopSupercenter Hi/Lo EDLP SpecialtyHardware/Home8.18.4 8.8 8.9ImprovementLiquor 5.67.3 6.5 6.6Pet 4.1 5.4 4.7 6.2Bookstores 3.9 5.0 4.0 4.4Stationery 3.54.5 3.7 3.7Electronics 3.0 3.5 3.4 3.5Office Supply 2.9 3.4 3.0 3.5Toy Stores 2.5 3.0 2.6 2.8Trips per shopping household [...]... sales have grown 36% in the last year Continued on page 28 Consumer & Shopping Insights— Now Online! The latest consumer and shopping insights from the industry’s most trusted information source is Faster, Easier, Better…and now Online! With Homescan Consumer & Shopping Insights, you have web access to the latest shopping insights available across all major categories and channels of trade, presented... of retaileraccepted consumer insights and analyses designed to prove the value of your products to your retailer’s business Specifically, Spectra integrates retailer POS information, such as Wal-Mart's Retail Link POS information, with our proprietary consumer insight techniques, to bring the retailer’s unique shopper profiles to life This reveals store-specific shopper insights and opportunities It... of your sales call by leveraging consumer-centric insights against your retailer’s objectives • Deliver extraordinary ROI by promoting distribution in the right retail stores Spectra Distribution Builder’s retail and consumer insights provide you with the information you need to accomplish your goals in the following business issues: 19 | Consumer Insight | Spring 2005 When you walk through the halls... that represents more than 45% of the total market | Consumer Insight | Spring 2005 Integrated Data: A Source of New Insight The data showed that Hispanic consumers prefer heavily scented laundry care products in powder form Superimposed on its data for retailers, VNU saw these preferences held true by store as well as by total market Consumer Insight | Spring 2005| 12 The second area of analysis was consumer... with school teachers to gather their insights about the ways children use their tiffin boxes Finally, we concluded the study by conducting synectic groups of mothers and children that were charged with generating ideas about tiffin boxes and tiffin box food, based on our observations All fieldwork was conducted in Delhi during January and February 2004 15 | Consumer Insight | Spring 2005 Using regular... panel data can provide an excellent overview of the national or even regional shopper, drilling down to retailer-specific consumer insights on products selling within retail stores can only be done by integrating retailer POS information with Spectra’s proprietary consumer insights techniques Matching your consumer information to your buyer’s objectives Business Tools for Retail Tracking Spectra’s OnDemand... cooking lessons Adding these services to the format mix might attract a marginal number of new customers, but prove to be an excellent way to cement relationships with loyal shoppers by retaining their interest and patronage with intriguing new offerings The cost-benefit equation would evaluate improved customer satisfaction and competitive differentiation benefits against incremental cost Ethnic... marketing execution Knowing which UPCs offered the greatest opportunity for Hispanic sales, which stores to target, the demographics and psychographics of the customers frequenting those stores and the best promotional vehicles for reaching those customers could help the client decide where to focus their efforts Further analysis of the databases revealed that Brand A was overdeveloped in heavily scented... reports is accessible via the secure ACNielsen Answers® web portal and delivers: • Executive Summary Scorecards that provide performance results and insights at the total market and individual custom trade area levels These quarterly scorecards are full of insightful charts and graphs that highlight key competitors’ performance, emphasizing ACV market shares and store counts, county-level trends, and... With Homescan Consumer & Shopping Insights, you won’t waste time wading through unnecessary data Interested in a regional comparison report of your brands? Want to know which retailers drive category spending? Need to target the best demographic match? Simply choose the business application to fit your needs and view the results immediately Homescan Consumer & Shopping Insights gives you: • Fastest access . ShareCastSpectra Targeted New Customer ListPublisherACNielsenEditorMark Chesney Contributing WritersTodd Hale, Senior Vice PresidentConsumer Insights, ACNielsenChris. next 20 years, which represents a golden opportunity. 22 4executive insightConsumer Insight | Spring 2005|Tim CallahanPresidentACNielsen North AmericaAt