Analyzing Shopper Behavior Gives Mondelez a Competitive Edge

Mondelez International is still rationalizing its brand and product portfolio after its 2012 separation from Kraft Foods. Witness the fact that Mondelez just agreed to sell a controlling interest in its SnackWell’s cookie and cracker brand to a private-equity firm. Also, Mondelez and its remaining bell-cow brands such as Nabisco are continuing to figure out the best ways to remain a global dominator in a snack market that provides challenges even as it grows disproportionately compared with other CPG staples.

Improving in-store marketing and merchandising will be crucial to realizing that goal. So Mondelez has set out to observe and analyze shopper behavior with the aim of raising consideration and purchase of Nabisco snacks in the supermarket. Their initiative relies on video and other gathered data of how shoppers behave in participating supermarkets and then integrates it with transactional, quantitative data supplied by the retailers.

“Our goal is to give our shoppers every opportunity to purchase our products, but do so in a way that is meaningful and aligns to shopper behavior,” Ameeta Jain, U.S. director of shopper insights and category management for Mondelez, told the annual meeting of the Category Management Association recently.

To that end, noted Priya Baboo, president of client solutions for VideoMining Corp., her firm’s “objective quantification of behavior helped [Mondelez] prove and disprove some of their hypotheses and helped them refine their shopper-marketing strategies based on a clear understanding of how people shop snacking categories in the U.S.,” including helping Mondelez to develop an understanding of “how things are the same or different” between American shoppers and those across the rest of the world.

VideoMining’s technology creates a “network” of cameras throughout the store, producing a “door-to-door, feet-on-the floor” tracking of each shopper, Baboo said. The network also captures every single one of the “do I buy or don’t I buy” moments, measures those moments in seconds, and then relates them to sales and conversion. 

Optimizing the growth opportunities available in global snacking was, of course, the main part of the rationale for splitting Kraft and a mature U.S. grocery-brands business away from Mondelez and its higher-potential portfolio of worldwide brands that range from Oreo to Ritz to Cadbury candies. In the U.S. market, for example, the growth rate for snack sales is about 5% -- more than double that for foods and beverages overall. And the potential to influence more purchases in crackers and cookies is palpable: 58% of snack purchases are unplanned when a shopper enters the store, according to research presented by Jain, compared with just 38% of other food categories.

Mondelez and VideoMining applied what they called a “5S” architecture to shopper behavior, describing a sort of funnel in which consumers first see, then scan, spot, show interest and select their ultimate purchases. The objective is to make sure that Nabisco and other brands are optimizing their products, advertising and merchandising at each level, Jain explained.

Thus: Is the category in a visible and relevant location so that consumers can “see” it? Then, is the category segmented in a way that is logical and easy to shop so that it can be spied as shoppers “scan” the store? When it comes time to “spot” particular items or brands, are they organized in a way that shoppers can find the one they want? To get shoppers to “show interest,” does the category have the right assortment for all shoppers? And to be “selected,” do the items have the right price, promotion and messaging to drive conversion?

At the upper levels of the funnel, for example, Jain and Baboo explained how Mondelez is trying to optimize the snacks category within the store in part by gaining placement in the most productive spots in the center aisles and by locating in-store advertising and promotions strategically. Jain observed that “everyone enters the store via the lobby and exits through the checkout” so Mondelez must “lever the real estate accordingly.” That could include, for instance, using the lobby to drive awareness of sales and seasonal promotions as shoppers begin their trip and the checkout to drive impulse purchases.

VideoMining research helped Mondelez understand how the supermarket is trafficked and the implications of that for the optimal location for snack and cookie brands. The back of the store is more likely to be trafficked earlier in a typical shopping trip, the front of the store later, Jain explained. That influences Mondelez’s efforts to “lever the perimeter to showcase categories that are more likely to be purchased earlier in the shopping trip, or center-store items that are complementary to the perimeter purchases,” Jain explained.

Baboo elaborated. “When people are near the beginning of their trip, they’re more open to messages and looking at impulse categories” such as cookies and crackers. That means “snacking categories may want to have a presence in the perimeter, or at least messaging or signage, to capture the attention of shoppers early.” 

Mondelez and VideoMining found that more shoppers are exposed to snacks by displays than shelves, 53% to 47%, and that promotion of the category is most effective in the lobby or the rear of the store.

Thus, Baboo said, if Mondelez “can stop the shopper with a message for Oreos or Ritz on the perimeter as they’re going to the dairy section, for instance, you’re more likely to be able to get them to walk into the cookie and cracker aisle because you communicated something that caught their attention and engaged them. But if signage is in the front of the store, shoppers are more likely to have completed their trip, and it’s less likely to be effective.”

Once shoppers move into center aisles, it’s also crucial to be in the most effective aisle. VideoMining’s recommends that Mondelez place its brands within the first six aisles in the typical store, where consumers move counter-clockwise around the store. “The first one-third of the store is where they need to be,” Baboo said. Jain observed that shoppers “have more disposable income early in their shopping trip and are therefore more likely to purchase discretionary and impulsive categories such as cookies and crackers” then. Thus, optimal adjacencies for snacks are complementary categories such as coffee and tea, and bottled juice, where more purchases are planned.

Within the cookie and cracker aisle itself, they said, a number of merchandising principles make Mondelez’s efforts most effective. One of them is to group cookies and crackers separately, categorized by manufacturer. Strong vertical blocks of brands and products are more effective than horizontal ones because shoppers use their peripheral vision, which moves side to side.

Bookending the aisle with each category’s highest-penetration and highest–awareness “signpost” brands, Oreo and Ritz, serves to draw shoppers into the aisle. Those brands are what Mondelez is counting on for much of the success of its overall business model. So making sure that they’re effectively getting in front of shoppers in the supermarket is a very important last step in a crucial strategy.

Shoppers tend to be active in the cookies and crackers aisle, especially with its Nabisco and other brands, if Mondelez can get them there. Now, with the help of some sophisticated technology, the global snacks giant can do a better job of delivering consumers to the right place in the store and getting them to spend more freely once they're there.

Article by Dale Buss - http://www.cpgmatters.com/In-StoreMarketing0114.html

Millennials and the new value of shopper marketing

The Coca-Cola Company sponsors this blog post and leverages proprietary insights to create world-class shopper marketing activities designed to help retailers convert more shoppers into buyers.  Visit www.cokesolutions.com to learn more.

Digital media has changed the way and the speed in which people shop. Marketers must now provide consumers with a full buying experience both online and in-store, adding a new dimension to their jobs. In particular, understanding the purchasing habits of millennials, who were raised with online shopping as a part of daily life, can be a challenge since many younger consumers have different expectations and approaches to buying.

“They are omni-channel shoppers,” said Daren Sorenson, Director of Retail and Shopper Insights for the Coca-Cola Company’s North America Group. “Millennials enjoy shopping much more than previous generations and take joy out of simply browsing.”

In spite of the huge increase in choice brought by digital retail, the economic downturn has affected how millennials spend and what they buy. Value remains a major consideration for Millennials when deciding where to shop, according to Sorenson. They want an engaging in-store experience and diversified options, but also want retailers to keep them informed in an interesting and personal manner.

As more people share information, comments and reviews online, brands are more exposed than before the advent of the Internet. Companies need to engage with consumers, particularly those who are younger, across channels and in a way that resonates with them. But implementing a sound strategy can be tricky, particularly with so many different platforms that can share a brand’s information.

“Millennials are the most highly educated and social generation in history,” Sorenson said. “They are clever and know what they want. As a brand, you need to be authentic and transparent when communicating with this younger generation.”

Sorenson notes that one brand that got it right is the Dollar Shave Club,  a Web-based e-commerce site for men founded in 2011 (Whose site is worth a trip to for the "Our Blades are F***ing Great" video alone - http://www.dollarshaveclub.com) Definitely worth . In 2012, the company announced itself to the world in a non-traditional manner via a funny, well-targeted YouTube video. In this clip, Dollar Shave Club showed that they do not take itself too seriously, and is a brand that firmly understands the highly visual, digital-based world. The clip has since gone viral, approaching 12 million views.

“Dollar Shave Club has gained an impressive following by telling a brand story that is authentic, entertaining and very shareable,” Sorenson said. While not every brand is in a position to mimic the Dollar Shave Club, their success is a lesson in what can be achieved when millennials become brand advocates.

For brands, having a sound omni-channel marketing strategy is key to connecting with millennials. As “digital natives”, millennials are fully comfortable operating on multiple screens and on multiple devices like laptops, smartphones or tablets. They enjoy interacting with new people and ideas via different social channels and will listen to companies that speak their language.

However, it’s not just about social media and flashy videos. The value of in-store experiences should be considered when thinking about marketing and branding. Millennials may spend a lot of time online but they have not fallen out of love with the bricks-and-mortar stores.

“As shoppers, they are less prepared than their predecessors and more reliant on in-store cues. Retailers that offer engaging store environments, and well-merchandised solutions, are the ones winning with Millennials,” Sorenson said.

Gone are the days of broadcast marketing: brands need to engage with consumers directly on an emotional level and establish a relationship.

“Digital allows for a two-way conversation between brands and consumers,” Sorenson said. “And when you understand consumers as people, you can create content that is share-worthy and engaging, rather than simply informative.”

The Coca-Cola Company speaks directly to millenials and many others via a new interactive magazine format website called Journey.

By Megan Conniff on November 12th, 2013 for Smartblogs.com 
Original posting can be located here: http://smartblogs.com/leadership/2013/11/12/millennials-and-the-new-value-of-shopper-marketing/

ConAgra Looks to Big Data for Sales Growth

You already know grocery and big box stores are collecting data on your shopping habits — what you buy, when, how often, and for how much.

But behind the scenes, Omaha's ConAgra Foods and other consumer product manufacturers that sell to these stores have become even bigger and more sophisticated players in the “big data” game.

They're now borrowing shopper-specific data directly from retailers and crunching it in new ways to better understand consumers and respond to their needs. That's in addition to how they use internal data to forecast demand and increase sales, and use aggregate retail data to plan promotions and strengthen supply chains.

“It's a gold mine of insights and knowledge that nobody has tapped into in a big way,” said Bob Nolan, ConAgra's vice president of customer insights and analytics.

ConAgra, behind brands such as Hunt's, Orville Redenbacher and Marie Callender's, is now studying individual shopper habits at several major U.S. grocery retailers and big box stores. The retailers don't share a shopper's name, demographics or financial information, but do provide all the purchase information associated with a particular customer number.

Now, ConAgra can see how often Shopper 1234 comes into a store, how often she buys a certain product and what products she tends to buy together — pasta and tomato sauce, for example, or seemingly unrelated items, like tomato sauce and diapers. ConAgra can learn how loyal the shopper is to a certain brand, and what makes her switch among brands. And the firm can sort shopper habits by individual store location, seeing differences among neighborhoods.

Now well into its 2014 fiscal year, ConAgra is intently focused on sales growth after a disappointing 46 percent decline in first-quarter profits.

The solution will involve being more competitive on price and investing more in promotions, CEO Gary Rodkin told analysts last week.

Data analytics can help the company target exactly where promotions and discounts are working.

“We need to bend the trends on our market share. It is a market share gain. It's category by category, customer by customer. We've got smarter analytics, and we've got to put them to better use,” Rodkin said.

Consumer goods manufacturers that use data analytics to understand shoppers outperform competitors that don't, according to Progressive Grocer, citing two IBM studies published in July.

“In an increasingly competitive marketplace, the ability to detect subtle shifts that were previously indiscernible is imperative,” found one study, by the IBM Center for Applied Insights and Kantar Retail.

That's because consumers today are not only bargain-conscious, but they're also no longer limited to a few retailers. Consumers, empowered by technology, have more choices — not just the neighborhood grocery, but also the warehouse club, the dollar store, the pharmacy or Amazon.

“The best way of winning their business is not to try managing them: it's to listen to them, understand them and serve them as discrete individuals,” authors of the IBM/Kantar study found. “That requires considerable analytical horsepower, though, and two-thirds of consumer products companies don't have enough.”

To boost its own horsepower, ConAgra made a big investment in its data analytics capabilities starting in early 2012. The firm hired Nolan, a former PepsiCo. executive, for a newly created position. Under his management, ConAgra added a new business function called customer analytics to the same department that houses two existing areas: shopper insights, a group started in 2006 that studies shopper behavior and needs, and category leadership, where the firm works with retailers and other manufacturers to improve the selection and display of various products. The group employs about 125 people.

Under the new customer analytics area, ConAgra has hired a dozen new employees, recruiting from other consumer goods companies and market research firms. Hiring is competitive as retailers and other manufacturers are also stepping up hiring of data analysts.

“These are different skills than we would have hired for in the past,” Nolan said. Some of the employees work in ConAgra offices, while others are deployed directly to retailers' corporate headquarters.

The firm has also leaned on its IT department to expand its in-house data center to handle the additional terabytes of information now coming its way.

With the new data enabling it to drill down to shopper-level habits, ConAgra can put a finer point on work it is already doing to understand the shopper needs and emotions that drive decisions.

Walmart also has amped up its capabilities. Even though the retailer doesn't use a loyalty card program outside of Sam's Club, it has a unique ability to correlate geography with purchase information because it has so many outlets, including Supercenters, Sam's Club, Neighborhood Markets and its online store, CEO Bill Simon said in September at a Goldman Sachs Global Retailing Conference.

“We think that gives us a competitive advantage that others would really struggle to get to,” he said.

A recent Deloitte Consulting analysis of manufacturers' use of big data analytics found that most of these firms lag in developing their analytical maturity, even though their competitive advantage depends on it. The Grocery Manufacturers Association, which sponsored the study, this fall will host its first conference designed to help retailers and manufacturers take a shared approach.

What ConAgra will do with retailers' data depends in part on what its retail customer wants out of the partnership. ConAgra declined to name its data-sharing partners but said the first retailer to share data in February wanted to better understand how people shopped in its frozen food aisles. Frozen food sales are stalled industrywide, and both retailers and manufacturers like ConAgra are eager to see that change.

One early finding was that people who buy one kind of single-serving frozen food tend to buy several kinds of single-serving frozen food. ConAgra could suggest to the retailer that it group smaller portions together, instead of stocking single-serve pizzas by family-size pizzas, for example.

That strategy might work well in one store but not in another, depending on demographics, and any suggestion to change displays would have to be easy for the retailer to execute, Nolan said. “You can't make things more complicated.”

The data may also reveal other shopping “affinities,” for example that people buying pizzas also love buffalo wings, and the retailer might decide to produce a buffalo-flavor pizza, said Christopher Durham, a private brand consultant based in Omaha.

By sharing and studying the data, he said, retailers can use it to inform private brand product development, another area where ConAgra could benefit considering its acquisition this year of private-label manufacturer Ralcorp.

“With retailers, it's not about big data, it's about big answers,” Durham said. “You can have piles and piles of data, but if there's nothing actionable coming out of it, it doesn't matter.”

It may seem strange that a grocery chain or big-box retailer would give up its information, for free, to a supplier. And strange, too, that a supplier would, for free, work with the numbers and offer advice on how the store could improve sales. Historically, retailers were reluctant to share this information, fearing that manufacturers might give the data to a competitor, or use it themselves to enter the market.

But sharing is becoming more widespread as the value of studying the data becomes clear.

Nolan said sharing information takes a sensitive approach. While ConAgra is the one crunching the numbers, the focus has to be on mutual benefit, not just what ConAgra can gain. “It's almost like being a consultant. We want to become the indispensable partner to our customers.”

Then, if ConAgra foods fit into a larger sales plan, he'll talk about how his canned tomatoes or frozen pastas can help the store.

“If they do a better job of managing their frozen department, and get more people down the aisle, ConAgra will get our share of it,” Nolan said.

Contact the writer: Barbara Soderlin

barbara.soderlin@owh.com    |   402-444-1336

Barbara Soderlin covers food safety, ConAgra, technology and employment/unemployment issues.