Mike Anthony @ engage consultants

Mike Anthony on Shopper Marketing

Shopper data only gives half of the story

with 2 comments

Imagine a situation for me, if you will. Your sales have just dropped by 25%. 

Brand tracking looks fine.

Retail stores looks fine.

There is no suggestion that anything has changed in your consumer data.

What on earth has happened?

Is your data flawed? Maybe it was a short-term blip? Perhaps you would wait to see if there is a trend. But what if the trend continued? For a year? What if the annual U&A report still showed consumption hadn’t dipped, but sell through at retail was stubbornly lower than it used to be?

This article  suggests that up to 25% of food bought is thrown away. If shoppers suddenly decided to only buy what was consumed, the strange scenario above would become real. Looking at sell-out data would give a contradictory story to any consumer data.

Clearly not all categories are the same, so that would suggest that some categories are lower than 25% and some are significantly higher. Some categories must be heavily over-exposed to non-consumption. How much of your brands sales are actually never consumed? Do you know? It’s not something that is usually included in a U&A study. But as a brand, if a big chunk of your sales are actually waste, then that may create a vulnerability – as times get harder, shoppers might get more savvy and reduce their purchases.

But the point of this blog is not really accounting for, or being aware of food waste. The point is that looking at the consumer alone doesn’t give the whole story. Nor does looking at sales data, or shopper data for that matter. There is a link between consumption and shopping in all categories, but it is not always the same.

Consumption occasion first

In some categories the consumption occasion leads. Fresh foods, or sauces used in meal solutions are often purchased against a specific consumption need (tonight’s dinner for the family, for example).

Shopper Driven

Fresh “stock items” like juices or cheese may be more shopper driven (the shopper buys and there is a good chance that some or all of the product will get consumed. Categories such as confectionery have a highly causal relationship led often by the behavior of the shopper – the more that gets bought, the more gets eaten (chocolate in our fridge at home has a shelf life of mere hours, typically!).

The consumer and the shopper need to be considered as separate entities, but it is not possible to fully understand one without the other. A consumer not using your brand may do so simply because no-one has bought it. A rise in consumption could be driven completely by a change in shopping behavior. The consumer’s attitude to the brand may be completely unchanged, but they have consumed more simply because it was there in the home. Likewise shoppers buy what they believe will be consumed. If consumption doesn’t take place there is almost certainly a feedback loop (however delayed it might be) which will to some extent undermine future sales (I’m not buying that again, no-one really enjoyed it/finished it/we ended up throwing it away).

Understanding the relationship between consumption and purchase is critical to the success of consumer AND shopper marketing. How well integrated are the functions in your business, and if not, how much might it be costing you?

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Written by Mike Anthony

August 15, 2012 at 5:39 pm

2 Responses

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  1. Mike:

    As always, you have promoted with great clarity and precision another topic that is germane to today’s Spartan, penny-wise shopper behavior-and the demand implications for CPG marketers. The Great Recession prompted new behaviors in categories you characterize as having “…a highly causal relationship led often by the behavior of the shopper – the more that gets bought, the more gets eaten…” I refer to these sectors as “expandable consumption” categories.

    In the U.S., incomes for record numbers of households fell below federal poverty guidelines, while these and many other households saw their discretionary dollars evaporate. As a result, consumption across essential and non-essential categories declined-with non-essential categories suffering more. Saavy marketers strove to understand the delta between the shopping behaviors and the consumer, (consumption), behaviors.

    Custom, household panel analytics that linked shopping behaviors of static groups across time periods, combined with attitudinal surveys of these same constituents, provided marketers with breakthrough insights. Households who once made overlapping purchases of staple products were now waiting for their pantries and storage closets to run bare before relenishing. Moreover, non-essential, expandable consumption categories suffered the worst volume erosion, driven by consumers who either stopped purchasing entirely, bought less frequently, or shifted purchases to smaller pack sizes in value channels.

    Marketers who capitalized on these trends responded by offering smaller pack sizes, and by executing surgical distribution, pricing and promotional tactics in Grocery, Mass and Dollar Channels. As a result, best-practice marketers and retailers have weathered the storm of declinining purchase frequencies, and have capitalized on these trends by meeting the needs of today’s abstemious, frugal consumer.

    Philip Vardakis

    August 18, 2012 at 2:50 am

    • Dear Philip,
      Thanks so much for adding so much value in your comments. The world changes continually – change is a constant, and to respond to this savvy marketers need not only to be able to see the future trends, but to also know where they stand NOW.

      Planning is about having a really clear idea on the destination and also where you are now. It’s impossible to plan a journey without knowing both the start and the end point. Unfortunately there is much crystal ball gazing without real understanding of where we are now.

      Connecting data together is frequently where I find the greatest insights and, when working with clients, the big “aha” moments. Often there is no new data (to the client that is) – but the data has sat in one silo or another, and never been put together.

      It’s when the going get’s tough that you realize just how good you are, and how strong your brand is.

      Thanks again,

      All the best,

      Mike

      Mike Anthony

      August 22, 2012 at 8:26 am


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