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Copyright © 2005 Information Resources, Inc. All Rights Reserved Re-Inventing CPG presented by IRI / MCA Europe: Louis-Michel Barbotin IRI U.S.: Valerie.

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Presentation on theme: "Copyright © 2005 Information Resources, Inc. All Rights Reserved Re-Inventing CPG presented by IRI / MCA Europe: Louis-Michel Barbotin IRI U.S.: Valerie."— Presentation transcript:

1 Copyright © 2005 Information Resources, Inc. All Rights Reserved Re-Inventing CPG presented by IRI / MCA Europe: Louis-Michel Barbotin IRI U.S.: Valerie Skala Walker Reinventing CPG Summit February 28, 2005 New Insight into the Shopping Process

2 Copyright © 2005 Information Resources, Inc. All Rights Reserved Understanding the Shopping Process Key Findings from ShopperLink Research in Europe ShopperLink Now Available in the U.S. Copyright © 2004 IRI France. Agenda

3 Copyright © 2004 IRI France. 3 Why is it important to study shopper behavior in-store?

4 Copyright © 2004 IRI France. 4 Available Consumer Demand Since 1995 Few Outlets: Supermarkets, Drugstores Many Outlets: Supercenters, Dollar, Club, Convenience, Health Food, Beauty Specialty, Etc. Shopping has become more complicated A lasting situation Reasonable Number of Products Expert Shoppers Selective Demand Overabundance of Products

5 Copyright © 2004 IRI France. 5 Consumers have developed a "shopping expertise" 970,000 SKUs 20 to 50 SKUs Number of CPG Items Available Number of CPG Items in a Typical Supermarket Number of CPG Items Purchased Annually by Typical U.S. HH Number of CPG Items in a Typical Supermarket Shopping Basket 20,000 to 50,000 SKUs 650 SKUs Source: IRI Dictionary, InfoScan Reviews, and Household Panel

6 Copyright © 2004 IRI France. 6 Offer Marketing From offer marketing to demand marketing…the basis of category management IRI’s expertise is based on a thorough understanding of the three roles of the consumer Demand Marketing Additional approach CONSUMER Product Marketing End User In-Store Marketing Buyer Retailer Marketing Shopper To Drive Basket $ For product innovation To draw traffic Traditional approach

7 Copyright © 2004 IRI France. 7 Address critical category management issues for both manufacturers and retailers IssueImplication Universe / Category DefinitionCategory adjacencies and category planogram Preparing for shoppingRole of brand on the shopping list Overall shopping mission when category is purchased - Routine - Top-Up - Urgent Need - Specific Occasion Role of category and product mix for each type of shopping drives category management strategy

8 Copyright © 2004 IRI France. 8 Address critical category management issues for both manufacturers and retailers continued IssueImplication Shopper's path through the store and location of category within that path Where to place the category to maximize opportunities for unplanned purchases Purchasing Process 1. Planning 2. Location of product in store 3. Comparison of items 4. Item decision 5. Reaction if desired item not found What items to carry How to organize the shelf Information on package Information on signage Pricing Promotion Store staffing

9 Copyright © 2004 IRI France. 9 Syndicated StudyCustom Study How should the category overall be managed? Study looks broadly at category-level purchasing behavior Standard methodology Results reported for: - All-category benchmark - Department benchmark - Individual categories How should the category, segment, or brand be managed? Study can focus on specific business issue defining the category new product introduction shelf organization price / promotion packaging etc.

10 Copyright © 2005 Information Resources, Inc. All Rights Reserved Understanding the shopping process Key Findings from ShopperLink Research in Europe ShopperLink Now Available in the U.S. Copyright © 2004 IRI France. Agenda

11 Copyright © 2004 IRI France France 2000 France Portugal 1997 France 2003 France Spain 2004 UK Italy Greece Germany The Netherlands MCA's History in Europe 100,000 consumers studied in over 100 categories in 8 countries

12 Copyright © 2004 IRI France Manufacturers Have Participated

13 Copyright © 2004 IRI France Retailers Took Part in the Research

14 Copyright © 2004 IRI France. 14 Striking insights from the European research conducted in 8 countries CONSUMER Buyer Shopper End User

15 Copyright © 2004 IRI France. 15 The shopper's mission when your category is bought should influence your category management strategy Business Strategy  Routine shopping (weekly, monthly)  Small current purchases (fresh products, top up)  Emergency purchases (products urgently needed)  Specific occasion purchases (e.g., birthday party, special sale on desired item)  Building loyalty  Recruiting  Store nearby  Recruiting Overall Trip Mission Europe Average (all categories, all stores) 47% 22% 15% 17% Shopper CONSUMER

16 Copyright © 2004 IRI France. 16 The Trip Mission Varies by Country's Retail Structure Modern retail model, retail market dominated by hypermarkets One stop shopping Specialized retail model with the chemists / drug markets & discounters Multi-stop shopping % of All Shoppers on a Routine Shopping Trip 32%37%35%48%56%48%33%56% Shopper CONSUMER

17 Copyright © 2004 IRI France. 17 The retailer structure in Germany vs. Greece leads to very different shopping habits Other types of shopping Small currentEmergencySpecific Routine shopping 50% Medium SM Small SM 66% 29% 44% 34% 18%3% 21% 1% Hard Discounters Drug Stores 78% 91% 48% 58% 22% 9% 17%9% 17%11% 35% HM 19% 65% 13%3% 58% HM 35% 42% 11%10%

18 Copyright © 2004 IRI France. 18 The Shopping Expertise Begins at Home % of shoppers who prepared a shopping list ROUTINE shoppers ALL shoppers 45% 51% 24%37% 57%43% 70% 33% 52% 60% 37%49% 75%55%74%42%

19 Copyright © 2004 IRI France. 19 For some categories, the brand name is often written Italy 32% Coffee 76% Mozzarella 53% Make-up 13% France 21% Coffee 66% Chocolate Beverages 49% Laundry 38% Netherlands 62% Candy 75% Chewing gum 73% Premix 39%

20 Copyright © 2004 IRI France. 20 Striking insights from the European research conducted in 8 countries CONSUMER Buyer Shopper End User

21 Copyright © 2004 IRI France. 21 Almost two-thirds of purchasing decisions are made at home 79% 78% 21% 22% 61% 62% 18% 16% 5% 16% 17% Planned to Buy the Category Brand Choice Pre-Determined Did Not Plan to Buy the Category Both Category & Brand Pre-Determined - Decision Made In Store - Brand Decision Made in Store Brand Choice Pre-Determined (e.g., by end user) Pure Impulse Total Purchases 100% 38%

22 Copyright © 2004 IRI France. 22 Homogenous throughout Europe CATEGORY PLANNING YesNo Total Shoppers 100% 61%56%53% 56%82%66%61% 58% Yes DECISION PRIOR POS 13%18%20% 6%20%18%20% 17%5%6%5% 3%5%6%2% 6% 11%16%18% 21%20%22% 10% 19% PURE IMPULSE BRAND REMEMBERED CHOICE BETWEEN BRANDS 18%34%39%44% 42%39%44%47% DECISION TAKEN IN FRONT OF THE SHELF SPACE No Yes PREDETERMINATION ON BRAND 26% 27% 14%21%24%12% 25%74% 88%86%79%76% 75%73%

23 Copyright © 2004 IRI France. 23 Planned vs. Decided In-Store to Buy Category Variation Across Categories in Italy PlannedDecided In-Store 25% 75% Frozen Meals 72% 28% Bottled Water 60% 40% Cheese 46% 54% Air Fresheners 36% 64% Make Up 29% 71% Candy 73% 27% Coffee 56% 34% All Cat Avg

24 Copyright © 2004 IRI France. 24 When brand choice is predetermined, price is less of a factor in the purchase decision Brand Price 20% 17% 12% 64% 22%26% Planned Unplanned 85% 52% 44% 33% 24% 32%35% 46% 26% 29% 43%

25 Copyright © 2004 IRI France. 25 When consumers can't find the desired item, their response varies by category Substitution No Purchase Other BrandSame Brand 60%30% 76% 6% 20% 18% 66%14% 34% 10% 58% Behavior When Desired Product Is Not Found 8% Dish Detergent Cheese Frz Pizza Shaving Products

26 Copyright © 2004 IRI France ” 36” 26” 17” 92 seconds Make-up Lunch meat Chocolate Beer Gum Time spent in front of the category shelf space One measure of category complexity and shopper expertise  Locating the desired type of product  Comparing options  Selecting the one to buy

27 Copyright © 2004 IRI France of 4 purchases are made in under 10 seconds* <10 sec Direct Purchases >10 sec * Amount of time a purchased product is handled before being placed in the shopping cart (not counting handling of other items not purchased) 51%33% 48% 44% 37% 36% 37% 41% 25% 28% 31% 32% 30% 27% 21% 33% 16% 24% 25% 31% 34% 36% 38% 42%

28 Copyright © 2005 Information Resources, Inc. All Rights Reserved Understanding the shopping process Key Findings from ShopperLink Research in Europe ShopperLink Now Available in the U.S. Copyright © 2004 IRI France. Agenda

29 Copyright © 2004 IRI France. 29 In-store research is the right approach Consumers don't shop in focus groups or simulated environments Consumer recall of past purchasing tends to be inaccurate, and even more so for infrequently purchased items There's a gap between what people SAY they do and what they actually DO Other Surveys In-Store Research Shoppers are making a real purchase decision under real in-store conditions Immediacy increases accuracy (not "last time" but "this time") We can observe the shopping process as well as ask questions about it -- and understand the last few seconds of the decision process

30 Copyright © 2004 IRI France. 30 The ShopperLink Approach No consistent approach No benchmarks for comparison; may not even be category specific In-store work only, no ROI analysis Other SuppliersShopperLink Proven approach exposes category decision drivers at three key stages of the decision process Syndicated study approach enables cross-category comparisons* -- because shopping expertise varies by type of product In-store observation and interviewing integrated with IRI retail sales and household panel data -- enables you to size opportunities and estimate ROI * Custom ShopperLink studies are also available, but this presentation will focus on the syndicated cross-category study.

31 Copyright © 2004 IRI France. 31 Benefits: The Bottom Line  Identify your biggest in-store opportunity:  Draw more people into the aisle  Convert more category browsers to buyers  Drive a brand switch  Increase volume per purchase  Determine what levers to pull to accomplish that goal  Improve resource allocation, focusing on those marketing efforts with the best pay-back  Bring new insights to retailer partners to facilitate collaborative category management

32 Copyright © 2004 IRI France. 32 U.S. Cross-Category Study Q  You decide which category(s) to purchase  Receive complete set of results for each purchased category plus several benchmark categories, Department average, and All- Category average  Observe and interview 250 category buyers per category in supermarkets in several different cities  Standard metrics for every category - syndicated for resale  Plus you can request 3 custom questions per category (e.g., related to your own brand) - proprietary to client  Other channels possible based on demand  Timing  Sign up by March 31  Interviewing April-May  Analysis delivered in June-July

33 Copyright © 2004 IRI France. 33 U.S. Cross-Category Study Q cont'd  Deliverables:  PowerPoint presentation with data tabulations and actionable recommendations  Live presentation by a Cross-Category Study expert  Price per category: $35,000  How to sign up:  Fill out "interest form" on your chair  Visit the Idea Exchange  Talk to your IRI rep 

34 Copyright © 2004 IRI France. 34 Cross Category Study Covers These Topics & More Preparation for Shopping: Was there a written or mental list? What is on it? End User: Who will use product, when, where, with what complementary products Trip Overview: What is the impact of "trip type" on category shopping? Channel / Store Selection: How decided, by # and type of items needed? Category Expertise: Why buying category, what items expected to find together, were items easily found Brand and Item Decision: Products examined and compared, factors influencing item selected, time spent making a decision, reaction to out-of-stocks

35 Copyright © 2004 IRI France. 35 % of Shoppers Whose Brand Choice was Predetermined (Not Decided In Store)  More than 67% of toothpaste and deodorants purchasers are predetermined on the brand they want to buy.  The other categories purchasers are less predetermined on brand. Standard Data Tabulations for Cross-Category Study  For each question on the survey, clients will receive results for  Total Study Average -- across all shoppers interviewed in all categories.  Total Department Average -- across all categories studied in the department to which the client-subscribed category belongs.  Each Individual Category -- for each category purchased by the client, plus other benchmark categories to be selected at IRI's sole discretion. Example

36 Copyright © 2004 IRI France. 36 Integrating panel and survey data provides a more robust understanding of shopper expertise % of time CATEGORY purchase is planned % of time BRAND is predetermined How often the BRAND on the list is the BRAND purchased Time spent "shopping" the category Category Penetration & Purchase Frequency: all outlets, this outlet, this chain Brand Penetration & Purchase Frequency Brand Loyalty Average Volume or Units per Purchase Survey Metrics Panel Metrics Implications How much shopping expertise are consumers likely to have? How likely are consumers to notice something new? If category (or brand) is rarely on the list, do consumers need reminders to buy? What's the opportunity to drive brand switches at the shelf?... to drive larger purchase size?

37 Copyright © 2004 IRI France. 37 Custom Studies Will Also Be Available  Business-issue specific  Advantage of working with IRI vs. working directly with an in-store research supplier:  Leverage IRI's knowledge of your category, market structure, etc. in study design  Leverage IRI/MCA's understanding of shopper expertise in study design  IRI integrates store & panel data with survey data to provide a more complete view of the issue  IRI brings analytic expertise, versus field execution

38 Copyright © 2004 IRI France. 38 Cross-Category ShopperLink Study Standard Observation/Interviewing Metrics PREPARATION FOR SHOPPING 1. Reasons for this shopping trip (type of trip) 2. Is there a shopping list 3. Is the category on shopping list 4. Is any brand named on shopping list STORE SELECTION EXPERTISE 1. Why came to this store today (type of trip) 2. Preferred store for grocery shopping? 3. Preferred store for buying this category (ever purchased category here before?) PRODUCT USAGE EXPERTISE 1.Who will use this product 2.Where / when / how will they use it 3.What other products will be used with it CATEGORY SHOPPING EXPERTISE 1. Ease of locating category in the store 2. How often visit this section when shopping PURCHASER / HOUSEHOLD PROFILE Gender, Age, Occupation, Income (optional), Household size w/ # children CATEGORY SHOPPING OBSERVATIONS 1.Number of products handled 2.Number of products put in cart (bought) 3.Type of promotion on product(s) bought 4.Time spent selecting product(s) bought 5.Total time spent in the category shelf space 6.Is shopper accompanied by other adults/kids BRAND/ITEM SELECTION EXPERTISE 1.What helped you find the product in the shelf space: shape/size of packaging, colors, logo / brand, promotional sign, etc. 2.Information read on the shelf / signage 3.Information read on the packaging 4.Factors considered when selecting item to purchase (end user preference, product features, price, special promotion, etc.) 5. Reaction when desired item is not found + 3 custom questions as requested by client (Panel, store, and proprietary derived measures not shown)


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