A chance for market sharing

Close monitoring of shoppers’ choices of products and stores can best be exploited if retailers and manufacturers work together. By Lynn Driver. Lynn Driver is sales manager for consumer services at Nielsen.

How do people choose which products to buy and from which store? Manufacturers and retailers need the answers to these questions to develop their products, packaging, promotions, advertising, displays and to establish their prices.

Retailers have been busy building databases about their customers. And the accuracy, detail and speed of information, both within organisations and through external providers, has generated an unprecedented wealth of information. Details about groups of consumers, even individuals, can be accessed at the touch of a button.

However, is all this information being put to good use? The real problem is not asking questions, but knowing which are the right questions to ask. And it is precisely for this purpose that a range of both new and reapplied techniques are coming forward to help dig into databases and extract the really useful stuff from the swamp of information present. These are called date-lining techniques.

Data visualisation is one such technique. It is an interactive and visual way to drill through data, allowing the user to unearth some real gems or, perhaps, a potential business threat.

For example, using this technique to look at primary shoppers and their secondary store purchasing, it was revealed that Sainsbury’s primary shoppers were being drawn to the cereals in Tesco stores.

Such information has implications for the way the product mix within Sainsbury’s should be addressed. What’s more, the retailer should be worried that its primary shoppers who defect to Tesco’s cereals might start to extend their interests to other parts of the store.

Returning to the initial question of purchasing choice, can these techniques discover which product attributes are important to which groups of consumers, and what action can be taken from the information provided?

Analysis, using segmentation modelling on the teabag market, revealed a new way of identifying buyer groups based on their known purchasing habits. It identified ten distinct groups.

It is possible to build on the information to better describe and define the group, not simply by what they buy but by which key product attributes are important, demographics, geodemographics, promotional purchasing, shop ping frequency, attitudinal data and so on.

These groups can be identified as follows:

Northern value seekers (see box)

Northern blue rinse

Southern Tesco families

Sainsbury’s families

Double income, no kids

Mainstream family brand buyers

Old-fashioned country dwellers

Downmarket Argyll

Secondary brand seekers

Asda families

Identifying these groups in this manner allows more efficient use of expenditure to ensure that marketers deliver the right message and incentives to the right people using the right vehicles.

Take, for example, the Northern value seekers. These shoppers are C2DE established family units who buy economy products within the tea category and tend to be very price-conscious. They shop around for value and are liable to switch both store and brand for the right proposition.

However, this group does not feel that coupons offer a great incentive to buy. Instead they want low prices and will shop around for them. Such an approach is straightforward for targeting, range management, competitor assessment and category management.

By understanding motivations for purchase, the marketing spend can be better directed, be it refining advertising and promotions, developing the right facia, or identifying direct mail targets.

In terms of range management, the choice offered by retailers can be varied depending on the group of shoppers being targeted. By understanding the choice segments that are fundamental to each shelf layout, gaps in what is offered and product rationalisation can be improved, based on the known behaviour of that shopper group in a particular market.

Understanding your competitive set is not always straightforward. A brand may fall into several choice segments because different people have different ways of reaching decisions.

It is crucial to understand whether a brand is competing in a number of segments in order to develop an appropriate attacking strategy. By discovering the way in which a group of consumers does its shopping, and sharing that information, retailers and manufacturers can work together more effectively to develop mutually beneficial category management programmes.

Such techniques as data visualisation and choice segmentation can bring a new and more in-depth understanding of consumer shopping behaviour which will prove critical in gaining competitive advantage in today’s market.

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