It is not often that the market research industry gets a bandwagon to climb aboard. Category management research, however, is one such trend which the 100-plus research agencies in the UK are busy hooking up to. Attend any research conference and the chances are that category management and efficient consumer response will be on the agenda.
Fair enough, given that any conference about marketing in the retail or packaged goods manufacturing industries will similarly feature the subject. What requires careful consideration is whether market research agencies are ready and able to embrace the disciplines of category management fully. Especially if you are about to invest your research budget in a big project, you need to ask how well the agency understands both the process of CM itself and retailing as a whole.
It is perhaps no surprise if there is something of a lag between the demand for research in this area and the ability to support it. It is probably only two-and-a-half years ago, at best, since the notion of managing across a whole category of products within the retail environment began to be considered. CM teams have been rapidly formed and approaches put together, but many of those involved are not bringing a long-term, in-depth knowledge of either branded products or retailing.
“Historically, it was very much the marketing people who were experts in the consumer, sales people who were experts in retailing and getting product into stores. That distinction is blurring – sales people are becoming more involved in marketing,” says Ian Sippitt, director of Leapfrog Research & Planning.
As manufacturers seek to become more customer-minded, research agencies are finding themselves working with “a different type of client”, he says. Often, the category management department will not have a history of dealing with market research, either in commissioning it or responding to it. Yet research is absolutely critical to the process.
“It is about manufacturers trying to acquire knowledge to present themselves as experts on a category to the major multiples. They are saying, ‘we know more about the category, so listen to us’,” says Sippitt.
That knowledge which branded goods companies are seeking to acquire will often reside principally in the surveys which have been carried out on their behalf by agencies.
And this is one of the key areas where tensions are emerging because of the newness of CM research. If you want to find out how people respond to point of purchase material, the techniques and analyses are well-known. Likewise, tracking shoppers through a store, or carrying out exit interviews to assess reasons for purchase or share of wallet. But CM incorporates all of these and more.
According to Steven Jagger, managing director of GfK Great Britain, many clients are not really up to the task of buying-in the research. “They can’t provide a detailed brief in the way we expect it. So we have to work on it with them. That makes it more of a consultancy operation than normal,” he says.
This educational process appears to be accepted by most agencies as part of the cost of getting involved with CM projects. It is ultimately justified, since category management research tends to be large-scale and so more valuable to the research agency. But it does point to some of the problems being created around the activity.
The basics are easy enough for agencies to handle. According to Dorothy Hall, director trade and consumer research at Opinion Research Corporation International: “What we do in research hasn’t changed since the Dark Ages.”
Whether it is interviewing people face-to-face, in-store, in a location or by phone, the principles of structuring a questionnaire and going through it point-by-point are the same.
Where CM differs is in trying to address more complex issues from the consumer’s point of view. “In the past, the retailer thought, ‘I wonder how people shop the store?’ Manufacturers asked, ‘how do we get onto a retailer’s list? When in a store, how is our packaging standing out?’ CM has brought those together,” says Hall.
The outcome can be significant for all of those involved in a project. Hall points to the example of yellow fats, which used to be divided into butter, margarine and PUFAs (polyunsaturates). “Consumers don’t think this way,” she says. The polyunsaturated fat content might be the most important product feature, for example. As a result of researching how consumers buy fats, many retailers have reorganised the display of this category.
Snacks are another example.
To the shopper, a snack might be a packet of crisps or a yoghurt, but retailers do not organise these products as a category. It is the level of impact on clients’ business which makes some in the market research industry worry about whether agencies are up to the job.
Equally, the presentation to clients of findings is more important with CM research than almost any other type of activity. This is because many retailers are used to thinking in terms of trading and discounts, and do not base their decisions on numbers or rankings. Measuring the quality of a research project by the number of inches high the report itself stands is not relevant in this area.
But some techniques also need to change. Jagger points to one of the critical differences which will affect how surveys are carried out. “You are looking for a representative sample of category users, rather than a representative sample of households,” he says. With the amount of work put in by agencies to identify consumer segments and understand their product use, it might be expected that proprietary information will start to emerge.
Jagger denies that this is the case, however. “The type of enquiries we get are so varied in nature – it is very rare that we work in the same category with more than one manufacturer,” he says. GfK has developed one new service specifically aimed at CM. Called TESI, it is a tool for looking within a category at how new brands perform and how brands fit together. It allows clients to look at the interaction of products in a category.
What agencies are certainly finding as a result of their role in CM is a growing responsibility. Rather than simply providing answers and then walking away – as happens so often with much ad-hoc research – they are facilitating important shifts in relationships. It is market research agencies who may find themselves holding the ring in the tussle between manufacturers and retailers.
This is happening because of how CM research has to be carried out. Often, the most important findings come out of surveys carried out in situ. “One of the first steps in any CM research programme is gaining the collaboration of the retailers. This can be a quite sensitive and complicated task,” says Bob Qureshi, managing director of The Harris Research Centre.
He points out that agencies have to take a structured approach towards retailers which demonstrates to them the benefits of allowing their stores to be used as research sites. This involves identifying the needs of the retailer’s own category managers and associating the objectives of the research with them. Approval of the survey, sample and timings will also need to be gained. The retailer’s team will also have to agree on the stores selected and the sampling method.
This plays to the strengths of research agencies which have strong reputations and credibility. “Poor judgement or bad operational procedure can jeopardise retailers’ involvement and hence the commencement of the research,” says Qureshi. For this reason, many of the leading agencies ensure that senior executives are involved in the early stages, when sensitivities are at their greatest.
But CM research is not simply a playground for research agencies, many of whom see it as an opportunity to pick up bigger budgets and increased status. Manufacturers and retailers have very clear views about what they want to emerge from their activities. This can be a benefit, if it means a precise brief, but it may also be a limiting factor.
Whatever the difficulties, there is no doubt that category management will continue to grow and acquire greater status within marketing. It is driven by the findings produced out of market research. As a result, the research practitioners are finding themselves in greater demand, and closer to the heart of their clients’ businesses. To succeed, however, they will need to ensure they can handle the first part of their job description as well as the second. As Hall says: “It does re-emphasise the marketing aspect of market research.”