Breakthroughs in understanding shopper

behaviour

2

Shopper marketing budgets are growing….

CAGR marketing budget growth

Total 2%

Shopper (manufacturer) 21%, (retailer) 26%*

…… creating a demand for better understanding of shopper behaviour

*Source : 2004-2010 estimated marketing budgets, source GMA/Deloitte Consulting LLP 2007 Shopper Marketing Study Results (Deloitte.com)

3

Agenda

• Development of a standardised in-store behavioural metric

• New approaches to collaboration in manufacturer / retailer shopper data sharing

• Situating shopper behaviours within 360° consumer understanding

4

P.R.I.S.MA Revolutionary, New In-Store

Behavioural Metric

Presented by Donna McCabe, Kraft Foods

George Wishart, The Nielsen Company

5

Dramatic shifts are taking place in the consumer marketplace…

video #1

Shortcut to ARC In-Store Jan '08Pt1.lnk

6

According to Millward Brown:“In every CPG/FMCG category, the point of purchase is the critical moment of truth when a consumer facing a shelf of competing brands makes a decision to part with hard-earned money for just one of them.”

Nigel Hollis, Millward Brown, July 2006

Effective Shopper Marketing is crucial

7

So, what is “Shopper Marketing” ?The GMA (Grocery Manufacturers Association) defines Shopper Marketing as:

• All marketing stimuli, • developed based on a deep understanding of

shopper behavior,• designed to build brand equity, • engage the shopper (i.e., consumer in ‘shopping

mode’), • and lead him/her to make a purchase

GMA (Grocery Manufacturers Association) & Deloitte Consulting

8

Consumers

Retail

Brand

The relationship has changed, from…The paradigm has shifted from….

9

Consumer

Retail Brand

Shopper

ENG

AGEM

ENT PREFERENCE

LEVERAGE

To a more integrated view….

10

SHOPPERPurchase Barriers

Retailer StrategyBrandEquity

In-StoreMarketing

Plan

Design

• Consistent promise• idea, • look and feel

• Brand equity fundamentals

• Reflecting Shopper Insights

Aisle

Promotion

Advertising

Display

Event/Sampling

Driving to a powerful instore marketing plan

11

Unfortunately, consumers are facing similar message overload in the retail

environment…

Shortcut to ARC In-Store Jan '08Pt2.lnk

video #2

12

So, how can manufacturers & retailers determine the most effective, impactful

allocation of their marketing investment?

IntroducingP.R.I.S.M.

13

Marketing has changed due to evolving consumer & industry dynamics

• Media fragmentation

14

• Consumers have evolved

Marketing has changed due to evolving consumer & industry dynamics

15

• Retailers have evolved

Marketing has changed due to evolving consumer & industry dynamics

16

With 70% of the purchase decision made in the store

17

Why More Why More Shopper Centric Shopper Centric

Stores?Stores?

Retailer Differentiation

Manufacturers Striving for Topline

More Demanding Shoppers

New Metrics

Source: Interscope, 2008

The timing is right to create truly shopper centric stores

18

The In-Store “Medium” is an unparalleled opportunity

19

Challenge is – No Metric

20

P.R.I.S.M. – Pioneering Research for an In-Store Metric

21

CONSORTIUM MEMBERSLEAD SPONSORS

CO-SPONSORS

SUPPORTING RETAILERS

CONSULTATIVE SPONSORS

The P.R.I.S.M. Consortium

22

Shopper Marketing is the next marketing frontier

Brand Management

Category Management

Shopper Marketing

1970s – 1980s

1980s – 1990s

Current & Future

Scanner Data

Loyalty Data

In-Store Audience Data

23

A common industry metric to measure consumer reach in-store

24

Auditor

Store Sensor

25

P.R.I.S.M. measures the audience by location in store and understands shopper patterns by demographic

Retailer transaction-level

scan data

In-store audience

Household panel

In-store audits

P.R.I.S.M.P.R.I.S.M.

“Who’s in the store”Gross impressions/audience by demo &

daypart

•ROI •Measurement &

Applications – e.g. Closure rates

PredictiveModeling

“What’s in the store”Presence of in-store

promotions

+

+

+

26

P.R.I.S.M. provides the foundation for in-store planning, execution & evaluation

• Who was in the store?

27

• What is in the store?

P.R.I.S.M. provides the foundation for in-store planning, execution & evaluation

28

• Was the investment effective?

P.R.I.S.M. provides the foundation for in-store planning, execution & evaluation

29

Retailing Applications1. Marketing/Merchandising2. Shopper Conversion3. Operations/Supply Chain4. Store Layout5. Shopper Segmentation

30

Shopper Conversion - Retailer A66

27

4239 39

22

3436

34

26

51

36 35

30 2924 24 23

21 21

0

10

20

30

40

50

60

70SA

LTY

SNA

CK

S

BEE

R

REA

DY

TO E

AT

CER

EAL

FRES

H B

REA

DA

ND

RO

LLS

SHEL

F ST

AB

LEJU

ICES

AN

DD

RIN

KS W

INE

CR

AC

KER

S

WA

TER

CO

OK

IES

FRO

ZEN

EN

TREE

S

Shop

per C

onve

rsio

n

Food Retailer A

The Opportunity Gap

31

The audience data can be analyzed by store part and time

Retailer A - Thursday

Store Part #29 had a highof 91% on Thursday but

a low of 13%on Wednesday

32

DWELL MAP

New Technology will track the shopping trip and monitor dwell time

33

Media & Marketing Applications1. In-Store Planning2. Evaluation3. Multi-Media Planning

34

The new In-Store metric will tie In-Store to other marketing spending and total investment analysis

35

Check Out

Pallet Displays

In-StoreTV

Case StackerDisplays

Shelf Talkers

Sampling Programs

Floor Graphics

In-Store Radio

End CapDisplays

In-StoreIn-Store

Advertising

Consumer Promotion

Trade Pricing

ROI

In-Store Activity Return On Investment Analysis

36

Check Out

Pallet Displays

In-StoreTV

Case StackerDisplays

Shelf Talkers

Sampling Programs

Floor Graphics

In-Store Radio

End CapDisplays

In-Store

In-Store Activity

Magazines

In-Store

Cinema

Outdoor Newspaper

Internet

EventMarketing

Radio

Television

CampaignRF

Overall Marketing Campaign

In-Store

Advertising

Consumer Promotion

Trade Pricing

ROI

Return On Investment Analysis

37

Source: Nielsen Media Research; Nielsen In-Store

Avg. Weekly Gross Impressions (000)Female 25-54 Northern California*

100

736

526

269

100

Front End/CheckoutIn-Store TV

Runway - RearWall Display

American Idol 30Second Spot

In-Aisle ShelfTalker

Women's ServiceMagazine

Impressions can be measured across multiple marketing options

Need to developappropriate CPMs

across thesevehicles

38

Extensive testing and early pilot programs confirm P.R.I.S.M. is valuable and ready for rollout

Dates • 2006 • 2007-early 2008 • 2008 and beyond

Scope • 10 stores, 4 retailers in U.S. • 169 stores, 17 retailers, 38 banners representing 62% Total U.S. ACV

• Projecting to 24,000(+) stores

• Syndicate the service in the U.S.

• Begin international expansion

Phase 1: Test

Phase 2: Scale and learn

Phase 3: Rollout

TodayToday

39

Everybody Wins• CPG manufacturers

40

Everybody Wins• Agencies

41

Everybody Wins• Retailers

42

Everybody Wins• Media Companies

43

Bringing In-Store Measurement to Life

44

P.R.I.S.M. -How can we use the data to further advance

shopper marketing understanding?

45

1. Audience measurement- who is in the store? - audience counts

2. In-store Marketing Presence- what was in the store?- presence of all in-store marketing stimuli- knowing whether and which marketing in-store vehicles are

present3. ROI/Efficiency/Effectiveness

- effectiveness/efficiency of in-store spending- conversion (from exposure to purchase)- planning and evaluation insights

P.R.I.S.M. offers unique insights and long-awaited information

46

• Gross impressions• Unduplicated impressions• Gross rating points• Frequency• % reach• Shopper conversion rate• # of stores in which marketing vehicle was present• % of stores in which marketing vehicle was present• Average # of weeks in which marketing vehicle was present

A range of unique in-store metrics

47

P.R.I.S.M. Data - Actual Examples

48

P.R.I.S.M. audience size measurement

Total Store Females 55+ Males 25-54

Checkout Area Zone 17,877,042 3,721,803 3,166,048Runway - Front 99% 99% 99%Lobby Zone 96% 95% 96%In Aisle Zone 92% 92% 92%Runway - Rear Wall 72% 72% 72%Runway - Front Wall 61% 61% 61%Produce Zone 55% 57% 49%Dairy Zone 50% 44% 47%Runway - Rear 46% 46% 46%Meat & Poultry Zone 42% 37% 41%Runway - Perimeter 40% 40% 40%Runway - Split Aisle 34% 34% 34%Frozen Food Zone 28% 25% 26%Deli Zone 22% 19% 21%Bakery Zone 21% 19% 21%Seafood Zone 20% 18% 20%Promo-Seasonal Zone 13% 13% 13%Pharmacy Zone 9% 9% 9%Greeting Cards-Party Zone 6% 6% 6%Floral Zone 4% 4% 4%

Retailer A - 4 w/e 09/29/07Gross Impressions by Store Part

• P.R.I.S.M. can identify audience size by storepart

P.R.I.S.M. can highlight differences in impressions by demographic groups

P.R.I.S.M. data can be used to determine optimal placement of in-store display based on gross impressions

49

P.R.I.S.M. allows you to analyze a common metric (gross impressions) across all mediums

Female 25-54

One WeekTOTAL GROSS IMPRESSIONS 526,100

In-Store AudienceOne WeekRetailer A

Gross ImpressionsStorepart Female 25-54Lobby zone 1,155,489Runway – Rear Wall 871,880Runway – Front Wall 736,498Produce Zone 713,231Dairy Zone 676,542

Despite being the #1 Despite being the #1 rated US television rated US television

show, American Idol show, American Idol Gross Impressions Gross Impressions

lag behind a number lag behind a number of Retail Store Zones. of Retail Store Zones.

50

Shopper Conversion rates from P.R.I.S.M. can be analyzed week to week to assess changes

driven by in-store activityCookies Shopper Conversion Rates

Aug-Sept 2007

Retailer A

Retailer B

Retailer C

51

P.R.I.S.M. can reveal how many shoppers had the opportunity to see various in-store executions

Impressions generated by a 1 week Impressions generated by a 1 week pallet display in the runway front pallet display in the runway front

generated nearly as many impressions generated nearly as many impressions as a 6 week shelf banner. as a 6 week shelf banner.

Kraft Bistro Deluxe

In-Store Activity # of store/weeks Impressions

Display – Pallet 1 5,393Runway Front

Shelf Banners 6 7,823Dry Dinner Mix Aisle

Total Impressions 13,216

52

Kraft Deluxe Competitor# of store/weeks 5 6

Display Location Display Pallet EndcapsEndcapCase StackerWall & Slatwall

Locations Runway Front Runway Rear WallLobby Zone Runway Split Aisle

Impressions 31,961 28,039

More shoppers had the opportunity to see Kraft Deluxe More shoppers had the opportunity to see Kraft Deluxe displays in just 5 weeks driven by more display locations. displays in just 5 weeks driven by more display locations.

The in-store marketing activity of competitive brands can also be analyzed through P.R.I.S.M.

53

Can investment in aisle reinvention drive increases in aisle traffic and shopper conversion rates sufficient to result in positive ROI?

P.R.I.S.M. data may be applied to answer many additional questions such as…

54

And… • Which aisle placement will drive the greatest exposure and shopper conversion rate for my mega display?

• Which type of display will yield the best ROI?

55

• Is the execution of in-store media in line with targeted goals?• Are there other storepart locations that provide a more

favorable audience rating and alignment with category shopper traffic?

• Are there other in-store media types that should be used to drive brand volume and category closure rate?

• Is the ROI more favorable for one type of in-store execution than another?

• Are my in-store marketing activities as effective as my competitors?

And many other questions…

56

P.R.I.S.M. analytics …A powerful tool for retailers and manufacturers

• Keeping the Shopper at the center

• Delivering leveragable insights into Shopper in-store traffic, closure rates, and ROI for in-store spending

• Examining impressions, impact and ROI of media spending across all mediums, including the store

New approaches to collaboration in manufacturer / retailer shopper data sharing ECR Berlin 2008Koos Berkhout

Presentation overview

• Introduction

• Data challenges in collaboration

• Benefits of a single platform

• Case study

• Summary

Company Overview

• Own and operate customer loyalty programmes– Nectar UK– Air Miles Middle East– Aeroplan Canada

• International Business Development– Launched in: UK, Canada, Netherlands, Spain, Middle East– Grocers: Safeway, A&P, IGA, Sobeys, Albert Heijn, Eroski,

Spinneys, Sainsbury’s

• Insight & Communication– Customer analytics– Insight sharing– Customer targeting

LMG Insight & Communication Division

Data-driven collaboration can go wrong in many areas

• There is an abundance of data sources, each with its own limitations and data traps

• ePOS– Comprehensive, cross-retailer view– Does not provide insight into who

• Panel– Adds the customer dimension to the cross-sector view– Provides directional information only – becomes less

reliable in questions requiring granularity

• Loyalty Card– Accurate view of how what customers do on a very

granular level– No cross-retailer view, data provides limited insight into

why shoppers behave the way they do

• Market Research– Captures broader range of data can be providing better

insight into why– Shoppers don’t always do what they say they do, survey

content is subjective

• People working across companies introduce additional challenges

• Organisations tend to have their own product hierarchies and category definitions

• Different data sets can be used to answer (parts of) the same question

• Choosing the best analysis technique and which insights to show can be subjective

• Interpretation of results can vary

A single platform addresses many sources of inconsistencies

Manufacturer

LMG Analysts

Retailer

Uniform front-end guiding users through phrasing business questions in a consistent way

Uniform front-end guiding users through phrasing business questions in a consistent way Central set of modules

containing definitions, analysis methodologies

Central set of modules containing definitions, analysis methodologies

Single source containing 100% transactional and customer data

Single source containing 100% transactional and customer data

Self Serve Live Case Study

A single insight platform enables more effective collaboration between retailers and manufacturers

• Organisational alignment and data quality are critical

– Manufacturers and Retailer use the same system

– Agree on consistent definitions in order to make customer data common language

– 100% data available over a sufficient time period

• The right technology determines the success

– Quick – Reports built and delivered in minutes

– Fast – Data available 3 days after the end of each trading week

– Simple – Intuitive portal simple to use and provides actionable insight

– Intelligent – Portal structured around key business questions

Thank you

k.berkhout@loyalty.co.uk

Situating shopper behaviours within360° consumer understanding

Using this insight to drivedifferentiated strategies

Sandy Livingstone

BMRB / TGI EuropaECR Berlin 2008

Consumer

Retail Brand

Shopper

As discussed earlier . . .

In-store planning is still disconnected

In-store planning is frequently conducted without sufficiently close reference to:

central marketing communications strategy

other wider picture issues such as attitudinal and cultural differences across markets

At best this misses an opportunity to build differentiation with real value to the consumer

At worst it results in poorly directly activities which can undermine longer term brand health

A short story of Brand X

How, apparently this brand came to decide on its in-store targeting strategy

Why subsequent sales data disappointed and led to uncertainty

How 360° data revealed new levels of insights, comparable across countries

How this influenced future European strategy

How it inspired a platform for specific actions with a retail customer

Misunderstanding derived from an incomplete picture

Brand X, a new snack product was launched across 3 European markets in early 2005

Based on demographic data on category consumption, assumptions were made by the sales team as to the target market, for example:

that the core was 18-34 year old females

that the major competitor was a category leader

A post-launch analysis showed that this hypothesis was clearly incorrect leading to concern over direction of trade support

Could more detailed analysis of other data help find a way forward?

Brand X profile in France

A highly summarised example of output

Have more spare time than many with a third spending 2.5 hours a day on leisure activities. Most of their weekdays are at college, some work part time or spend a lot of time caring for children. Often use the Internet, some may use it at their campus for study or for staying connected with friends. They like to hang out with friends after school or work at fast food restaurants, cafés and bars are also into sports (football, swimming, badminton) and particularly sociable activities such as bowling, snooker etc. They rely on TV heavily or books and Bande Dessinées for relaxation. Some try to win some extra money from machines, scratch-cards or the lottery. Those with families are active theme-park goers (Parc Astérix, Walibi) and others attend cultural sites/events in Paris.

Brand X Users: 2.4 million in FranceR

egul

ar a

ctiv

ities

Abo

ut th

em

Two thirds are female, younger (spread within the 15-34 age group) and therefore more likely to be single and to be students. However some have started their families, and 44% have children in their household. An average number work, however given a quarter are in full time education and with skews towards homemakers and unemployed, they are slightly more likely to finding it hard on their personal income(though by background, HH income is above average). Marked skew to the north half of France with a core group living in larger cities and Paris.

Source: Enlightenment Europa TGI 2007 February (Oct05 - Sep06) Universe: All Adults 15+ in F Base: Brand X users

Reactive to and engagedwith ads and promotions

Spenders, not good at saving or managing money

Impulsive trialists – love anything even superficially new (e.g. packaging or gadgets)

Pleasure in everything; food, affection, shopping or their home

Forward-looking, ambitious and up for Challenges

Experiencing Enjoy diversity and difference

Try to affirm themselves through their

appearance

Out and about enjoy having a good night out

Music an important thing in life

Look for guilt free treats. Indulgethemselves but may feel tension being aware of calories

Impulsively driven by clothes, fashion and socialising

Source: Enlightenment Europa TGI 2007 February (Oct05 - Sep06) Universe: All Adults 15+ in F

Fashion is everything (and is disposable)

Compulsive shoppers / browsers / spenders

Aspire to gain esteem and stand out

Love being Young and Youthful

Top

conf

ectio

nary

br

ands

Other choc

Ice creamBreakfast cereal

Foods and Diet

Boxed choc

Mayonnaise

Food

str

ateg

y

Salad dressing

Sweets

RTE desserts

Connecting with friends and family through food in a non-traditional French manner (no structure/control). Sweet tooth, like to treat themselves without avoiding sugars/fats. They like fast food and pizza and many go for easy options such as takeaway. Many like experiencing new things and some eat in restaurants especially Greek/Turkish, Italian and exotic foods. Some opt to diet products or skip meals to keep their weight down. Many compensate with sport and overall keep fit.

Snack/ Foods more likely to consume often

FoodS

nack

Milk

Ice cream (bars & sticks)

MintsCereal bars

Savoury snacks

Source: Enlightenment Europa TGI 2007 February (Oct05 - Sep06) Universe: All Adults 15+ in F Base: Brand X users

Chewing gum

Bar choc

Sweet biscuit

Cheese in portion

Delicatessen

Meat & Poultry

Frozen vegetable

Brand Y comparative profile

Key values for each brand

Image conscious/ keeping up

Connecting

Spending

Similarities Key values pulling consumers apart

Diet tension

Superficial novelty

Culture

Environment

Home

Source: Enlightenment / Europa TGI 2007 February (Oct05 - Sep06) Universe: All Adults 15+ in F

Discoveries

Real differences exist between Brand X consumers and those of its competitors

Not just a challenger sub-set: these were evident throughout:

Demographics

Mindset

Lifestyle

This warranted a further investigation into attitudinal differences in greater depth

I always think of the calories in what I eat

I think fast food is all junk

I always look for the light/diet versions of food and drink

We rarely sit down to a meal together at homeI don't have time to spend preparing

and cooking food

I don't want responsibility I'd rather be told what to do

There's little I can do to change my life

I like taking risks

I would like to set up my own business one day

I loathe doing any form of housework

I find that I'm easily swayed by other people's views

My faith is really important to me

I consider myself to be a spiritual person

I find it difficult to say no to my kidsIt is important my household is equipped with the latest technology

A woman's place is in the home

Contraception is a woman's responsibility

Real men don't cry

I consider myself interested in the arts

The point of drinking is to get drunk

When doing the household shopping I budget for every

penny

I really enjoy any kind of shopping

I often enter competitions featured on packets or labels

I sometimes send off for goods services or info packs advertised in newspapers mags on TV or radio

It's worth paying more for organic food

To do my shopping by internet makes my life easier

Celebrity endorsement influence my purchase decision.

I would never think of taking a package holiday

Most of the time I'm trying to lose weight

A designer label improves a person's image

Enlightenment / Europa TGI 2007 February (Oct05 - Sep06)

Bounty

Brand L

Dove

Brand M

Tender

Milkinis

Brand X

Maltesers

Brand ABrand Y

Brand BNussini

Nutoka

Caramac

Mars Bar Kit Kat TwixSnickers

Kinder Maxi

Milky WayDaimPick up

Aldi - Other choc

Lion Bar

Duplo

Nuts

Banjo

Starting point: a map using 250+ attitudinal statements against category brands in Germany

Brands L and M are Brand X’s

closest competitors from

this axis of interpretation

Brand Positioning in Germany

Enlightenment Europa TGI 2007 February (Oct05 - Sep06)

Maltesers

Brand A

Mars Bar

Rolo

Kit Kat

Brand Y

Bounty

Twix

Lion Bar

Snickers

Brand L

Kinder MaxiBrand B

Duplo

Nuts

Milky WayDaim

DovePick up

Aldi - Other choc

Brand M

Banjo

NussiniNutoka

Caramac

Tender

Milkinis

Brand XPremiumisation Early adoptionSophistication

Price-oriented ConservatismReactivity

Masculine Values

FeminineValues

Distinctive niche

position is confirmed

ConservatismPremium / sophistication

Germany

Contrarian / Rebelling

Trialism based on promotion

France

ConventionFashion / materialism

Great Britain

Opposing valuesCore territory values

Observed differences by country

• Premium display• No price or “cheap” promotions• Competitions as link to

aspirational

• Support sophistication• Avoid carving small niche• Widen appeal outside core

Germany

• Rolling price promotions• Series of tie-ins with other trial

increasers in other categories

• Refresh novelty value• Permanent new interest• Increase penetration

France

• Glamour magazine• Range away from main• Checkout displays

• Reinforce fashion values• Leader of its own category• Increase frequency

Great Britain

Potential tacticsIn-store strategy

Recommendations by country

Generating new sales from this insight

A retailer/manufacturer partnership approach built on differentiation

The potential amongst non-users is sized by creating a closely matched “look-alike” group . . .

63% of Brand X

consumers have at least

7 of these variables in their profile

Among snacks consumers, people who have at least 7 of these variables in their profile are 43% more likely to be Brand X consumers

I like to treat myself to foods that are not good for me I avoid sugar (no)I often eat between meals, I keep eating snacksI think fast food is all junk (disagree)I don't pay sufficient attention to what I eatI really look after my health (no)Because of my busy lifestyle, I don't take care of myself as well as I should Our family spends a lot on food I often buy useless things I often buy, on impulse, products I hadn't thought of I dress in a young style I like to keep up with the latest fashions I like others to look at meI spend a lot of my spare time with friends every dayI want to get to the very top in my careerMarital status: Single/Living alone

Brand X

. . . Creating a potential of 16.5m consumers

Among other snacks eaters 39% have a very similarattitudinal profile to Brand X’s users

Snacking consumers who are non-users of Brand

X

Potential of 16.5m extra consumers

The opportunity for Brand X / Retailer A No particular affinity between these

consumers identified and any specific brands.

Their consumption of competitive products is average

Their potential affinity with Brand X is quite unique making this a promising

target market

Stronger likelihood to be Retailer A shoppers

Opportunity to create a differentiated platform from which to drive consumption

/ sales

Eating is a short break to fuel and escape pressure

• Convenient / easy solutions / quick fix

• Often on the go

• Follow impulsions / avoid rules

Not really about quality for its own sake

• Notion is more one of extravagance

• Usually expressed only on occasions

Indulgence is not really achieved via sensorial pleasure

• Rather it is through the notion of having transgressed

• Treating generates feelings of guilt as well as of pleasure

Creating a shared, differentiated platform:Brand X / Retailer A in partnership

Health and diet Indulgence Premiumisation

Pleasure obtained from the category positioned as a well-being treat / mental break necessary to a healthy and balanced lifestyle

(similar function as a massage or some down-time in a Starbucks etc.)

• No relation to premium quality snacks or to healthy options

Conclusions

Conclusions

Survey data can provide the missing insight vital to maximise in-store differentiation and ROI.

We recognise that relatively few make intelligent use of it:The volume of data being processed from other sources can be overwhelming and gives the illusion of completeness

There is an inherent difficulty in reconciling findings with other data sources

We are hopeful that in future these barriers will be reduced:we have already worked with P&G on a project to tie into Nielsen data

we are investigating ways of working with loyalty card systems

Meanwhile make use of differentiating insight already available

89

Panel Q&A