Shopper Marketing GFK OJO

GfK Consumer Tracking SimIT 2011
The role of Consumer Tracking analyses in shopper

marketing
Agenda
► Introduction to shopper marketing
► Importance of Consumer Panel Data in shopper marketing process
► How it works?
Introduction to Shopper Marketing

Introduction to shopper marketing

4
Why is Shopper Marketing important? „If people went to stores only

in situations when they
needed something, and if they
bought only products they
…developing retail market… actually needed, trade would
► profiling of retail chains… go
bankrupt very quickly”
► mass advertising communication… Paco Underhill, CEO Envirosel
► individualization…
► decreasing loyalty towards sales channels/ retailers ..
► changes resulting from the economic growth… „The moment when a shopper
notices and chooses a product is
the first moment of truth. If this
result in differentiation of shopper‟s behaviour and their moment did not happen, the
expectations. second moment of truth, when
the shopper could experience all
the benefits of our product, would
not happen either,.”
Focusing marketing activities towards „an average
A.G. Lafley, CEO
customer” means no less than aiming at an „undefined P&G
space”.

5
There are two pillars of building sales:
- building demand (brand equity) and activating shopper (shopper equity)
Building demand Activating shopper

- brand equity – shopper equity
Potential tactics:
►by selling more to those who already buy brands

► by attracting those who do not buy brands but purchase category
► by attracting those who neither buy brands nor category

6
In order to increase sales it is necessary to anticipate and predict customers

expectations, needs and behaviour. It is a key success factor in the saturated market.
Traditional approach to selling
Retailer Manufacturer
Price negotiation
Loading in promotions
Holding back information

7
ECR - Efficient Consumer Response
ECR was initiated in the US in 1993
“integrated supply chain approach to improving customer service and efficiency.

In other words to satisfy consumer needs through better products at lower cost,
with faster availability” (IGD)
Category Managment
ECR approach to selling
Retailer Manufacturer
Consumer

8
Definition of Category Management as per ECR
„Category Management is a retailer/supplier process of managing categories as

strategic business units, producing enhanced business results by focusing on
delivering consumer value”. (ECRE 1997)
Retailer Strategy
Category Definition
Classical Category
Category Role
Management process
Category Assessment established by ECR
Performance Targets
Category Strategies
Category Tactics
Review
Implementation Plan

9
• How do the retailer position themselves?

Retailer Strategy • Who are their buyers?
• Which categories fit their strategy?
• What products make up the category?
Category Definition • What would be the consumer description of
the category?
• WHohwatimprpoodrutactnst
Category Role aisrethseeecnataesgosruyb?stitutable
•aWndhaintterorrle ldatoetdh?ese category
play?
Category Assessment
Category Review
••IHsotwheisstehgemceantetagtoiorny
• Where are the opportunities?
p•mearnfo
What argthe
are meiabusiness
nbgleagaobjectives
anidnst it‟sand
Performance Targets pmoeare
how taesthey
nutirato
albbe
?le?
measured?
Category Strategies •What is the long term Business Plan for

the category and what marketing strategy
will be followed?
Category Tactics •What day to day tactics need to
be employed to achieve the
strategy?
•Gain approval to the plan from all
Implementation Plan functions within the business and assign
responsibilities and dates

10
Category management evolves towards shopper insight
• CM remains restricted to big trade and industry companies
• Little sharing about CM-learnings
• CM-process got shortened (Day-to-day CM, CM-light)
• Effectiveness of CM is reduced after several projects
•Need for new approaches and data in CM, focus on shopper insight (HH-
panel data, qualitative data)
Shopper Insight questions Consumer

Panel gives answer to.
Role of Consumer Panel in Shopper Marketing

12
Category management evolves towards shopper insight ….
That’s why Consumer Panel data significantly gained on importance in

terms of shopper insight:
• Delivers continuous measurement:

WHO buys
WHERE/WHAT buys
HOW MUCH/for HOW MUCH
HOW OFTEN

13
Only Consumer Panel:
• can analyze what a retailer’s shopper is purchasing in the

competitor’s stores
• can show the customer-profiles of a retailer based on real purchases
• shows not only the current (Sales-) situation, but also the
Potential of customers!
• Analyses of losses and gains
• covers all relevant distribution-channels including all channels that

are not co-operating with the retail-panel

14
Consumer Panel answers key insight shopper questions:
• What is the growth potential of a category/segment/brand within a retailer
?
in comparison to its competitors?
• How to grow the sales of a

category/segment/brand?
• What is the specific shopper behaviour in a given retailer and competitors?
• Are the buyers loyal toward a given retailer?
• How good is a retailer in taking care of its shoppers potential?
• Who are the shoppers, what‟s their preferences?


15
Consumer Panel analyses within Category Managment process:
Retailer Strategy Shopper„s profiles, Key-Facts
Category Definition
Category Role GfK SimIT
GfK SimIT
Category Assessment
Category Review
Performance Targets
Efficient Store Assortment
(Assortment Optimiser)
Category Strategies Parfitt Collins
Distribution of price
frequencies,
Category Tactics Launch Analyses, etc.
ABS analyses: Price
Implementation Plan Performance Planner,
Price Point Analysis, Shopping
Missions
How it works?
Evaluation of the category performance & identification of growth

opportunity
17
Universe = 10
Types of shoppers:
• Buyers of the category
• Shopper of the retailer

$
$ $
• Buyers of the category and

shopper of the retailer
$ $
$ $
$ $
• Buyers of the category in

$ $
$ $
the retailer
$ $
• Neither buyer of the

$ $ $ $
category nor of the

shopper retailer

opportunity
18
A retailer can grow a category if…
(1) …more category buyers visit the store
- Shoppers Non-Kaufland-Shopper
(who buy Coffee) (who buy Coffee)

opportunity
19
(2) …more Shoppers actually buy the category in the store…
all other stores


opportunity
20
(3) …the shoppers who by the category in the store are more loyal to the store
all other stores


opportunity
21
Consumer Panel can answer four main questions:
How many coffee buyers are shopping in a particular retailer?

The potential buyers = Buyer propensity
How much of the total coffee turnover is “visiting” the stores of a particular retailer?
The potential turnover = Propensity
How many of the potential buyers are actually buying coffee in the particular retailer?
The actual buyers = Closure rate
Which amount of the potential turnover is actually spend in the stores of a particular retailer?
The actual turnover = Loyalty

opportunity
22
A B C D E F G H
is shopper is shopper is shopper is shopper is not is not is not is not
of of of of shopper of shopper of shopper of shopper of
Category spend 100,- € 100,- € 100,- € 0,- € 100,- € 100,- € 100,- € 0,- €
Spend at 25€
Kaufland
100€ 0€
Total Category buyers: 6

Total Category spend everywhere: 600€
Buyer propensity Kaufland: 3 out of 6 Category-Buyers = 50 %
Closure Rate Kaufland: 2 out of 3 Kaufland-Shoppers = 66,7 %
Propensity Kaufland: (100€ +100€ + 100€) / 600€ = 50 %
Loyalty Kaufland: (25€ + 100€ + 0€) / 300€ = 41,7 %
Loyalty in store Kaufland: (25€ + 100€) / 200€ = 62,5 %

opportunity
23
HH
total Coffee 6 HH Total Coffee

buyers
Total Coffee buyers: 6
Total Coffee Spend: 600 €

FMCG Carrefour
buyers
Closure rate: 2 out of 3
3 HH Carrefour Shoppers: 67%
Closure rate
67% Propensity: 300€ / 600€ = 50%
Loyalty: 125€ / 300€ = 42%

Carrefour 2 HH
Coffee buyers Loyalty in store:
125€ / 200€ = 62,5%
125 € 200 € 300 €
Total Coffee Sales: 600 €

Carrefour Coffee buyer Carrefour Coffee buyer Carrefour FMCG buyer
spend in store spend anywhere spend anywhere
Loyalty in store
Propensity
65,5%
50%
Loyalty
42%

opportunity
24
Buy FMCG
FMCG at retailer Not FMCG at retailer
Most difficult to change,

has to do with category
Retailers category
Buy category roll at retailer
Consumers
Buy category at
Not buy category at retailer
retailer
Retailers category consumers

Bought at retailer Bought outside retailer
that doesn´t buy at retailer
Potential for Potential for increased

increased sales to “closure rate”= transfer
existent buyers consumers to buyers

opportunity
25
How good is the retailers performance?

Analysis based on fair share
Total Category Y Category Z

Market Share Market Share Market Share
Retailer X 4,6 % 5,2 % 6,0 %
- list more SKUs

- more Promotions
- lower Prices

opportunity
26
The problem with market share comparison
• You are only analyzing what is happening inside the retailer.
• The behaviour outside the retailer is not evaluated
• No advice on how to respond to weaknesses:
Share of Trade of a retailer is the result of shopper loyalty and their buying intensity within
the
category. These aspects are not accounted for in the classic approach.

opportunity
27
Example Retailer X
21,4
Propensity in%
18,5 15,7
13,2
11,8 10,8 Loyalty in %
2,2 2,0 2,5
Share of Trade
FMCG Juices&Drinks Dairy Products
„Normal“ Fair-Share Evaluation: Juices&Drinks underperforming, Dairy Products good

Performance.
Category Evaluation with GfK -> Propensity of Juices&Drinks relatively low, therefore Loyalty
high -> Performance of Juices&Drinks better than FMCG!!
Focus should be put on categories with high propensity and low loyalty ---> e.g. Dairy

opportunity
TESCO 28
Gain new shoppers Manage intelligently
Detergents total
100
80
60
Tea
40
Fruit Juices &
Coffee total Non Carb. Drinks
Relative Loyalty
20 Chocolate bars
0
-15 -10 -5 0 5 10 15
-20 Yoghurt total
Yellow Fats
-40
Build Basket Review the whole category
Fresh Cheese
Gain new shoppers
-60
Relative
Propensity
*Size of bubble: spending of chain buyers for selected category everywhere


opportunity
COFFEE 29
Gain new shoppers Manage intelligently
100
80
60 E’Leclerc
Tesco
Auchan
40
Real
Relative Loyalty
20 Carrefour
0
-15 -10 -5 0 Hypernova 5 10 15
-20
-40
Build Basket Review the whole category
Gain new shoppers
-60
Relative
Propensity
*Size of bubble: spending of chain buyers for selected category everywhere

opportunity
30
„Nice to have” „Stars”
rel. low potential rel high potential
Y Axis: Relative Loyalty in %
rel. high loyalty rel. high loyalty

Buy less of the Like the product
category but category and buy it in
tend to the store
buy it in the
store
rel. low potential rel. high potential
rel. low loyalty Rel. low loyalty
Buy less of the Like the product
category – what they category and buy it
do buy tends to be elsewhere
elsewhere
„Poor Cousin” „Potential Starlets”
X Axis: Relative Propensity in %


opportunity
31
„Nice to have” „Stars”

Do not invest additional „Stars“ are the „Top-
money/ resources, maybe Performers“ ➔ keep the
Y Axis: Relative Loyalty in %
also reduce them ➔ try to position by continously

hold the position with very penetrating the market
low efforts
• If the Propensity is high, or • Utmost priority; increase

the Category/Brand/Retailer Loyalty ➔ try to turn
is of strategic importance ➔ „Potential Starlets“ into
increase Loyalty „Stars“; well invested
• If Propensity is low ➔ do money
not make any efforts
„Poor Cousin” „Potential Starlets”
X Axis: Relative Propensity in %


opportunity
32
High propensity means that;
• Retailers shoppers spend a lot on the category, probably more than what the retailer can see in
his sales figures.

• Retailers planogram (shelf space) are based on sales figures not on shoppers demand
(propensity),
means that they allocate space incorrect if they don’t use propensity
• Propensity should be the base for optimising In Store space but also space in promotions
• Propensity should be the base for assortment strategy - high propensity means that retailer
should have
broad and deep assortment
• Propensity is the base for new product development in category. High propensity means that the
retailer should be first on market with new products in the category.


opportunity
33
Things to keep in mind about PROPENSITY AND LOYALITY
• Propensity is always a function of the total importance (= number of stores, total sales) of a retailer
• You hence cannot directly compare the absolute propensity of retailers (i.e. higher means better)
• If you want to compare retailers use relative propensity (vs. FMCG or vs. category you are looking at)
• Loyalty can be compared directly as it is independent from the importance of the retailer
• It is still sometimes useful to use relative loyalty (e.g. is a brand performing better in comparison to
the
category)

opportunity
34
Loyalty Class: TOTAL; Total Hypermarkets; TOTAL MINERAL WATER

35
Importance of store
shoppers on the market
(how much they generate
LOYALTY of the category market)
ClLOSURE RATE LOYALTY IN

STORE
Av. Spendings of
shoppers who
Shoppers who bought category in
bought category instore on category
Spendings of
store anywhere
shoppers who
bought category in
store on category
Shoppers who buy anywhere
category anywhere
Av. Spendings of
shoppers on
category anywhere
Average number of visit in which

category/item was bought

opportunity
36
How to improve Loyalty?
Improve Closure Rate Improve Loyalty in

store
=
Improvement of Loyalty

opportunity
37
How to optimise the Marketing-Mix
Low closure? Low loyalty in store?
Assortment Promotion
Placement
Price

opportunity
38
A) Loyalty low due to a Low Closure Rate:
- Article Range ( Number of articles listed ) ?

- All product segments covered (Width of assortment) ? Assortment
- Number of brands/variants per segment (Depth of assortment) ?
- Shelf Space Allocation ?

=> Shelf Space per Article / Number of Facings per Article ?
- Store Layout ( Placement of department within store ) ? Placement
=> Customer Tracking Study

opportunity
39
B) Loyalty low due to low Share of Requirement:
-Regular Price of most important

SKUs ? (Index vs. competitorsr) Price
- Index Promotion Price vs. Regular price
?
- Number of Promotions / Types of Priomotion ?

- classic Instore-Type
(Price/Display/Leaflet and Store Radio
Trolley Ads/Billboard Ads inside/outside store)
- were SKUs promoted in-store which simultanously had strong off-
Promotion
store- Advertising?
(classic Advertisements/ Promotion-Tours, etc.)

opportunity
40
Missing opportunities
- An analysis which gives information to which retailer the losses of value of a given retailer
went to. In other words where the shoppers of a given retailer are buying outside
the retailer.
Misssing opportunity share: how much of total sepndings outside the retailer is covered
by particular retailer (recipient).
Affinity Index: missing opportunity share/ market share w/o analysed reatiler (fair share)
high- loss higher than expected

Low – lower than expected
01.10.2008 - 30.09.2009; TOTAL MINERAL WATER; TESCO HYP

41
Tesco hyper would gain te most from Real and

Carrefour (retailers with the highest missing opportunity
share and Affinity Index)
In relative term C4, Real, Auchan are the highest
danger for Tesco
Missing opportunity analysis

42
•Price Index shows the actual prices the store shoppers have paid for a category/brand,
when the by it in the store compared to what the paid for the same category brand in other
stores.
• It shows how price sensitive the category/brand is for the store.
• Calculation:
Price per unit paid by store shoppers in other store (reciepient)

X 100
Price per unit paid by store shoppers in the store
• This measure is where I make money!

•Price Index shows not only price differences, but how the store shoppers has reacted to
the price differences.
• Is price a driver in store brand/category performance?
TESCO HYP; 01.10.2008 - 30.09.2009

43
Tesco is loosing to Kaufland due to low prices, however in

terms of looses to Carrefour price is not the determinant.
Missing opportunity analysis

44
Missing opportunity balance: diffrence between spendings of shoppers of

analysed retailer in recepient retailer and spendigs of shoppers of recipient store in
analysed store.
Tesco shopper spendigs in Kaufland
Kaufland shopper spendings in Tesco
Missing opportunity
- = balance
TESCO HYP; Opportunity balance (CUR); 01.10.2008 - 30.09.2009

45
In absolute term Tesco is loosing the most to Kaufland. Low

Affinity Index indicates that the loss is under proportional (all
analysed retailers are loosing to Kaufland (see next chart)
01.10.2008 - 30.09.2009; Opportunity balance (CUR)

46
47
PERFORMANCE
ANALYSIS:
In which categories does a retailer have the highest

potential?
What are the reasons for weak loyalty?
Is the focus put on the right segments, brands?

PERFORMANCE ANALYSIS – Pingodoce

Mineral Water
48
Store share: Pingodoce share of total Mineral Water is 4,1%

Shopper loyalty: among Pingodoce shoppers who are Water buyers anywhere Pingodoce accounts for 7,7% of
their total spendings on the category
Buyer Propensity: the Pingodoce shoppers who are Water buyers anywhere accounts for 51% of all Water
buyers (total market)
Shopper loyalty in store: among Pingodoce shoppers who are Water buyers anywhere and buy Water in
Pingodoce, Pingodoce accounts for 16,5% of their total spendings on the category
Propensity: the total spendings of Pingodoce shoppers who are Water buyers anywhere accounts for 54% of total
spendings on the category (total market)
Buyer closure rate: the Water buyers at Pingodoce accounts for 37% of all Pingodoce shoppers who are
Water buyers anywhere

Mineral Water
49
Pingodoce
Spend anywhere (spendings on category in the analysed retailer and outside the retailer): among
analyzed retailers, shoppers of C4 spend most on Water anywhere (bubble size)
Shopper loyalty index (shopper loyalty in Mineral Water vs. shopper loyalty in FMCG): Pingodoce, Tesco,
Real are underperforming in terms of loyalty (spendings on Water)
Propensity index (Propensity in Water vs. Propensity in FMCG): Pingodoce and Auchan shoppers have
much higher potential in Water compared to Tesco and Real shoppers

Mineral Water
50
All analyzed brands (except for Private Label) have positive shopper loyalty index which means that
Mineral Water has relatively high share of their purchases
The highest potential index shows Nałęczowianka and Ustronianka which means that Pingodoce shoppers are
interested in buying these brands however the loyalty index for Nałęczowianka is low -> Pingodoce should
focus on this brand to improve its position on Water market
51
MISSING OPPORTUNITY ANALYSIS:
Which retailers are the main competitors in a particular
market? To which retailer the losses of value of a given retailer
go to?
MISSING OPPORTUNITY– Pingodoce

Mineral Water
52
Missing opportunity (spendings of analysed retailer shoppers outside the retailer): Pingodoce shoppers
spent on Water in Kaufland over 61 M PLN
Missing opportunity share (share of recipient retailers in the analysed retailer shoppers spendings
outside the retailer): Kaufland accounts for about 6% of Pingodoce shoppers spendings on Water outside
Pingodoce.
Affinity index (missing opportunity share vs. market share w/o analyzed retailer - fair share): the
losses of Pingodoce in were higher than expected on terms of analysed hypermarkets
MISSING OPPORTUNITY– Pingodoce

Mineral Water
53
Missing opportunity share (share of recipient retailers in the analysed retailer shoppers spendings
outside the retailer): Kaufland accounts for about 6% of Pingodoce shoppers spendings on Water outside
Pingodoce.
Price index (price per unit paid by analysed retailer shoppers in recipient retailer vs price per unit paid by
analysed retailer shoppers in analysed retailer): the losses of Pingodoce to Kaufland are determined by
lower prices
DEMOGRAPHICAL PROFILE – Pingodoce

Mineral Water
54
Pingodoce
Demographical profile allows to compare the importance of shoppers group of a retailer vs. Total Trade e.g. for
Pingodoce the most important group in terms of spendings is from biggest cities, whereas for Total Trade are
the rural communities

Shopper Marketing GFK OJO

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Shopper Marketing GFK OJO

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GfK Consumer Tracking SimIT 2011

The role of Consumer Tracking analyses in shopper

► Introduction to shopper marketing

► Importance of Consumer Panel Data in shopper marketing process

Introduction to Shopper Marketing

Introduction to shopper marketing

Why is Shopper Marketing important? „If people went to stores only

Introduction to shopper marketing

Building demand Activating shopper

►by selling more to those who already buy brands

Introduction to shopper marketing

In order to increase sales it is necessary to anticipate and predict customers

Traditional approach to selling

Introduction to shopper marketing

ECR - Efficient Consumer Response

ECR was initiated in the US in 1993

“integrated supply chain approach to improving customer service and efficiency.

Introduction to shopper marketing

Definition of Category Management as per ECR

„Category Management is a retailer/supplier process of managing categories as

Introduction to shopper marketing

• How do the retailer position themselves?

Category Strategies •What is the long term Business Plan for

Introduction to shopper marketing

Category management evolves towards shopper insight

• CM remains restricted to big trade and industry companies

• Little sharing about CM-learnings

• CM-process got shortened (Day-to-day CM, CM-light)

• Effectiveness of CM is reduced after several projects

Shopper Insight questions Consumer

Role of Consumer Panel in Shopper Marketing

Category management evolves towards shopper insight ….

That’s why Consumer Panel data significantly gained on importance in

• Delivers continuous measurement:

Role of Consumer Panel in Shopper Marketing

Only Consumer Panel:

• can analyze what a retailer’s shopper is purchasing in the

• can show the customer-profiles of a retailer based on real purchases

• Analyses of losses and gains

• covers all relevant distribution-channels including all channels that

Role of Consumer Panel in Shopper Marketing

Consumer Panel answers key insight shopper questions:

• What is the growth potential of a category/segment/brand within a retailer

• How to grow the sales of a

• Are the buyers loyal toward a given retailer?

• How good is a retailer in taking care of its shoppers potential?

• Who are the shoppers, what‟s their preferences?

Introduction to shopper marketing

Consumer Panel analyses within Category Managment process:

Retailer Strategy Shopper„s profiles, Key-Facts

Category Role GfK SimIT

Evaluation of the category performance & identification of growth

• Buyers of the category

• Shopper of the retailer

• Buyers of the category and

• Buyers of the category in

• Neither buyer of the

category nor of the

Evaluation of the category performance & identification of growth

A retailer can grow a category if…

(1) …more category buyers visit the store

Evaluation of the category performance & identification of growth

A retailer can grow a category if…

(2) …more Shoppers actually buy the category in the store…