APT's Insight-Works

UPDATE: Frito-Lay recently announced the release of a new, quieter, compostable SunChips bag… hopefully they’ll test it in-market in a few markets before rolling it out more broadly…

When SunChips rolled out its new compostable bag in April 2009, it seemed like a smart move for a company that emphasizes natural ingredients, healthy lifestyles and environmental sustainability.  The packaging was another way for the Frito-Lay subsidiary, which already uses solar power at its factories, to grow its green credentials and gain credibility among its core consumers.

But instead of building the brand, the new bags—which are notably noisier—may have just irritated consumers.  Sales dropped 11% during the past year.  Recently, SunChips made the awkward announcement that it was abandoning the highly-touted packaging.  A decision that seemed prescient 18-months ago now leaves customers annoyed and environmental advocates dismayed.

The abrupt about-face leaves a number of unanswered questions.  Why didn’t focus group testing highlight the gravity of the impact of packaging noise earlier? Was the entire sales decrease attributable to the new packaging? Are there any markets or retail outlets where the new packaging actually drove an increase in sales?

Well-executed in-market tests could have prevented this unfortunate outcome by isolating the impact of the new packaging and determining which consumers would like the changes, and which would not.  SunChips experience highlights the importance of in-market testing to supplement focus groups and other research channels prior to packaging changes. While participants in focus groups, seeking to appease their environmental consciousness, might not have raised issues with bag noise during, in-market consumers voted with their dollars and the incremental impact was loud (no pun intended).

Had SunChips run a robust in-market test of the new bags prior to rollout, it may have been able to limit availability to areas where the new packaging would been successful and continued developing its package technology before rolling out a bio-degradable bag across the country.

This is not the first time that PepsiCo, owner of SunChips producer Frito-Lay, has run into packaging problems – a 2009 introduction of an updated package for its Tropicana brand was short-lived as well.

SunChips is now working on a quieter version of the bags in hopes of reintroducing them.  Hopefully, it is also looking to more robustly run in-market tests of any new bags prior to rollout to substantially improve their ability to accurately predict consumer response.

Read more about how APT clients (ranging from Kraft to Owens Corning) use Test & Learn^TM to improve profits on new packing, product innovation, and media investments.

Collaboration is an interesting topic these days in the Consumer Goods and Retail industries.  Nearly everyone agrees that collaboration between retailers and manufacturers is important, but few can point to shining examples where its worked as well in practice as on paper.  But if Consumer Goods marketers are going to be truly successful at capitalizing on the Shopper Marketing opportunity, closer collaboration between the manufacturers that make the products and the retailers that shelve them will be essential.

At least that was the view put forth by top executives at Best Buy, Family Dollar, and Sam’s Club during a panel discussion on Collaboration moderated by John Dranow of SmartRevenue.  During the discussion, a number of key points of effective collaboration emerged:

• Manufacturers should be looking to partner and experiment with Shopper Marketing ideas year round, not just during the holiday shopping season.
• Willingness among retailers to share data is highest when manufacturers begin with a demonstrated willingness to share insights.
• A clear understanding of consumer, brand, and market strategy is a critical foundation for beginning a collaboration dialog.
• Alignment on objectives, success criteria, and means of measurement is needed up front before proceeding on any collaborative initiative.

APT plays a primary roll with many of our clients in enabling that alignment.  Using APT software, manufacturers and retailers are able to establish a clear understanding on what can be measured and how it will be measured when considering any Shopper Marketing in-market test.  With clear metrics and reliable, objective results in hand, they are able to make decisions about which Shopper Marketing programs worked, and which didn’t.

Collaboration and its role in driving successful Consumer Goods industry Innovation will be the topic of an upcoming plenary session at the GMA Shopper Momentum conference, November 8-10 in Naples, FL.  During the session, Nick Sorvillo, Senior Vice President of Consumer Insight and Strategy, Kraft Foods, Inc., Charlie Davis, Vice President of Innovation, Delhaize Group, and Patrick O’Reilly President and Chief Operating Officer, Applied Predictive Technologies will be discussing the case for collaboration as a linchpin for effecting innovation.

Whether it’s figuring out the value of in-store sampling or rethinking its sizable investment in in-store displays, Coca-Cola is using testing to figure out what is working and what isn’t when it’s communicating to consumers at the point-of-purchase.  Jessica Ellickson, Director of Global Shopper Marketing at The Coca-Cola Company, took the attendees at Shopper Insights in Action through a detailed case study of how Coke used a combination of primary consumer research and in-market testing to enhance the message of freshness around its juice products in Turkey.

In another session, Coca-Cola told the audience that it believes 80% of money spent on point-of-purchase displays is wasted.  Taking this challenge as an opportunity, Coke has embarked on a rigorous program of testing to evaluate a variety of point-of-purchase display alternatives, including focusing on different brands, channels, countries, consumer segments, and purchase contexts, and determining what the right balance of Price, Product and Visual messaging works best in each.

Using testing, Coke has learned how to maximize the impact of POP visuals, and when specific types of visuals (ex.  men vs. women) work best.  In addition, they’ve been able to identify when a price message adds value and when it is clutter that clouds the message.

In a different vein, Nestlé’s Russ Onish, Director of Category Leadership & Shopper Insights, described how different merchandising locations and price points were evaluated as they planned the introduction of a new single serving “Cup” packaging for their ice cream brands.  Nestle used virtual testing to evaluate consumer behavior and to determine both the preferred Price point and location for the new package, and determined that the conventional wisdom that suggested placement within the brand family to maintain assortment, otherwise known as “Blocking”, was the less ideal choice.  The innovation team pushed for dedicated doors to create a destination for cups.  Nestle implemented the tested solution in nearly every one of its retail customers, and managed to convince ninety-percent of stores to stock cups together based on the testing results.

At APT, we spend a lot of time thinking about analytics and the process Consumer Goods companies use to turn “Unknowns” into “Knowns”.  A certain former Defense Secretary was famously quoted on this topic of information and uncertainty, but the fundamental insight is universal.  An organization must take a rigorous approach to qualifying and quantifying what it knows and what it doesn’t, and aggressively pursue the objective of reducing uncertainty and thereby enable it to act with confidence and authority.

And so, we weren’t surprised to see the theme of Shopper centric Analytics & Research as one of the underpinning of the recent  Shopper Insights In Action conference in July.  Judging from the range of topics discussed, The Analytics & Research toolkit is varied and deep, spans the spectrum of Primary and Secondary research, and leverages an impressive variety of tools and techniques.

But when it comes to quantifying the potential impact of any Shopper Marketing program, in-market testing has become the gold standard for today’s manufacturers.  At least that’s the perspective put forward by Autumn McDonald, Directory of the In-Market Testing for Growth group at Kraft Foods. During the presentation, Ms McDonald highlight how the food giant is using the APT Test & Learn approach to measure in-store changes, new items/restages, alternatives for retail coverage, and the impact of media/marketing heavy ups.  According to Kraft, the advantages of in-market testing include:

• Obtaining in-context learnings on Shopper Marketing behavior
• Harnessing actual, rather than just claimed, results
• Uncovering the “why‟s” behind results
• Optimizing prior to program expansion or roll-out
• Increasing overall program ROI

In our next installment, we will talk about how marketing and messaging In-store has emerged as the new primary point of leverage for many manufacturers searching for new ways to engage and retain loyal consumers.

It’s the lazy days of summer 2010 and with the worst of the 2008/09 recession seemingly behind us, retailers and manufacturers are asking themselves big questions. Question like: What kind of Consumer is going to emerge from this recession? Will their behavior be markedly changed?, and How do I both reach this new consumer with timely Brand messaging, and how do I keep the message relevant?

Increasingly, the Consumer Goods industry dialog has turned to Shopper Marketing as one of the key activities in the marketing toolkit.  Shopper Marketing is less a revolution than an evolution in the way marketers view and design messaging to reach today’s consumers.  It draws important distinctions between the Shopper and the Consumer, and places a much stronger emphasis on reaching shoppers as close as possible to the point of purchase decision; ideally in the store.

So it was with great enthusiasm that many of today’s top Manufacturers and Retailers descended upon the Shopper Insights In Action conference this past July.  The conference featured three tracks of discussion, each reflecting the core precepts of Best Practice shopper marketing:  Analytics & Research, In-store Marketing, and Collaboration and Loyalty. Look for upcoming posts on each of these Shopper Marketing lynchpins of success.

Here you can find a Executive Summary by John Karolefski of CPG Matters that covers both the conference and a provides a great overview of the importance of Shopper Marketing in today’s Consumer Goods selling environment.