Just because your consumer says he’ll go out of his way to buy Ruffles doesn’t mean he will. And as more companies realize this disconnect between thought and deed, many are now going beyond traditional research methods in an effort to truly get into the shopper headspace.
The likes of Frito-Lay, Coca-Cola and HP are implementing in-store research programs that bring marketers and other employees up close and personal with shoppers. The benefit? Along with sales increases, they’re finding they can gain leverage with retailers and build stronger relationships with consumers.
Marc Guay, president of Mississauga, Ont.-based Frito-Lay Canada, believes in-store research is crucial because ‘the point of purchase is very complicated. There’s the consumer, and then there’s the shopper. What consumers tell you when you conduct surveys isn’t necessarily what you observe in the store.’
Along with regular in-store intercepts, a couple of years ago the firm placed GPS devices on grocery carts to determine shopping patterns and hot spots. Frito-Lay then ‘translated that information into actionable game plans to go to our retail partners and implement merchandising tactics that responded to those findings,’ he says.
One of the learnings was that consumers spend a lot less time in the store than they used to, and a lot less time in the aisles. ‘So being on the perimeter of the store is certainly something we strive for,’ says Guay, who points to in-store promos such as an annual Superbowl campaign wherein Frito-Lay and Pepsi team up to create an attention-getting experience involving carpets that resemble a football field and goal posts. Retailers like it, says Guay, because January is slow and they want to add excitement.
According to Luke Sklar, partner of Toronto-based marketing consultancy Sklar, Wilton & Associates, the dramatically consolidated retail environment is a big factor in the decision to cosy up to consumers. Sklar, who counts Heinz, Maple Leaf and Smuckers as clients, says studying shopper behaviour is critical not only to gain a true understanding of the consumer, but also to help strengthen relationships with customers (a.k.a. retailers.) ‘Loblaws doesn’t really care about Heinz ketchup. The only way we can make them care is to give them smart thinking that makes them more money. [You need to] go to them and say: ‘You know, if you actually put the display here or if you put a double posting there, you will raise your basket by x dollars.”
The main way to deliver smart thinking is through observing shoppers in their habitat. ‘Retail is a visual, sensory business that you cannot understand unless you see people feel, touch and view,’ says Sklar. ‘You need to get into the moment of truth because that is where the decision to spend money is made and people can’t [articulate the decision-making process.]’
Observational methods, he adds, can either be quantitative or qualitative. So time-lapse photography studying traffic flow can help determine shopping patterns. Qualitative research, on the other hand, involves walking people through the store to see if key focal points actually evoke the responses desired.
While Sklar maintains that ‘most [CPGs] have been wonderful at consumer understanding, but not as strong at shopper understanding,’ he says these in-store research methods, previously rare, are now more common. ‘In a country with pressure-disposable income like Canada, with cost pressures and the over-stored retail market, shopper research is a wedge to be smarter, to get everyone to make a little bit more money.’
Coca-Cola took in-store research one step further when it introduced a concept store in Toronto’s trendy Yorkville in September to act as a valuable tool for gauging consumer feedback. The store houses the soft drink giant’s new coffee brands, Far Coast and Chaqwa – its play to take a bite out of the lucrative $5.2 billion (including café and grocery store sales) java market. Concept stores are also opening in Norway and Singapore. While the location of the store here may seem odd, it actually makes sense when you consider that the Far Coast line targets more upscale clients like Windsor Arms and Yorkville’s trendy restaurant Flow. (Meanwhile, Chaqwa is going after gas stations and movie theatres.)
The store’s purpose is to generate consumer insights, according to Coke, which emphasizes that it’s not going after Starbucks or Tim Hortons, nor is it getting into the retail business. ‘We are fundamentally not competing with coffee houses,’ says Udaiyan Jatar, premium brewed beverages GM at Atlanta-based Coca-Cola Company. ‘The concept store is really a marketing tool…it’s part of our full-learning plan,’ explains Silvio Annosantini, premium brewed beverages business development director, Coca-Cola Canada.
Non-CPG companies also see value in cosying up to shoppers. Mississauga, Ont.-based HP Canada recently wrapped its Demo Days, when employees spent a half-day in Best Buy stores getting a glimpse of how overwhelming the consumer electronics retail experience can be. Everyone from the leadership team to members of the marketing, finance and call centre departments were invited to participate.
Says Lynn Anderson, VP of marketing and strategic alliances: ‘It’s a really good opportunity to…[help employees] understand from the customer’s point of view what the whole experience is around the purchase and the take home of an HP product.’
And the Demo Days (first tested two years ago before being rolled out nationally this year) help build customer loyalty, she says. ‘You can put a face to the company when the customer is making that purchase decision, and because your products are being sold through a channel, this is an opportunity for them to build a rapport directly with HP.
‘Many consumers, when they are walking in, have not determined which brand may be the one they are ultimately going to select – so this gives you an opportunity in the purchasing process to state your benefits and bring them over to your solution.’
While HP will compare sales in participating Best Buy locations during Demo Days versus a similar period to gauge success, there are other benefits to the program, says Anderson. ‘I talked to about 10 people who were coming to HP because they’d had a really bad experience with a competitor – and they were very clear about where the competitor fell down, which is great, because it reaffirms your value proposition does ring true, or [you realize] ‘Hey, do you guys know that the one thing we have taken for granted we should really be pushing?”
Marketing consultant Alan Kay’s advice is not to get in over your heads when it comes to implementing marketing strategies that are based on research born of close customer contact. ‘Don’t try to change everything,’ advises the president of Toronto’s The Glasgow Group. ‘Just change a few things that matter to the customer.’
With files from Annette Bourdeau and Mary Maddever.
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Why now?
Alan Kay, a marketing consultant and president of Toronto-based The Glasgow Group, says one of the reasons more companies are interested in one-on-one dialogue with consumers is that commoditization has increased the importance of customer experience. In fact, he says, customer experience must now be differentiated to gain a competitive edge.
While Kay says traditional research is still very important to help identify what kind of experience people want, ‘to be able to convert that research knowledge into insight and action you need to go one step further, which is to bring the customer into contact with your organization. That allows your management to make the kind of decisions the customer wants, and allows the customer to see that the organization, the brand, is actually listening.’
Doing so, he says, can help a company establish customer loyalty, but it’s also the price of admission nowadays, because of the Starbucks of the world, which have excelled in the customer experience arena. While ‘it’s hard for established organizations [to create that structure] they have to find something that captures a Starbucks-like approach – and the way to do that is to talk to customers directly.’ Kay says the idea of interaction with consumers began with the Internet, which facilitated a more intimate dialogue, but that companies are now pushing such tactics further.
‘Managers have so much information at their fingertips, it’s hard to make decisions without getting closer to the customer,’ he explains.
