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Shopper Analysis Integration

Today, integrated programs routinely integrate key data sources so that marketers can optimize their retail efforts. In this integrated process, they combine data from proprietary sources such as transactional data, loyalty programs, credit cards, advertising/promotional effectiveness tracking, shopping pattern analysis, electronic marketing results, and so on with external data such as ethnographic overlays, syndicated research (MARI, channel studies, and such), geographic/trade zone maps, brand partner databases and insights, and more.

This data is then analyzed to identify meaningful patterns and groupings. Further analysis of the clusters leads to the segmentation of actionable shopper groups based on profitability.

Cluster analysis informs a series of strategic decisions that drives subsequent choices related to assortment, adjacencies, planograms, store navigation, and so on (see Figure 1.2).

Figure 1.2

Figure 1.2 Shopper Analysis Integration

In completing their analysis, retailers may access syndicated research, account team interviews, store associate interviews, shopping basket diagnostics, current program reviews, competitive situation analyses, and retail audits. Brands may supplement these efforts with their own shopping basket analyses, reviews of their current program results, a trade-off analysis of the costs and benefits of alternative strategies, and insights from the syndicated and proprietary research to which they have access. Uniting these efforts creates synergy that increases program impact as compared to individually generated programs. Retail success is driven by traffic and transaction value. By involving agencies, brands, and retailers in the strategic discussion of how best to meet shoppers' needs within a formal process that includes assortment, structure, and design, we significantly increase the impact and effectiveness of our programs (see Figure 1.3).

Figure 1.3

Figure 1.3 REAP Strategy

Retail Marketing Scorecards

By routinely measuring results and analyzing campaigns within a formal process, we generate important insights that can improve results for future programs. The inclusion of academic research at the biologic, cognitive, logical, and social levels yields even more nuanced analyses and insight (see Figure 1.4).

Figure 1.4

Figure 1.4 Shopper Relevancy Scorecard

Likewise, we can examine the likely acceptance of the program by the various constituencies within the brand marketing organization (see Figure 1.5).

Figure 1.5

Figure 1.5 Brand Acceptance Scorecard

We can further consider our proposed program in terms of its likely implementation at retail by looking beyond the headquarters teams to appraise its acceptance by the field operations team and the floor personnel (see Figure 1.6).

Figure 1.6

Figure 1.6 Retailer Acceptance Scorecard

Integrating all these considerations, we maximize our odds of success and the likely impact of our program by evaluating programs against a holistic scorecard (see Figure 1.7).

Figure 1.7

Figure 1.7 Holistic Marketing Scorecard

Segmentation Premiums

As we develop our strategy we recognize that, for retailing, the great middle has been lost with the death of the old homogenous mass markets. We operate in an environment that rewards the outstanding service of important, defined market segments and punishes the generic pursuit of a generalized middle ground (see Figure 1.8). The premium associated with excellence in specialization is evident in space productivity measures and comparative stock valuations. For instance, Whole Food delivers sales per square foot of $8821 and a stock valued at a five-year average price earnings ratio of 42.72 versus Kroger's $466 per square foot3 and a price earnings ratio generally in the 11 to 12 range.4

Figure 1.8

Figure 1.8 Retail Marketing Strategy

Successfully identifying the segments you cultivate is a critical component of retail success deserving of careful consideration. Many standards have been used for shopper segmentation including demographic, ethnographic, psychographic, and usage criteria. Often, marketers combine traits to describe unique groups to be targeted based on a combination of characteristics that translates into a distinct profile. A key consideration when building targeted groups is that they must be meaningful aggregations that are discrete; that is, uniquely different from each other so that each shopper is placed in one group versus multiple segments. We must also reach the identified groupings so that the plans developed are actionable. Brands should segment their channels to service their customers across the shopping universe and then collaborate with retailers within each channel. Successful collaboration yields sales increases whereas breakdowns result in lost opportunities.

Traditional Shopper Segmentation Traits

  • Size
  • Growth
  • Composition
  • Demographics
  • Leisure pursuits
  • Influencer versus follower
  • Shopper versus user
  • Shopping purpose
  • Visit frequency
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