CPGmatters: Generalizations Don’t Work Because Shopper Behavior Varies – dunnhumby
By James Tenser
Through a special
arrangement, presented here for discussion is a summary of a current article
from the monthly e-zine, CPGmatters.
the spectrum of purchase behaviors within a category mean that average
measurements mask what’s really going on?
category may appear mature with no growth. But among households that are
engaged, they are significantly more engaged, buying 60 percent more of
some categories. We focus on those specific households to understand why
they are acting the way they are,” said Haluk Nural of dunnhumbyUSA.
idea is to identify behavior you want to see more of, understand why it’s
happening, and use the marketing spend to increase those,” said the vice
president of manufacturer practice at the consultancy best known for its
work on loyalty marketing with Kroger.
doesn’t rely on generalizations and averages because consumers behave differently
around different categories. For example, some shoppers may respond to
a lower price in a certain category, but then use the savings to trade up
in a category that is important to them.
Nural observed that more retailers – not only dunnhumby marquee client
Kroger – are making those kinds of data available to manufacturers to support
improved merchandising and marketing decisions. A crucial consideration
for retailers, he added, is to maintain the right balance between efforts
to promote shopper loyalty versus shopper acquisition.
the old days, we were primarily after acquisition because we had no ability
to identify loyal users or quantify their value to us. Now we can identify
loyal users and identify the right set of shoppers to try to acquire,” he
said in a presentation at the recent Merchandising, Sales & Marketing
Conference hosted by the Grocery Manufacturers Association (GMA).
cited an example regarding a brand in the confectionary business where
his group identified Kroger shoppers who fell into four loyalty groups
– Champions, Valuables, Potentials, and Uncommitted.
Champions were highest in value, representing one percent of shoppers,
but 10 percent of dollars spent on the brand. Potentials and Uncommitteds
were significantly lower. Review of historical data revealed that many
previous promotions had motivated Potentials and Uncommiteds to buy at
very low prices, but not come back.
loyalty data also revealed that year-over-year, 60 percent of Champions
in the category were buying less of the brand and 10 percent had left the
brand, although they stayed in the category in Kroger.
you can see, a focus on acquisitions over loyalty can be an expensive choice,” Mr.
brand determined that a better alternative would be to redirect some of
the marketing spending to pinpoint the Champions, motivate them to buy
incremental items, and remain loyal.
is still a lot of headroom to increase volume among the best customers,” he
said. “You can see how much the brand had lost. Better to make sure you
put a portion of funds to keep Champions and Valuables with you and persuade
them to make incremental purchases.”
Questions: What are the opportunities as well as challenges of drilling
down to individual purchasing patterns within different categories? How
will that capability impact loyalty marketing? How valuable are generalizations