Tuesday, January 7, 2014

Analyzing Shopper Behavior Gives Mondelez a Competitive Edge

Mondelez International is still rationalizing its brand and product portfolio after its 2012 separation from Kraft Foods. Witness the fact that Mondelez just agreed to sell a controlling interest in its SnackWell’s cookie and cracker brand to a private-equity firm. Also, Mondelez and its remaining bell-cow brands such as Nabisco are continuing to figure out the best ways to remain a global dominator in a snack market that provides challenges even as it grows disproportionately compared with other CPG staples.

Improving in-store marketing and merchandising will be crucial to realizing that goal. So Mondelez has set out to observe and analyze shopper behavior with the aim of raising consideration and purchase of Nabisco snacks in the supermarket. Their initiative relies on video and other gathered data of how shoppers behave in participating supermarkets and then integrates it with transactional, quantitative data supplied by the retailers.

“Our goal is to give our shoppers every opportunity to purchase our products, but do so in a way that is meaningful and aligns to shopper behavior,” Ameeta Jain, U.S. director of shopper insights and category management for Mondelez, told the annual meeting of the Category Management Association recently.

To that end, noted Priya Baboo, president of client solutions for VideoMining Corp., her firm’s “objective quantification of behavior helped [Mondelez] prove and disprove some of their hypotheses and helped them refine their shopper-marketing strategies based on a clear understanding of how people shop snacking categories in the U.S.,” including helping Mondelez to develop an understanding of “how things are the same or different” between American shoppers and those across the rest of the world.

VideoMining’s technology creates a “network” of cameras throughout the store, producing a “door-to-door, feet-on-the floor” tracking of each shopper, Baboo said. The network also captures every single one of the “do I buy or don’t I buy” moments, measures those moments in seconds, and then relates them to sales and conversion. 

Optimizing the growth opportunities available in global snacking was, of course, the main part of the rationale for splitting Kraft and a mature U.S. grocery-brands business away from Mondelez and its higher-potential portfolio of worldwide brands that range from Oreo to Ritz to Cadbury candies. In the U.S. market, for example, the growth rate for snack sales is about 5% -- more than double that for foods and beverages overall. And the potential to influence more purchases in crackers and cookies is palpable: 58% of snack purchases are unplanned when a shopper enters the store, according to research presented by Jain, compared with just 38% of other food categories.

Mondelez and VideoMining applied what they called a “5S” architecture to shopper behavior, describing a sort of funnel in which consumers first see, then scan, spot, show interest and select their ultimate purchases. The objective is to make sure that Nabisco and other brands are optimizing their products, advertising and merchandising at each level, Jain explained.

Thus: Is the category in a visible and relevant location so that consumers can “see” it? Then, is the category segmented in a way that is logical and easy to shop so that it can be spied as shoppers “scan” the store? When it comes time to “spot” particular items or brands, are they organized in a way that shoppers can find the one they want? To get shoppers to “show interest,” does the category have the right assortment for all shoppers? And to be “selected,” do the items have the right price, promotion and messaging to drive conversion?

At the upper levels of the funnel, for example, Jain and Baboo explained how Mondelez is trying to optimize the snacks category within the store in part by gaining placement in the most productive spots in the center aisles and by locating in-store advertising and promotions strategically. Jain observed that “everyone enters the store via the lobby and exits through the checkout” so Mondelez must “lever the real estate accordingly.” That could include, for instance, using the lobby to drive awareness of sales and seasonal promotions as shoppers begin their trip and the checkout to drive impulse purchases.

VideoMining research helped Mondelez understand how the supermarket is trafficked and the implications of that for the optimal location for snack and cookie brands. The back of the store is more likely to be trafficked earlier in a typical shopping trip, the front of the store later, Jain explained. That influences Mondelez’s efforts to “lever the perimeter to showcase categories that are more likely to be purchased earlier in the shopping trip, or center-store items that are complementary to the perimeter purchases,” Jain explained.

Baboo elaborated. “When people are near the beginning of their trip, they’re more open to messages and looking at impulse categories” such as cookies and crackers. That means “snacking categories may want to have a presence in the perimeter, or at least messaging or signage, to capture the attention of shoppers early.” 

Mondelez and VideoMining found that more shoppers are exposed to snacks by displays than shelves, 53% to 47%, and that promotion of the category is most effective in the lobby or the rear of the store.

Thus, Baboo said, if Mondelez “can stop the shopper with a message for Oreos or Ritz on the perimeter as they’re going to the dairy section, for instance, you’re more likely to be able to get them to walk into the cookie and cracker aisle because you communicated something that caught their attention and engaged them. But if signage is in the front of the store, shoppers are more likely to have completed their trip, and it’s less likely to be effective.”

Once shoppers move into center aisles, it’s also crucial to be in the most effective aisle. VideoMining’s recommends that Mondelez place its brands within the first six aisles in the typical store, where consumers move counter-clockwise around the store. “The first one-third of the store is where they need to be,” Baboo said. Jain observed that shoppers “have more disposable income early in their shopping trip and are therefore more likely to purchase discretionary and impulsive categories such as cookies and crackers” then. Thus, optimal adjacencies for snacks are complementary categories such as coffee and tea, and bottled juice, where more purchases are planned.

Within the cookie and cracker aisle itself, they said, a number of merchandising principles make Mondelez’s efforts most effective. One of them is to group cookies and crackers separately, categorized by manufacturer. Strong vertical blocks of brands and products are more effective than horizontal ones because shoppers use their peripheral vision, which moves side to side.

Bookending the aisle with each category’s highest-penetration and highest–awareness “signpost” brands, Oreo and Ritz, serves to draw shoppers into the aisle. Those brands are what Mondelez is counting on for much of the success of its overall business model. So making sure that they’re effectively getting in front of shoppers in the supermarket is a very important last step in a crucial strategy.

Shoppers tend to be active in the cookies and crackers aisle, especially with its Nabisco and other brands, if Mondelez can get them there. Now, with the help of some sophisticated technology, the global snacks giant can do a better job of delivering consumers to the right place in the store and getting them to spend more freely once they're there.


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