webminar shopper iri

Copyright Information Resources, Inc., 2006. Confidential and proprietary 1

Copyright Information Resources, Inc., 2006. Confidential and proprietary

1

Shopper Insights Part 1: Understanding Shopper Expertise

May 2006

IRI Best Practiceswebinar series

Shopper Insights this has been the hottest topic in the CPG industry for the past 2 years.So weve created two seminars in which well share highlights from IRIs research on this topic.Today is part 1: Understanding Shopper Expertise. Well review key findings from in-store shopper observation and interviewing studies, integrated with retail sales and consumer purchase behavior metrics.On Tuesday June 6, well present part 2: Shopping Trip Missions. That session will describe a multi-faceted approach that combines consumer segmentation with shopping trip segmentation and product co-purchasing as well as reveal differences in trip-types by outlet, retailer, consumer segment, and product category.



The cost / benefit of in-store interviewing versus other survey methods

Best Practices for in-store shopper research

Useful findings from IRIs 2005 ShopperLink studies

Next Steps

Todays Topics

Heres the outline for todays presentation.First, we often get asked why in-store research is so much more expensive than, say, doing an Internet survey, and when is that extra expense really worth it? So I just want to say a few words on that subject, and share a couple of case studies that really illustrate the benefit of doing in-store research.Next, I want to share a Best Practices approach to doing in-store research, to show you some ways to get the best return on your investment in this type of research.Third, Ill reveal some of the most useful findings from IRIs 2005 ShopperLink studies.And well close with a couple of recommended next steps.



Internet survey

$20,000

500 respondents

$40 per complete

In-Store Interviewing Costs 5x More

In-Store Survey*

$50,000

32 interviewer days8 completes / day

250 completes

$215 per complete

* Assumes observation and interviewing of actual category buyersin a category with medium penetration and purchase frequency levels.

Here are some very rough figures to give you a general idea of how much more expensive in-store interviewing is versus an Internet survey.Any way you slice it, its expensive to pay a well-trained interviewer to stand in a store for 8 hours waiting for a category buyer to observe and interview . . . relative to the cost of emailing a large Internet consumer panel and letting a computer program interview each respondent.So why would you do it?Well, probably for the same reason you pay 5 or 6 figures for statistically sound new product testing rather than just asking your mom if she likes the product. Different business questions require different research methodologies, depending on the potential upside and downside of your ultimate business decision.



General Benefits of In-Store Research

Most consumers don't shop for CPG products at home

Consumer recall of past purchasing tends to be inaccurate, and even more so for infrequently purchased items

There's a gap between what people SAY they do and what they actually DO

Other Surveys In-Store ResearchShoppers are making a real purchase decision under real in-store conditions, with out-of-stocks, limited product variety, shelf tags, etc.

Immediacy increases accuracy(not "last time" but just now")

We can observe the shopping process as well as ask questions about it -- and understand the crucial last few seconds of the decision process

You may be wondering why we cant just do a less expensive telephone or Internet survey to address some of the same questions we ask in an in-store study (e.g., how do people use the category). If your only questions are about who uses this product and how and when, and what do you like and dislike about the product? then interviewing people at home is a fine approach.

But if you really want to understand why a person is on a particular type of shopping trip, and how they decided to buy a particular item . . . Those are difficult things to recall later. An internet or phone survey has to ask about a product purchase that may have occurred weeks or even months ago, and the consumer is likely to have true recall of their decision criteria back then.

Certainly, you can get a much larger sample size for a lower cost from Internet research. But, on the flipside, Internet research doesnt let you see what the shopper is actually doing at the shelf, as ShopperLink does. Its a generally accepted truth in research that what consumers say we do and what we actually do can be very different. Just think: if every concept-test participant who said they definitely would buy some new test product, actually DID buy that product when it rolled out, there wouldnt be so many new product failures!



Questions Best Asked in the Store, at the Shelf

What was most important in determining your final choice?

How much time was spent at the shelf? How many different

products were considered?Did you read any

information on the package? What?

ShopperLink Approach

If this item you just selected had not been

available, what would you have

done?

Because of the reasons just given, you will get better answers to the following types of questions if you can actually OBSERVE the shopper in the process of shopping, and then ask follow-up questions about what they just did.

Think about the last time you bought a toothbrush. Do you remember how much you were influenced by the brand name, color, price, bonus packs, coupons, or specific claims on the packaging? Can you even remember what color and brand of toothbrush you brushed your teeth with this morning?

If your only question is how do people use this type of product at home? then an IRI AttitudeLink survey or a general market survey is afine approach to answer that question. But we still ask it within the ShopperLink study because we want to understand how people shop on different types of trips and when theyre shopping for themselves vs. other members of their household. (For example, women may buy most of the toiletries for their husband and/or kids so how do they make that purchase decision? Is that decision predetermined by the end user, or not?)

Clients may also say that they can get a much larger sample size from Internet research. The other side of that coin is that Internet research doesnt let you see what the shopper is actually doing at the shelf, as ShopperLink does.




Success Stories



Next Steps

Todays Topics

To wrap up this section on WHY you might want to do in-store interviewing, I want to share a few anecdotes from studies IRI has done recently. I just want to give you a flavor for the types of actionable learnings you can get from in-store research, to whet your appetite to learn more about our Best Practices approach to this type of research.



In-Store Research -- Success Story #1

f Business Issue: Understand shopper expertise in a home cleaning category, and in particular, how a new product form is perceived.

f Key Findings and Recommendations:

The majority of category buyers were not convinced that the convenience of the new product form was worth their money

Strengthen the brand positioning in the market and to increase trial of the new form.

Many shoppers were still unfamiliar with the new form Reorganize the category planogram to place the new product form in

between the two leading forms (rather than off to one side).

Volume potential of the new form seems to be lower than originally expected

Evaluate and rationalize the number of SKUs of the new product form that should be available.

No notes.




f Business Issue: Understand general shopper behavior in a snack food category.

f Key Findings and Recommendations: This is a high-impulse category, with the majority of shoppers making category

and purchase decision at the shelf.

Due to the limited amount of time shoppers spend at the shelf, any shelf activity needs to be bold.

In-store advertising has limited impact, with most shoppers either not noticing it or not being affected by it.

No notes.




f Business Issue: Understand shopper behavior for a niche brand in a small category that is experiencing strong growth, especially how and where to best position the brand in the store.

f Key Findings and Recommendations:

Category buyers expressed a stronger desire to find the category near the produce section than in any other area of the store.

Client is using the results to help influence retailers regarding category location

Consumers had a wide variety of usage for the category outside of just snacking

Client is using this information to adjust overall marketing strategy

No notes.




f Business Issue: Understand how consumers shop a particular beverage category, including consumer use of information on the package in making their purchase decision

f Key Findings and Recommendations: This category is the most quickly purchased category of all categories

studied.

Consumers were not studying the package as much as Client believed.

Also given the high penetration and high purchase frequency of this category, we can see that consumers have a high level of expertise that leads them to shop quickly.

Client is applying these findings to their package design initiative

No notes.




Best Practices for in-store shopper researchConceptual frameworkProcess specifics


Next Steps

Todays Topics

Next, I want to share a Best Practices approach to doing in-store research, to show you some ways to get the best return on your investment in this type of research.



Consumers have had to develop a "shopping expertise"

970,000 SKUsand MANY OUTLETS

20 to 50 SKUs

Number of CPG Items Available

Number of CPG Items in a Typical Supermarket

Number of CPG Items Purchased Annually by Typical U.S. HH

Number of CPG Items in a Typical Supermarket Shopping Basket

15,000 SKUs

650 SKUs

Source: IRI Dictionary, InfoScan Reviews, and Household Panel

IRIs approach to in-store shopper research begins with a couple of premises that have been proven through years of research in Europe (by a company known as MCA until IRI acquired it three years ago).

The first insights is this: In response to the proliferation of retail outlets and product offerings, consumers have had to develop a shopping expertise.

To put some more perspective around this "shopping expertise", consider: IRI's Dictionary contains almost 1 million "active" UPCs that are currently being sold somewhere in the U.S. in the outlets tracked by IRI (sourced from outlets we track via retailer scanner sales data, as well as the releasable retailers & outlets we track via household panel data). In the 300 or so CPG categories tracked by IRI, the typical supermarket about 15,000 unique items. Our household panel purchasing data shows that the typical U.S. household purchases a total of about 650 unique SKUs each year (as above, still considering just those items that fall within the InfoScan Reviews categories), and a BIG stock-up cart has about 50 items in it.

This means that a typical shopper is weeding down from 15,000 items in the store to 50 items in 30 to 60 minutes, or making a purchase decision every minute or half-minute.



Shopper expertise varies by category

Mens Razors Milk

Buying for someone else, not so familiar with their usage of the product

Infrequent purchase

Complex set of options (lots of SKUs, lots of new products)

Buying for self and family, very familiar with product usage

Frequent purchase

Straight-forward set of options (limited number of SKUs, not a lot of change)

The second premise is that shopper behavior varies by category, as consumers have different levels of expertise with each category.



The consumer rotates through three roles during the CPG product purchasing process

Why do you take the trip? Buyer

How do you decide what to buy?

How do you decide what you need?

User

How do you decide where to shop?

Shopper

The third premise is that to understand this shopper expertise, it is useful to break down the process into three roles.

Shopping starts at home, with the product USER deciding that they have a need theyre out of milk, they notice Target has a sale on their favorite brand of laundry detergent and they figure its a good time to stock up, whatever.

That evolves into the SHOPPER role, in which the consumer decides they willgo shopping for some set of products and they decide where to shop.

Once at the store, the consumer evolves into the BUYER role, in which various factors (such as assortment, out-of-stocks, pricing, specials) influence their decision to buy a particular type of product (category), specific brand, and specific item.



Within each role, there are several important stepsPlanning Selecting Store Locating Product

Comparing ProductsDecision makingUsing

Lastly, we break down the roles into specific steps of the shopping process.Planning includes questions about whether the consumer made a shopping list, what was on the list,

what type of trip the consumer was making -- e.g., to pick up a few things were out of, or to stock up on a wide variety of products for the coming week(s).

In regards to selecting the store, we ask whether this is the shoppers main store for grocery shopping and whether it is their main store for buying this particular category, and why they do (or dont) prefer this store for each.

Locating product includes where in the store the category is located, as well as where on the shelf specific products are located and how theyre laid out in the planogram, and how much time the consumer spends shopping that section. Are products easy to find or not?

Comparing products includes whether the shopper walks up and immediately grabs their item, or whether they scan the shelf, compare different items (assortment), read information on the package, check and compare prices, check for specials, and so on. We ask what factors were most important to the consumer in making their product choice today, including whether they had already determined (before coming to the section) that they would be buying this category (type of product) and also whether they had pre-determined the specific brand and/or item they were going to buy.

All of these variables are studied in a typical ShopperLink study, to help you understand the complete shopper journey from home to the store and to determine the relative influence of each variable that impacts the ultimate product purchase decision. The result is understanding of how to develop each driver (for example, what information needs to be highlighted most prominently on the package to win brand switchers?) and how to prioritize your marketing efforts. An example of our standard questionnaire can be provided on request.




Best Practices for in-store shopper researchConceptual frameworkProcess specifics


Next Steps

Todays Topics

Next, I want to review the specific process IRI recommends.



IRI Best Practices Process for Measuring Shopper Expertise

Develop InsightsShopper

Attitudes & Behaviors

DefineMarketing

Levers Distribution,

pricing, promotion

Change Shopper's

behaviour at the Point of Purchase

Quantify the Opportunity

Traffic, Conversion,

Basket $

Grow Sales

Step 1 Step 2

ShopperLink

Step 3HH Panel Metrics

Step 4

Rule BookRetail Sales Metrics

Now that you understand our conceptual framework for Shopper Expertise, lets talk about how our specific process for measuring it, so you can SEE new consumer insights, and take new ACTIONS to help you WIN at the shelf.

Our overall approach starts by agreeing on the following statement: There is an untapped opportunity for growth that lies in understanding shopper attitudes & habits and figuring out how to adapt our marketing programs to influence shopper behavior and grow sales.

IRI has built a a four-step process to help our clients tap into this opportunity, by developing the insights, recommending new tactics, and helping you measure your success. And we want to show you our Best Practices approach for tapping this opportunity today. The next few slides will take you through our 4-step process in a little more detail.



Step 1: Collect Data on Shopper Attitudes and Behaviors at the Shelff How much of the decision to purchase the category is decided at

homebefore coming to the store and how much of the decision is made in the store?

f How can you influence shoppers at the shelf? How do in-store efforts generate an incremental transaction?

f When category and brand choice are both predetermined, how can in-store efforts generate more volume/transaction (multiple units)?

f What information -- product features, price, promotions -- are consumers using to decide their purchase?

f What do your consumers do when their desired item isn't available? How worried should you be about out-of-stocks?

f What type of trip are consumers on when they buy this category? How does that impact their desired assortment (the products we need to offer to best meet their needs)?

In step 1, we seek to understand shopper attitudes and behaviors. We submit that the focus in particular needs to be on how people shop your particular category because our research has shown that how people shop really does vary as they move from category to category. Step one is to conduct the in-store observation and interviewing study.Here are some of the typical questions we are trying to answer with the ShopperLink in-store study.



Step 2: Integrate Household Panel Data . . . Example: Survey + Panel Data Leads to Conclusions

Panel Metrics: High category penetration: 74% (ranking: top 12%) High category purchase frequency: 8.4x/year (ranking: top 5%) High category traffic: 9% of all supermarket shopping baskets include

category (ranking: top 5%)

ShopperLink Metrics: High predetermination levels:

% of category buyers who predetermined category would be purchased: 75% % of category buyers who predetermined brand would be purchased: 68%

Fast category shopping speed: mean time of 50 seconds, with half of shoppers spending 30 seconds or less.

Conclusion: High Category Familiarity

Next, we want to build insight into our biggest opportunities for growth and which marketing levers to pull to tap into that growth. We need to take the in-store survey results and bring in additional data points. We now pull in consumer metrics (from household panel) to supplement our understanding of shopping expertise in this category. In this category, we find high penetration, high purchase frequency, and along with the metrics gleaned from ShopperLink shown here, the high level of predetermination and fast shopping speed we conclude that consumers have a very high level of familiarity with the category. As a result, its going to be harder to get the consumer to take notice of anything new at the shelf, and advertising or activities to shake the consumer out of their usual habits.

Volume per purchase occasion could also be shown here (but in a masked context, volume figures arent very useful) . . . Need to make it relevant in terms of days of supply and how often someone is likely to be out of stock AT HOME before they make their next purchase.

At the end of this step, we want to have identified a consumer objective: do we want to increase aisle traffic? Category purchase incidence? Or volume per purchase? Drive a brand switch? Increase category purchase incidence on a particular type of shopping trip?

Source information: Ranking (e.g., ranking: top 20%, or ranking: 20 / 296) are ranking against all 296 Reviews categories (286 Builders categories, the remaining 10 are too small to report based on sample size). Because the distribution of categories by size is not even (there is a disproportionate number of very small categories), we defined Top 10% as high, Top 25% as medium, and bottom 75% as low.



Step 2: . . . and Quantify the OpportunityExample Opportunity: Capture the "Brand Undecided" Shopper

Dollar opportunity if your brand can win one additional brand-switch occasion from each "brand undecided" category buyer

= $63.8 mm

Your brand's average promoted price per volume, assuming you're most likely to win a switch when you're on deal

x $1.48 / pint

Incremental volume your brand could gain by winning one additional brand switch occasion

1 minus your brand's current market share, assuming your brand gets its fair share of switches

Volume switch-able at the shelf, 1 occasion per switch-able buyer

1 average category purchase

Brand-switch-able buyers (each buys an average of 8.4 x / year, but for this scenario we won't try to win 100% loyalty, just one switch)

Category buyers who decide brand in-storeNumber of category buying HHs (@113 million x 74% penetration)

= 43 mm pints

x .70

= 61.5 mm pints

x 2.3 pints

= 26.8 million

x 32%84 million

Importantly, IRI links the in-store shopper interviewing work back to our national household panel data and retail sales data, so that we can project the dollar potential of each recommendation.

Here is an example of how we use our household panel data in combination with the in-store interviewing data to size each opportunity we identify, so that you have some way of prioritizing the opportunities identified through the research.

The estimated number of U.S. households in 2006 is approximately 113 million. (Note: there will be some rounding error that shows up in these figures)



Step 3: Define Marketing LeversExamplef Category Complexity: High

High level of variety available: average supermarket carries over 170 category SKUs (ranking: top 7%)

Complexity is rising: number of items up +5% vs. YAG Implication: Need to understand relative importance of assortment vs.

risk of consumer confusion. Need to look at opportunities to rationalize assortment, refine planogram, and use packaging and signage to increase conversion to purchase.

f Category Size: Large Annual supermarket sales over $2.7 billion (ranking: to 5%), up +7% vs.

YAG Implication: Even small changes can make a big different in absolute

dollar sales.

f Other retail sales metrics: distribution, price, promotion metricsf ShopperLink metrics: how shoppers are influenced by these variables

Next, we bring together retail sales data to provide additional perspective and context for the ShopperLink data.We can merge in findings from Modeling studies like price elasticity and marketing mix modeling. The goal of this step is to further quantity the size of each opportunity identified by the ShopperLink survey, leading us to the next step of building the rule book.



Step 4: Write Rule BookExample Page on Pricing

Absent differentiation, be price competitive.

Within a basket of brands, shoppers look for the best value for the money

Price is #1 criteria in category purchase decisions

Product quality considered along with price

52% of Brand A shoppers said that they bought the product for the "good price" which was higher than competitors

ActionInsightsData

The final client deliverable will include the usual summary of key findings from the research, but more importantly, a Rule Book for category management and marketing.

We have quite a few Rule Book pages we can show the client, I just wont show them all here in this training, but theyll be available in an appendix to the sales deck well be posting on the sales wizard.



WIN at the shelf:

Increase sales through a mix of tactics that increase category traffic, purchase incidence, and/or basket size.

ACT faster and with greater confidence:

Create a Rule Book for in-store success in your category

SEE what you've been missing:f What % of category sales are up for grabs versus

predetermined?

f What is your biggest opportunity to grow sales and what levers should you pull to capitalize on that opportunity?

f How much time do consumers spend shopping YOUR category and what information are they looking for as they shop?

SUMMARY:Size and prioritize opportunities to win at the shelf

SEE: Here are some examples of the specific types of questions that ShopperLink addresses.

ACT: Once the data has been gathered, IRI writes up the findings and helps you develop a Rule Book, which will provide guidance to both marketing and sales managers, to help you adapt your marketing efforts to provide consumers with the right information at the right time and place, including what they need to see at the shelf to select your product over the competition. The Rule Book will address such topics as signage, promotional offers, packaging, the relative importance of managing out-of-stocks, and more.

WIN: The end goal is to increase category sales. The way we get there will depend on the insights we develop from the in-store research, which will show us where our biggest opportunity is: is it to draw more traffic down the aisle, increase purchase incidence (aka conversion), or increase basket size.

Importantly, IRI links the in-store shopper interviewing work back to our national household panel data, so that we can project the dollar potential of each recommendation. There are dozens of things you MIGHT do in-store to increase sales, the trick is figuring out which ONE is your biggest opportunity to tackle right now.



Clients category results will be benchmarked versus all other categories weve studiedf This does NOT mean Client gets category-specific results for categories you

havent purchased.

f It DOES mean that you can see where your category fits in the spectrum of all other categories weve studied.

f EXAMPLE DATA SHOWS for average time spend shopping the category:

Lowest category weve studied (category will not be named): 10 seconds

Median category: 45 seconds High category (other than yours): 60 seconds Your category: 60 seconds

INSIGHT: Your category is one of the most complex-to-shop categories in the store

RECOMMENDATION: Here are some ways to make it easier for shoppers to get to yes (to put a product in their basket).

Another benefit of working with IRI is the access youll have to our Shopper Insights benchmarks database, which puts your category into context.

This is really helpful when you compete in multiple categories, and are trying to put results for different categories into perspective, and are trying to prioritize the extent of a given problem or opportunity and where to focus your efforts first.

Its also helpful in positioning your recommendations to retailers. For example, if you can say that your category is complex like (we can tell you some of the other categories with similar levels of complexity to yours, such as Soup), and the retailer has had success with the Campbells Shelf Maximizer program in the Soup category, then the retailer will more easily nod their head when you describe the new shelving approach you want to implement.



ShopperLink is available in both Syndicated and Custom Variations f Syndicated Studies

2006 Cross Category Study Efficient approach to get an overview of Shopper Expertise in a new

category (or one you havent studied in a few years). See the key drivers of shopping behavior in a category, that you can leverage for new product launches and established brand growth efforts?

2006 Natural/Organic Shoppers Study Whats different about the way people shop for the natural/organic products,

that we can leverage for competitive advantage as we expand our n/o line?

2006 On-Premise Beer/Wine/Spirits Study

Now that you understand our core approach to in-store shopper research, lets get specific about the types of study you might want to do.

Last year, we offered a syndicated Cross Category study to our clients, who sponsored studies in 12 different categories. Ill share some key findings from the 2005 Cross Category study later in this presentation.

This year, were offering a variety of syndicated studies, each of which will be somewhat customized to whichever clients sign up as sponsors. The benefit of participating in a syndicated study is that you dont just get results on your own category, you get benchmarks that help you understand how your category is different from others and that helps you explain to retailers why category A needs to be merchandised one way, while category B needs a different approach. And, particularly if your category is slower moving, you save money because we can share an interviewer across several adjacent categories and make moreefficient use of that fixed cost of having an interviewer stand in the store for 8 hours.

For those of you who are thinking: I dont like syndicated studies because I dont want to share my research and my potential for competitive advantage with my competition. Let me offer up something for consideration. Often times, the clients who are sharing in the cost of a study are really NOT direct competitors. Also, were finding that most everyone is asking a lot of the same questions anyway. Its not just about the questions you ask. Its what you DO with the data -- how you interpret it and apply it. Every client who participates in a syndicated study still gets a separate analysis which they help tailor to their unique approach to doing business, integrating with other custom research theyve done, and in the end, each gets something different out of essentially the same raw data. Its not that much different from scanner data everyone is getting the same POS data, but theyre all getting something unique from it, right? Just something to think about, when youre trying to get the most out of your limited budget.



Custom Study Design SuggestionsIntegrate with IRI Trip TypologyIRIs Trip Typology classifies all household panelist-reported shopping trips into 31 trip types which roll up to 4 trip missions.

- Food stock-up- Food+HBC stock-up- Food + Home Care

- Perishables fill-In- Non-food fill-in

- Meal solution- BWS & tobacco

- Beer/Wine/Spirits- Tobacco- Beverage+snack- Health/personal care

Predominant Product Types Vary by Trip Type

$50 +

$30-80

$20-50

< $40

Spending

Routine HH prep for coming week(s)

15 +Stock-Up many categories

Routine fill-in on heavy-use categories

5 to 15Fill-In several categories

We have a specific event in mind

2 to 10Special Purpose

Were out, we need it, we have to make a trip for it

1-5Immediate Needquick trip

Mindset# ItemsTrip Mission

The IRI Trip Typology was developed and vetted with clients in 2005. We have a two years worth of typed shopping trip data available now for custom analysis.

If you identify an opportunity to expand your sales by targeting consumers on a particular type of trip, ShopperLink can help you interview consumers in-store on that type of trip, to identify ways to capture that incremental purchase.






Next Steps

Todays Topics

To wrap up, I want to share some of the significant findings from IRIs 2005 syndicated Cross-Category ShopperLink study conducted in supermarkets in 4 different cities, which involved 12 different categories across shelf stable, frozen, and refrigerated foods, plus a couple of home care categories. No HBC categories happened to be sponsored by clients.



At the Shelf

% of Category Buyers Who Made Brand Decision:

At Home

65 - 88%4 categories

45 to 64%5 categories

14-44%3 categories

Focus on out-of-store marketing that builds brand loyalty

Focus on point-of-sale marketing

Understand level of predetermination to determine where to focus marketing efforts

If we find that the brand decision is usually predetermined before the shopper enters the store we found this to be true in several high-purchase-frequency categories like yogurt, frozen single-serve meals, and cigarettes, where brand loyalty also runs high -- then the marketing focus should be on building brand awareness and preference through advertising and other vehicles.

Conversely, if most consumers decide the brand at the shelf we found this to be true primarily in smaller categories where consumers seemed to have less shopping expertise -- then in-store variables like product availability and visibility, and information on the package and signage, become much more important.

Equally or even more important, we will question shoppers about what information they're reading on the package or considering while at the shelf making a decision.



How can we break through the clutter at the shelf and get our new product noticed?

Consumers shop so fast, they are unlikely to notice new products on the shelf.

If most category shoppers are looking for a pre-determined brand, position yourself next to the brand you want to cannibalize.

If category shoppers are less brand loyal, they are more likely to scan the aisle for specials, so use trade deals to increase your chance of trial.

Know what information consumers most often read on the packaging while making a decision, and make sure your packaging highlights it.

8 87% of category buyers spent < 10 seconds shopping the section

and

14% - 88%of shoppers came to the shelf with a specific brand in mind

42% of yogurt buyers said they read nutrition info on the package while shopping

SOURCE: 2005 IRI ShopperLink in-store research on 12 categories

IRI has been doing in-store shopper observation and interviewing studies in Europe for many years, but we just started doing them in the U.S. in 2005. We studied about 15 different categories last year, and gained some interesting learnings that may help you figure out how to break through the clutter at the shelf.

First, we measured the time consumers spend shopping particular categories, and found that consumers are moving through the aisles pretty quickly: spending as little time as 35 seconds shopping for Shelf Stable Juice to as much as 70 seconds shopping for Frozen Dinners. The % of shoppers focused on finding a specific pre-determined brand also varied by category, from a low of 32% in



Understand amount of time you have in-store to impact a category purchaseVaries by Country+ Italy & Greece: 49 seconds

Portugal, France, Spain: 65 -77 sec. Packaging that works in 1

country may not work in another

Varies by Category*

% of shopping category > 1 minute

Orange Juice: 10%. 71% bought 1 item and the vast majority of those didnt pick up any other item

Air Fresheners: 28%. Over half handled multipleitems, but only a third bought multiple items.

Frozen Dinners: 36%. 56% bought 3+ items

+ All-categories-studied average for each country. * Country Source: U.S.

What are they doing for over a

minute?

U.S.: 38 seconds

Time Spent Shopping the Category: we can relate this back toaverage # of SKUs carried by the chain and outlet, other measures of category complexity such as the # of boxes on the market structure diagram, whether this is a dual-user category where we can observe (and check in panel data) how often products for a man AND a woman are bought on the same trip, how often multiple items are purchased on the same trip, the planogram design in the stores where interviews were conducted, and so forth.

Another use of this information: improving the design of other research studies, such as package design research or virtual reality store tests, by limiting the amount of time consumers are allowed to spend evaluating a package to make it similar to what they'd do in-store.

Perhaps the most important contribution IRI can make is to help you quantify the SIZE of each opportunity. Rather than just saying,"consumers are seeking X at point of purchase" -- what's the dollar opportunity of delivering on that promise? Also, a study will typically suggest several actions, but which will have the biggest impact? We can apply factor analysis to determine which factors are the strongest drivers of purchasing and will be most likely to have a measurable impact on your volume.



RazorsBlades

Previous Shelf Organization: Razors vs. Blades

Premium Standard Premium Standard

Help consumers get to yes and convert more browsers to buyers by helping them find the right product efficiently

New Shelf Organization: Complementary Products

Standard RazorsPremium Razors

Premium Blades Standard Blades

Study found 70% of buyers are women, who would like to first find razor they recognize, then blade

to fit it . . . find correct item faster with fewer mistakes

No notes - this is a real finding from a study conducted by IRI/MCA in Europe.



More on helping consumers find their desired product to avoid a walk

SPARKLING

From light to strong sparkling

Single Serve

Bulk & Multi-Packs

FLAVORED

Sparkling Still

CH

ILD

REN

>

> >

AD

ULT

STILL

From low to high minerality

SOURCE: European study by IRI/MCA

Findings: All bottled waters should be together in the same aisle. Brand-block, with single serve SKUs above multi-serve packs. Group products for children together, as a subset of flavored still water.

Using shopper insights is key in the development of store planograms which will ensure that shelf layouts follow consumer logic, while facilitating the consumer shopping experience in a way that is profitable for the retailer.

Many in the industry use Market Structure diagrams to help design planograms. But while Market Structure does reveal what product attributes consumers user to segment the category, and approaches like IRI's also reveal competitive sets (which products are perceived as highly substitutable vs. less substitutable), they can't be directly translated into an optimal planogram. Sometimes you want to facilitate direct comparison of products that consumer behavior indicates are not close substitutes: as when a retailer wants shoppers to see the price advantage of their Private Label vs. the virtually identical branded alternative. Other times, you don't: in the case of some premium-priced breath fresheners, they might sell better in the dental care aisle than next to much less expensive "regular" gums and mints. Also, a market structure will show you that diapers and baby wipes and baby food are not close substitutes, yet mothers will find it very convenient for all of those products to be shelved together. So, ShopperLink is complementary to a behavior-based market structure.



Give the appropriate priority to reducing out-of-stock / not-carried levels on your items

Orange Juice

Average of remaining 10

categories

Cigarettes

SubstitutionNo Purchase

Other Brand Same Brand

23%

69%

Behavior When Desired Item Is Not Found

38%

Asking consumers what they'll do in the event of an out-of-stock helps you gauge your risk when out-of-stocks occur, and how high of a priority you should give to reducing out-of-stock levels on specific items (which you would learn from an IRI OOS analysis). If consumers readily substitute another item of your same brand, you don't need to worry as much about item-level OOS. On the other hand, if consumers readily substitute a different brand, the manufacturer is going to want to study their OOS levels and impact on their sales, but the retailer isn't going to care as much. The worse case is when a specific item is missing and the consumer doesn't make a category purchase in that store that day: both the mfr and the retailer are going to want to react to THAT.



SUMMARY:With ShopperLink, You Can

See what youve been missing:

Observe and interview category buyers at the shelf, develop new insights into shopping habits and attitudes in your category, and identify your biggest in-store opportunity

Act faster and with greater confidence:

Adapt your marketing efforts to provide with the right products and information at the shelf to convert more browsers to buyers

Win at the shelf:

Increase your brand and category sales and share

1) ShopperLink enables you to (read the SEE point). This in-store shopper observation and interviewing can be conducted in virtually any markets, retailers, and categories (although of course retailer approval is needed, and some retailers are more amenable to this than others and their willingness to participate varies depending on how much they think theyll get out of the research that will benefit them directly).2) With this information, you will be able to (read the ACT point).3) The end result will be that you (read the WIN point).Now, lets get into some specifics.






Next StepsFinal Polling questionSources for additional information

Todays Topics

Now, to wrap up our presentation, lets talk about some next steps.



KEY DATES

Deadline to sign up for the 2006 IRI Cross Category study in supermarkets

June 12

Deadline to sign up for the 2006 IRI Insights on Natural/Organic Shoppers study in supermarkets

May 26

Shopper Insights in Action conference in ChicagoIRI presenting a special workshop on Unleashing Shopper Insights from 8:30 to noon on Wed., July 20.

July 19-21

IRI webinar on Shopping Trip MissionsJune 6

Event information: http://us.infores.com/page/news/events

Email questions to: [email protected] or your regular IRI rep

UPCOMING EVENTS

In closing, I want to remind everyone of a few key dates and also provide you with the link to our event information and with an email address to contact us if you have any follow-up questions.



For more information on upcoming events at IRI, please log on to:

http://us.infores.com/page/news/events


Copyright Information Resources, Inc., 2006. Confidential and proprietary

38

Shopper Insights Part 1: Understanding Shopper Expertise

May 2006

IRI Best Practiceswebinar series

Shopper Insights this has been the hottest topic in the CPG industry for the past 2 years.So weve created two seminars in which well share highlights from IRIs research on this topic.Today is part 1: Understanding Shopper Expertise. Well review key findings from in-store shopper observation and interviewing studies, integrated with retail sales and consumer purchase behavior metrics.On Tuesday June 6, well present part 2: Shopping Trip Missions. That session will describe a multi-faceted approach that combines consumer segmentation with shopping trip segmentation and product co-purchasing as well as reveal differences in trip-types by outlet, retailer, consumer segment, and product category.

webminar shopper iri

Documents