Taming the Data Deluge

Marketers and consumers struggle with the volume of data the world now generates. David Benady asks how the two sides can jointly control the tide, including the advent of brand ‘data stores’.

Data is inundating the economy, overwhelming consumers and businesses with swathes of information that they struggle to comprehend. The overload is set to spiral as social media, mobile and geo-location technologies spew forth yet more reams of data.

With billions of web searches made every month, more than 20,000 new books published weekly and more texts sent daily than there are people on Earth, data is increasing exponentially. The number of exabytes (EB – equal to 1bn GB) of information created in 2011 hit 1750, double the 2009 figure, according to IDC estimates. There is twice as much data as storage capacity.

This torrent of data makes it hard for marketers to ensure their brand messages are heard above the noise. Consumers have become reluctant to open the floodgates to receiving more irrelevant information, and some are wary of providing personal details.

Research company TNS has analysed the way in which consumers ‘eat’ at this table of information and created five consumer segments based on their readiness to absorb data. It calls the data deluge ‘information obesity’, and looks at the way people create their own ‘eating plans’.

You are what you ‘eat’
‘Fast foodies’, it says, consume the easiest, lightest data they can find. ‘Supplementers’ devour as much information as they can. ‘Carnivores’ consume only meaty chunks – whole books and in-depth research. ‘Fussy eaters’ are loath to consume information from any source, while ‘balanced dieters’ never consume too much information; what they do take comes from a variety of sources.

TNS marketing sciences director Russell Bradshaw says these ‘eating plans’ are a good way for marketers to target resistant consumers. ‘By understanding the predominant “eating plans” that exist among their brand franchises, brand managers and chief marketing officers have a tool for maximising the reach, resonance and values of their campaigns,’ he says.

TNS analysis suggests that ‘carnivores’ are more likely to shop at Marks & Spencer, while ‘fussy eaters’ tend to stock up at Asda. This gives M&S leeway to bolster its communications, giving customers big, meaty chunks of information they can savour slowly. Asda, meanwhile, would do well to deliver information in bursts and offer online nuggets such as tweets to appeal to voucher-hungry customers.

Marketers acknowledge that segmenting consumers by their propensity to consume information can be useful, but many see it as an add-on to the already tough task of identifying relevant audiences.

David Torres, global manager of chemicals technology at Shell Research, says that Shell intends to embed the TNS eating plans into its work, adding that brands need to search the data they have for clear and relevant insights.

Meanwhile, Stephanie Maurel, head of retention at Sport England, says the ‘eating plans’ could be useful if blended with other tools. ‘The TNS data obesity segmentation makes a lot of sense and rings true anecdotally. It is a great idea to segment by the information consumers are prepared to receive, although perhaps this is an extra step to be added to current tools,’ she adds.

Maurel’s role at Sport England is to use data to help various sports’ governing bodies to increase participation and attendance, a challenge for smaller sports, such as hockey. One solution is to take data from grassroots sources, such as social media, and integrate it with i n fo r m at i o n from elite sports events.

While small sports may be unsophisticated when it comes to data collection, Maurel says some governing bodies are using real-time data to build their popularity.

British Cycling, for example, gets feedback from locally organised Sky Ride mass-cycling events and feeds it through to its board meetings. This, in turn, helps it shape the way in which Sky Rides are organised.

For many brands, the UK’s data-chain is dominated by retailers. They control the all-important information about sales, which they then sell back to brandowners. Nonetheless, retailers, too, are suffering from information overload, according to Chris Osborne, retail principal at software supplier SAP. A recent survey by SAP found that more than half of retailers believe they have more information than they can handle. ‘Structured’ data – such as till receipts showing items purchased, times of day, quantities and prices – has been around for decades. Osborne advocates combining this information with ‘unstructured’ data – such as the random chat of social media – as the next great challenge for brands and retailers.

The prize will be to build a total view of each customer’s likes, behaviour and loyalty, and target offers accordingly. A crucial step is ensuring both types of data are gathered and acted upon in real-time.

Osborne believes the development that will enable this is ‘in-memory’ data analytics, where the data is stored in the computer’s memory for quick retrieval, rather than on a conventional database where it is stored on a hard disk, making it harder to access and wasting capacity.

He envisages a two-track economy where success will depend on efficient use of data. ‘The retailers that win out will be the ones that are very careful about how they use data and don’t swamp consumers with irrelevant offers,’ adds Osborne. ‘Retailers that create competitive advantage are (also) careful about how often they communicate with consumers.’

Useful data vs ‘noise’
Given the retailers’ iron grip on data, some brands have turned to comparison website Mysupermarket.co.uk to gain access to information about their own performance through mini-shops on the site. Reckitt Benckiser, Kellogg, Danone and Nivea are among those to have created such stores.

James Foord, vice-president of business development at Mysupermarket.co.uk, says brands are only just beginning to grasp the distinction between ‘data noise’ and what is useful. The site allows brand-owners to create a direct relationship with consumers and thus control their data. Brands can analyse the battle between their products and stores’ own-label versions, for example – data retailers rarely release. ‘This is the tip of the iceberg of what is possible. Brand stores will open up a whole new level of insight that has real value,’ adds Foord.

The battle for data control is about more than simply capturing as much information as possible and keying it into a database. Finding ‘smart’ data can save time and money in research and bring significant benefits for brands. The challenge is to find the pieces of information that help a brand locate its best customers and give insights into their motivation for buying a product.

Mike Dodds, chief executive of integrated agency Proximity, recalls a cat-food brand’s CRM programme in which customers were questioned about their behaviour. The question that delivered the best data was: ‘Do you celebrate your cat’s birthday?’ The responses helped the brand discover the most involved and valuable customers.

A potential barrier to the development of data-driven marketing will be consumers’ attitudes to privacy and control of their personal details. The online giants, such as Google, Facebook and Twitter, have built their businesses on getting users to give up their data in return for ‘free’ services. If the public refuse to play, this could put a spoke in the wheel of the data economy.

Chris Combemale, executive director at the Direct Marketing Association, says brands have to be upfront about privacy and make their policies simple and readable: ‘If you can’t put the policy on one page and make it clear, you have an issue.’ He also warns brands to avoid being ‘creepy’ online – by serving ads based on details consumers thought were private – which, he argues, can make digital marketing appear intrusive.

Modern marketing is essentially a battle for data. However, consumers themselves have the ultimate weapon: to switch off and stop sharing their information.

Technology was supposed to make life easier, but, in reality, it has made the world far more complex. The task of creating marketing campaigns that get heard above the din will only get harder still in a society deluged with data.

Marketing © Brand Republic
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Chain Reaction

A 1700 crore brand, Amway India’s direct selling business journey involves thinking and acting like an FMCG company

FOR A company that’s built on a model of minimal mass media advertising and maximum direct selling, resorting to above the line communication sure does raises eyebrows. But William S Pinckney, CEO of Amway India knows that to drive the company further into the Indian market, using advertising to increase brand awareness is important. So from a corporate ad that projected Amway more as a FMCG company and less as a direct marketing business, Pinckney says the company will now start with category advertising soon to “to educate customers about the brand as many people don’t know us.”

Pinckney’s worry may be the unfamiliarity of the brand in India, but looking at the numbers Amway has notched up, it seems to be spreading the right message. Amway will be closing the financial year with a turnover of 1700 crore, clocking a CAGR of 20%. With over a decade’s presence in India, Amway today sells around 115 SKUs — from products in beauty to home and personal care. While beauty (10%) and HPC (30%) are important categories for Amway, 60% of its sales in India come from nutrition products and its brand Nutrilite, according to Pinckney, is among the Top 5 in the world in its category. Pinckney accepts that the company‘s growth has revved up only in the past few years thanks to key changes initiated in the overall business model.

The changes however do not mean that Amway has moved from its multi level marketing model that is the USP of the company. Products are still sold through a network of Amway Business Owners (ABOs) across the country with emphasis on bottomline margins. Pinckney says one of the thrust areas has been a faster delivery of the product range to end users. Using a network of seven contract manufacturing facilities, the SKUs move to a central warehouse and from there to regional warehouses across the four main metros — Delhi, Kolkata, Mumbai and Bangalore. Amway today has a network of 130 offices, 55 warehouses that reach around 4000 cities and towns across India.

Taking a leaf out of the FMCG sector, Amway has introduced smaller SKUs like single use sachets to generate trials among customers and get them interested. Further, to get customers to ‘touch and feel’ the products, the company has ‘brand experience centres’. These centres situated within shopping malls and high streets allow customers to look at the product range. Pinckney says that the centres are manned by consultants who provide information on the products on display. However, these centres don’t sell as he is clear that selling happens through ABOs. “The retail format is not a point of sale as we don’t want it to cannibalise our core business operation.

Customers can try our products at the experience centres and we will help them get in touch with the ABO in the area they live to buy the products,” says Pinckney. However like any FMCG company, Pinckney says providing a retail experience is important even for Amway and therefore the company plans to have a footprint across the country with over 30 brand experience centres.

Amway may have notched up some serious numbers in a short span of time, but there are challenges as it looks to scale up the ladder. Foremost is the beauty and personal care category that’s witnessing an aggressive play off between established FMCG players. Market observers believe for Amway to make an impact, it will have to project each product as a brand with its own character and personality. “A lot of brands in these category are imagery driven. Any premium that a brand charges depends on the brand message it sends across,” says one market observer. That’s precisely the reason why Amway is now looking at above the line communication for individual brands. On the other side of the spectrum is the price war that one comes across in home and personal care. With well known FMCG companies playing the price card regularly, Amway for its offering has to be in sync with the market when it comes to pricing, say market observers. Pinckney knows that in terms of marketing and communication, he doesn’t have the muscle to match the FMCG behemoths in the market. But Amway’s trying to overcome the perception and familiarity issue through training. Amway provides free training to its ABOs and so far it has conducted 29,000 training sessions for more than 1.5 million people. “As this is a one-to-one marketing business, it is important that ABOs know about the product they are selling,” says Pinckney.

Amway has acquired some traction in the multi level marketing business, but to keep the chain going, the company will need to think more like a consumer goods company and less like a direct seller.

 

The small jam set to drive big sales

Premier Foods, the UK’s number one food manufacturer, is launching a new range of conveniently sized 250g Hartley’s jam that looks set to drive even more fruitful sales for the fastest growing jam brand.

As the market leader with 22% value share, growing 37% year-on-year, Hartley’s is driving category growth within the jam market and is the signpost brand for spreads.

The launch of the new 250g format in the convenience, impulse and cash and carry channels will help continue Hartley’s strong growth and drive incremental sales.

The distinct taste and new 250g format utilising Hartley’s unique tear drop shaped jar will create an opportunity for retailers to capitalise on an accessible price point and convenient size that will drive trial amongst new and occasional consumers.

David Atkinson, general manager for sweet spreads at Premier, comments “We believe the 250g jar is a logical step for Hartley’s in order to grow the brand. The new format is particularly relevant to occasional jam users and smaller households and we expect it will positively impact penetration and sales.

The jar also leaves us open to further product innovation as consumers will be more inclined to trial new flavours in a smaller jar”, said Atkinson.

The jam is available in stores from June, with an RRP of £1.09. The 250g jar will be available in Hartley’s best selling flavours; Strawberry, Seedless Raspberry, Apricot and Blackcurrant.

Milestone marks difficult times – Home Depot turns 30

Home Depot’s founding is corporate lore – a classic story of turning lemons into lemonade.

Bernie Marcus and Arthur Blank, fired from hardware chain Handy Dan, got their revenge by creating Home Depot, a warehouse hardware concept. The first two stores opened in Atlanta on June 22, 1979. Over the next three decades the company grew into the nation’s second-biggest retailer behind Walmart.

How we got the story
The AJC reviewed past articles and books about Home Depot, and interviewed two former CEOs, the current CEO, former and current executives and retail experts to get their thoughts on the company at 30.

As the chain turns 30 on Monday, Marcus is not bashful about burnishing the legacy.

“When you look at what Arthur and I have accomplished, today over 300,000 people are working at the Home Depot,” he said last week. “We probably lowered costs to homeowners by about 25 to 30 percent. We had more of an impact on the economy than any Congress since.”

But the milestone comes at a humbling time for Home Depot. In recent years the stock price has tumbled and expansion has ground to a halt. Internal reorganizations have forced layoffs, and the company known for its “You can do it. We can help.” ad tagline is scrambling to regain its customer service edge.

None of the founders is still on the board of directors, and in conversations last week they were frank about how the company has evolved with different leadership.

“I would say for a period of about four to five years, we lost our way through the last CEO,” said Marcus. He was referring to the December 2000-January 2007 reign of Bob Nardelli as chief executive. Recruited from General Electric, he was the first CEO brought in from outside.

Nardelli, hired to give Home Depot discipline and structure, was criticized for changing a culture that had been working. He tried to build new revenue streams by creating a wholesale division, HD Supply, intended to become the leading supplier to big infrastructure projects such as sewer lines and bridges.

“I think Nardelli came in because Arthur and I felt we had grown the business and the systems were very antiquated,” said Marcus. “We were very entrepreneurial and we needed some discipline. Nardelli provided that. But unfortunately, he had his own culture he tried to infuse into the Home Depot, and that culture didn’t work well.”

Blank, who left Home Depot shortly after Nardelli’s hiring, said, “I think the board’s decision about Nardelli clearly was not the right one.”

Pat Farrah, another co-founder who now runs garden retailer Smith & Hawken, was more emphatic.

“None of the three of us should ever have handed over the reins of the company,” said Farrah. “We knew how to do everything, and do it well and people loved us. We should still be running the company today.”

Nardelli, who left Home Depot to run now-bankrupt Chrysler, declined to be interviewed for this story.

Wall Street analyst David Schick, however, said blaming Nardelli is too easy.

“I don’t think it’s fair at all to throw Bob under the bus,” said Schick, of Stifel Nicolaus Equity Research, a firm that does business with Home Depot.

“I think the growing pains Home Depot ran into are pretty interesting glimpses into the history of American retail,” he said. Nardelli’s effort to update internal systems and diversify revenue were not mistakes, he said, but part of the company’s “life cycle.”

It’s easy in hindsight, Schick said, to say building HD Supply or Expo, a store dedicated to high-end designer items that actually pre-dated Nardelli’s arrival, was wrong.

“But when you’re 20 years old and pretty built out, it’s easy to think, ‘Lets look at other businesses,’” he said. Wall Street also wouldn’t have embraced slowing growth, he added. “It’s Wall Street’s fault too.”

If debate about Nardelli’s tenure persists, Marcus said he thinks the current CEO, Frank Blake, is headed in the right direction. He shed HD Supply, although Home Depot still owns a 12.5 percent stake, and shut down Expo. He’s emphasizing the core retailing that was the company’s original calling card.

“Frank Blake has done a yeoman’s job in two and a half years in turning that around,” said Marcus.

“Frank is not wedded to everything in the past,” agreed Blank, “but he understands the value of culture and those fundamentals.”

In the face of a housing-led recession, however, sales, profits and stock price have all been under pressure during Blake’s still-young tenure.

Excluding the HD Supply division, revenues dropped nearly 10 percent over the last two years to $71.3 billion. The company’s market cap, or the value of all outstanding shares, is about $40 billion, down from $70 billion in January 2006.

Archrival Lowe’s has wrestled with similar downdrafts, though the North Carolina-based chain is still growing its U.S. store base and has started expanding to Canada.

Home Depot plotted overseas growth many years ago, hoping to emulate No. 1 U.S. retailer Walmart and its expansion into South America, Asia and Europe.

Home Depot’s progress has been limited to 176 stores in Canada, 74 in Mexico, and 12 outposts in China. An attempt to gain footholds Chile and Argentina last decade fizzled.

“We did expand at one point,” said Marcus. “We went South to Chile and Argentina, but we didn’t do well. We were not ready for it. Frankly, we didn’t have systems to control those businesses and we pulled out.”

Now, retail expert Howard Davidowitz sees international growth as Home Depot’s next frontier.

“Home Depot is very small internationally, and that may mean a lot of potential for them to grow,” said the New York retail consultant and investment banker.

But analyst Schick doesn’t think the chain should be looking abroad.

“No, absolutely no,” he said. Home Depot “is very housing-related” and has a “different equation” than Walmart. The latter has a self-service model, while Home Depot’s calling card is helping homeowners solve problems.

“American retailers and companies often think we know how to do things here, so we can do it there,” said Schick. “You have to be very careful about assuming your model is exportable.”

What does the current CEO think? Blake said international growth is “absolutely an opportunity for us,” and that he will probably look to Latin America first – but only “when the time is right.”

Meanwhile, Home Depot’s biggest growth opportunities now are stealing market share back from Lowe’s, and in making its U.S. stores more efficient and profitable, he said.

Blake believes he can “drive” up revenues by improving U.S. stores and increasing Internet sales.

He’s working to create “advantages” for Home Depot over Lowe’s by improving inventory and merchandising systems. The company is spending hundreds of millions of dollars building new product distribution centers. Blake said company research shows Home Depot’s brand is still “incredibly strong.”

“Thirty years is still pretty young,” said Blake. “There are more opportunities to play offense here than overseas. You have to remember where you’re going to create more of your value.”

As consumers cut spending, Home Depot lowered prices last year on more than 1,000 items. This year it launched the price-conscious tagline, “More Saving. More Doing.”

Davidowitz thinks Home Depot should have capitalized more on being a “warehouse” brand during the “biggest trade down” in retail history. He said stores should have areas “where everything is $10 or less, to drive footsteps. Why don’t they have that?”

As for the next 30 years, Home Depot’s future will remain pegged to the consumer, and the economy.

“What’s tarnished is our economy,” said Davidowitz. “Home Depot will come back if we can get all this stuff back and the economy improves a little.”

Said Schick: “I do think housing will still age, paint will still crack and faucets will still leak 30 years from now. I don’t think we’ll all be levitating, so we’ll still be wearing out carpets.”

ITC bites off 11% of biscuit market

THOUGH ITC is nearly synonymous with tobacco, it has in no way stopped people from munching ITC’s biscuits. The company has managed to corner nearly 11% of the national biscuit market.

Since the Rs 9,000-crore biscuit market witnessed a growth of 20% last year and is slated to sustain its growth this fiscal, ITC is looking at enhancing its biscuit manufacturing capacities by at least 15-20%, primarily to manage supply chain costs and improve profitability. “We plan to set up additional capacities in such areas where we have developed a significant front-end scale, but are limited by proximate capacities. Attempts are being made to create new biscuit variants in segments that are relevant to the consumer. The positioning of the marketing mix is also being worked upon to drive consumption by creating convenient price points or by differentiating product propositions,” Mr Chitranjan Dar, chief operating officer, ITC Foods Division, told ET.

For starters, ITC plans to drive growth by vitalising its brand ‘Sunfeast’ through product innovation, contemporary packaging and targeted brand communication. A huge investment is also being planned for brand building and product development. At the same time, the company is looking at investments in building trade loyalty across channels and markets.

Elaborating further, Mr Dar said, “while ITC per se has no plans to rationalise its biscuits portfolio, we review the basket from time to time. Additions or deletions takes place on the basis of the market feedback and actual sales. The idea is to strengthen the winners and replace the average performers with potential winners from the biscuits stable. As of now, there is no product which does not contribute positively to the overall pool of contributions.”

Incidentally, a large proportion of the growth in the biscuits segment is coming from the mid-price offers growing at 35%. The mid-price offers is the non glucose segment and includes cookies and sandwich cream products.

“There are clear indications that consumers are upgrading to mid-price offers in line with the growth of packaged foods in the country. Since consumers are ready to pay for good quality and tasty products, we find a growing value for product quality and hygiene. Hence, our capacity additions will partly be in line with these requirements Mr Dar pointed out. The basic product glucose, however, continues to be largest category in terms of volumes.

Rajesh Exports to launch jewellery retail chain under `Shubh Jewellers’ brand

BANGALORE: Rajesh Exports (REL) has finalised the launch of its premium retail jewellery chain of stores under the brand name of ‘Shubh Jewellers’. The company is launching the chain under an associate type business model across four states in South India – Kerala, Tamil Nadu, Karnataka and Andhra Pradesh.
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REL has finalised associate agreements with jewellers for the launch of 100 ‘Shubh Jewellers’ stores across these states. An official release claims that REL has completed all the formalities including stocking of inventory for the launch of the first phase during the first week of December. ‘Shubh Jewellers’ will offer five thousand exclusively designed 22kts jewellery pieces to the customers with guarantee of purity at the lowest gold prices and making charges.

As reported earlier, REL purchased all the 30 outlet assets of OyzterBay in India and repositioned them under a new store brand name ‘Laabh’ (profit) to cater to the higher end of the jewelry market.

Last month, REL roped in Bollywood female actor Sharmila Tagore as brand ambassador. Through it’s internal team, REL has created 60, 40, 30, 20 and 10 second TVCs’ for its ‘Labh’ brand. The TVCs’ feature Tagore and have been directed by Hemant Hegde. REL’s promotion plans announced earlier had been delayed but, now, according to company sources, 40 and 20 second TVCs’ on all NDTV channels will commence in the first week of December. The campaign amount of Rs.300 million announced earlier has also been ramped up, avers a source at REL.REL is planning for two TV campaigns during the current financial year ending March 2008 – the first campaign between December and end January 2008, and the second campaign to commence in the second or third week of February 2008. The company is in talks with a couple of other channels for spots during the first phase.
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TVCs’ during the second phase will be in Hindi, English and most regional languages. REL plans to beam them across all national channels (GEC, news and lifestyle channels) and regional channels. According to industry sources the company’s negotiations are in advanced stages with ETV for ad spots.

REL who claim to be the largest gold jewelry manufacturers in the world had earlier joined up with Fossil, a leader in fashion watches and accessories in a 50:50 joint venture with Fossil India (FIL) with four main objectives – To set up a manufacturing base in India to manufacture watches and other accessories under known brands and distribute these products in India mainly through wholesale and other channels; Setup a retail network in India which would retail the products of Fossil and REL; Jointly create a range of designs which would be offered to the global markets by the already established global distribution network of Fossil; Distribute Fossil’s globally known brands through the REL network.

The arrangement has been delayed due to problems at the US` end of Fossil, but still very much on, according to industry sources.

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