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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Merchandising and Shelf Management to latch shoppers

Back in the “old days,” store brand product merchandising was easy. A retailer simply placed its store brand widgets to the right of the national brand widgets on the shelf, and called it a day.

But times – and store brand products – have changed. Most food, drug and mass merchandise retailers have made significant improvements to the quality of their own-brand products, and many of them now boast multi-tiered store brand programs. They want shoppers, therefore, to view their own brands as true brands.

Accomplishing that mission is easier said than done, however. After all, retailers lack the deep pockets of the national brands when it comes to marketing. For that reason, merchandising plays an especially critical role today in attracting consumers’ attention – and dollars.

Photo by Vito Palmisano

“With limited ad dollars to support these brands, merchandising may be, in some cases, the only way to differentiate them versus national brands beyond price,” stresses Mike Kowalczyk, vice president and general manager of the In-Store division of Livonia, Mich.-based Valassis, a media and marketing services company.

Andres Siefken, vice president of marketing for Daymon Worldwide, Stamford, Conn., agrees that strong merchandising plays a significant role in store brand growth. Effective merchandising techniques not only help drive transactional sales of store brand products, but also help make such products more accessible in the store – educating consumers and driving incremental trial.

“Data [have] proven that many people developed a better perception of private brand quality during the recession,” Siefken adds, “and that people tend to keep buying private brands after trying them.”

With rising fuel and commodity pricing wreaking havoc on consumers’ budgets, proper merchandising is even more critical than ever, notes Scott Kern, management consultant for the Parker Avery Group, an Atlanta-based boutique strategy and management consulting firm.

“While merchandising is always important, in these times of household financial stress, merchandising of private label is critically important,” he says. “Merchandising must ensure there are price-competitive private label offerings as part of the assortment for the value-conscious shopper, but not so many private label products that they take up too much of the assortment and push out brands that customers are loyal to, thereby driving them to competitors.”

Consider the shopper
Before devising any sort of strategy for a store brand merchandising overhaul, retailers will want to gain a strong understanding of basic shopper behavior within a store.

Photo by Mimi Austin

“Humans deselect before they select,” explains Dorothy Allan, vice president, business intelligence for Plano, Texas-based Crossmark, a sales and marketing services company focused on the CPG industry. “There are 7 billion people on the planet, and all of us sort and class information the same way. It is a very efficient way of processing millions of data points in a short period of time.”

That reality does not amount to an invitation for retailers to clutter up their stores, Allan notes. Instead, they need to be decisive about product placement and create a pattern within the store onto which shoppers can latch. She points to a personal example from her annual holiday store walk.

“The majority of stores were ‘painted’ with red and green displays,” Allan says. “Four months later, the one I still remember more than any other was a gum display. It was light blue and had a great offer and true appetite appeal. It certainly broke through the sea of red and green.”

Consumers also approach store shelves and displays with a mindset that varies according to the category, notes Todd Maute, a partner and senior vice president with CBX, a New York-based branding and design firm. For example, a shopper has a different mindset when he is looking to buy a differentiated product such as laundry detergent than he would have in a commodity-type category such as canned vegetables.

“I think it’s in retailers’ best interest to understand the value and role that private label plays in the category,” he says, “because the role the brand plays in the category will vary, and the role should help shape the merchandising strategy.”

Because geography also plays a part in in-store shopper behavior, retailers should take location into account in store brand merchandising.

“Localization of the merchandising strategy based upon the store demographics seems to provide the most consistent performance results,” says Daniel Galvin, executive consultant for the Parker Avery Group. “Price optimization is also most effective when combined with clear brand demographics at the local level.”

Rethink placement
Whether merchandising store brands, national brands or a combination of both, placement is key, Allan says.

“Perfect pairing or solution sales are one of the eight rules of shopper marketing,” she notes. “Make it easy for the shopper to say ‘yes’ and save time in store. Studies show if you can help the shopper find what they need more quickly, they will use the balance of their time to shop and buy more!”

Photo by Vito Palmisano

How much more? Allan says a shopper with 100 items on her list will walk out of a “shoppable” store with 104 items, citing a retail shopability study from Dr. Ray Burke of Indiana University’s Kelley School of Business in Bloomington, Ind. Therefore, retailers must find a way to engage the shopper and fortify the emotional connection with her. Building trust is all-important here, so the brands that will come out on top are those that are “authentic” and live up to their promise to the consumer.

“While innovation is important, the fundamentals of having the right products in stock – in sight and in the right locations with the right message or offer – are key to driving shopper loyalty,” she emphasizes.

The multi-tiered aspect of many retailers’ store brand programs, too, presents a challenging but exciting merchandising opportunity, Maute believes. Premium products, for example, have no national brand match for comparison purposes. And when niche store brands such as organics are added into the mix, the complexity only increases.

“You can have a three- to four-brand presence in a given category, so merchandising is critically important to communicate that you’ve got depth in the category – you’ve got price if they want price, and you’ve got unique and differentiated if they want unique and differentiated,” he says.

Maute points to New York-based Duane Reade as one retailer that really knows how to merchandise its premium food tier right along with its opening price point items. The retailers’ assortment of premium cookies, for example, gets a prime eye-level space block, with its no-name skyline-themed value brand situated below it. The national brand, meanwhile, gets non-prime placement, meaning Duane Reade gives its own brands the star treatment.

Still, the traditional approach – with store brands placed to the right of the national brands on the shelf – does still make sense for certain products and certain categories, Maute says. For example, it can work with ibuprofen or canned commodities to suggest store brand quality is on par with that of its national brand shelf-mates.

“At the same time, if you’re trying to say you have breadth and depth in the category – and different types of canned fruit items, for example – you might want to block set them together because then you will have a much larger presence in the category versus being checker-boarded throughout the aisle,” he says. “And some of those aisles are quite large.”

When done right, cross-merchandising also can be an effective element in a store brand merchandising strategy.

“The cross-promotion of private label products with complementary national brands is a great way to drive sales for both and provide solutions for shoppers at the same time,” says Jeff Weidauer, vice president of marketing and strategy for Vestcom, a Little Rock, Ark.-based specialist in retail shelf-edge solutions. “One of the more successful implementations we’ve seen is to include a private brand product as a tie-in to every end cap in the store.”

The best strategies, Weidauer adds, strive to build customer confidence in store brand products, treating them as quality brands in their own right instead of simply low-cost alternatives.

Retailers also should support strategic store brand placement with additional marketing, says Rick Davis, CEO of Davaco, a retail services provider headquartered in Dallas. He says point-of-sale and other store signage, in-store coupons, promotions and “seasonal pushes” all are proven methods of moving product and boosting category sales.

Go above and beyond
With all of the current interest in store brand product innovation, retailers also have a huge opportunity to infuse a bit of innovation into the merchandising of such products. Shopper-engaging placement could involve the creation of category “destinations” within the store, Siefken’s favorite innovative strategy. Although he notes that the vast majority of “good retailers” have been busy creating such areas, the best ones pull it off by going beyond just entertainment – they have an “experiential” focus. Moreover, such destinations make a fine showcase for premium and specialty-type private label offerings.

Photo courtesy of CBX

Siefken points to Schnucks’ Culinaria with cooking classes inside the store, Wegmans’ tea bar/center and Carrefour’s wine club/in-store destination as great examples. They make for “retailtainment,” he says, providing a total product and category experience.

The approach also allows shoppers to use all five senses in key categories within the store to drive incremental category sales, Siefken says. Moreover, such creative merchandising really sets one retailer apart from another.

For his part, Maute sees opportunities for retailers to merchandise store brand “solutions” in certain categories, rather than facing off product by product against the national brands.

“I think there’s probably value in assessing if it makes sense to merchandise the ‘baby solution’ versus diaper to diaper, baby oil to baby oil or wipe to wipe,” he says. “And I think you’re seeing more and more private label expand into the perimeter of the store – you can also block set in those categories.”

‘One of the more successful implementations we’ve seen is to include a private brand product as a tie-in to every end cap in the store.’
– Jeff Weidauer, vice president of marketing and strategy, Vestcom

Speaking of category-specific merchandising, Kowalczyk likes what Supervalu has done in the launch and merchandising support of own brand pet offerings.

“Through an innovative positioning and strategy perspective, they have introduced a viable alternative to pet owners with their evoked set of brands,” he says.

And Kowalczyk points to product coupling as the “next level of innovation” on the store brand merchandising front, a practice that once was limited to the national brands.

“The costs for both in-home and in-store coupling strategies and the associated tactics are such that private label products can now reach consumers actually seeking to test, try and hopefully become loyal,” he stresses.

Another innovation gaining traction on the merchandising/marketing side is digital signage, Davis points out. In addition to being an easy-to-change, cost-effective configuration that helps to sell products, the technology can serve multiple functions within the store.

“For example, some retailers are selling advertising space on their digital signage for incremental profits,” he says. “And because content is controlled from a centralized location, retailers are even using their digital signage to facilitate internal training programs to be reviewed before or after store hours.”

Siefken believes integrated programs, not stand-alone programs, are the wave of the future. They are not so easy, however, to pull off.

“My advice is to take a close look at how the world has evolved and how people are now all connected,” he says. “It’s easy in theory for a retailer to create a program around their brands and integrate it with a social media strategy. The problem I’ve seen is in execution.”

He advises retailers to seek outside help from the experts when they need it here.

Photo courtesy of Fresh & Easy Neighborhood Market

“The new integrated programs will not only help drive sales, but store traffic and loyalty,” he adds.

Although grocery retailers generally have been slow to adopt new technology – in part because they realize razor-thin margins in comparison to other retail segments – Galvin expects mobile retail to play a bigger role in grocery’s future.

“In the near- and mid-term, the increase of retail price optimization and the basic blocking and tackling of marketing and merchandising coordination, brand management and supply chain integration are likely to absorb any grocery retailer’s appetite and capacity for change,” he says.

Avoid mistakes
When it comes to store brands, no one merchandising approach will fit every retailer or every category – a combination of different approaches almost always will work best. But the most successful retailers also will be careful to avoid some common merchandising missteps.

The most common of these mistakes is not treating own brands as real brands, Weidauer contends.

‘Creating clear brand architectures that are relevant to the defined target demographics are critical to maximizing private label success.’
– Scott Kern, management consultant, Parker Avery Group

“This results in poor shelf placement, meaning not at eye level or without a sufficient number of facings,” he says. “Retailers should merchandise these products as if they are proud of them.”

Failure to give store brand products their fair share of end cap placement and over-promoting these items on a price-only basis also are mistakes to avoid, Weidauer says. Ongoing price promotions not only weaken the value proposition for the shopper, but also change the perception from “quality alternative” to “cheap substitute,” he contends.

Compared to retail “leaders,” retail “followers” tend to have longer planning and strategy cycles, Kern notes – 12 months or more. What’s more, they typically fail to coordinate marketing and merchandising to the extent of the leaders.

Yet another common retailer mistake, Kowalczyk says, is not using all the tools available to them in store.

“While TV, magazine and traditional advertising may not be in the budget for most private label brands, using call-to-action tactics such as signage, at-shelf couponing and advertising certainly is within reason and has been proven to grow these brands as much, if not more so, than other forms of support.”

Too often, retailers do not take consumer demographics into the product development plan, Kern says, which ultimately has a negative impact on merchandising. By offering a single brand for all store brand products, he believes retailers send “muddy messages” to shoppers and typically reap less-than-optimal results.

“Creating clear brand architectures that are relevant to the defined target demographics are critical to maximizing private label success,” he says. “Many grocers tend to focus on low-end private label products, and there remains an opportunity for premium private label offerings in such areas as organics. Multiple brands focused on targeted brand demographics enable clearer messaging and can be price-optimized to compete with national market equivalents and value-priced competitors.”

Finally, Maute believes many retailers underestimate the relationship between product design and merchandising. The two are so connected that his company attempts to get a handle on a retailer’s merchandising strategy before designing a new store brand package or packaging line.

“We’re working with one customer that is very active in the promotion of frozen commodities, and products tend to move a lot because of promotions,” he says. “We actually changed the design strategy to get more continuity across colors and items so that even if the items do move around a lot, they still get a good brand presence. If we didn’t understand that merchandising strategy, we probably would have approached color more on product than on brand.”

Successful Brand Marketing

With an increase in trust deficit world over, here is what brand managers need to weed out of their environments to retain their brands’ trust

MARKETING’s greatest invention is the brand. In effect unheard of 100 years ago, brands and branding now march triumphant. Everything and everybody — places and destinations, political parties and social movements, people (first celebrities and politicians, now, it appears, all of us) — are brands.

Yet, aside from a few usual suspects such as Apple, in the branding heartlands, all is not well. Y&R executives John Gerzema and Ed Lebar highlighted the problem in 2008, when they reviewed longitudinal evidence from Y&R’s Brand Asset Valuator research programme. In their book The Brand Bubble, they charted a ‘precipitous’ decline in brand trust since 1993, along with sharp falls in consumer perceptions of quality, brand awareness and ‘brand esteem’.

In 1993, for example, consumers trusted 52% of the brands researchers asked them about. Fifteen years later, the figure had fallen to 25%. Gerzema and Lebar pointed out that stock markets may have been pushing up the value of brand-owning companies, but brands themselves were being ‘hollowed out’.
Then came recession. Halfway through, Promise chief executive Charles Trevail observed that “according to every survey and index on trust in institutions and organisations from around the world, trust is in terminal decline”. Even when the recession was supposed to be lifting, Alterian chief executive David Eldridge commented on his company’s latest research: “Consumer trust is at an all-time low.”

So what’s the problem? How can brands and branding be so successful, yet so sickly at the same time? The answer may lie with the occupational diseases of brand management — diseases that are generated by the daily working lives of brand managers.

MASKING THE PROBLEM
Brand management as ‘mask management’ is the most common of such diseases. Because brands are all about external communication, many brand managers find it hard to resist the temptation to paint ‘lipstick on the gorilla’ — telling customers what the brand manager knows they would like to hear, rather than keeping to the truth of what the organisation can, or actually intends to, deliver.

In reality, the most important part of the brand manager’s job is one of internalisation: bringing customer views and perceptions from outside the organisation inside, so that the organisation understands, responds and resonates to customers’ changing demands. Yet, activity-wise, the minute-by-minute focus of the day job is external communication. When changing the external message is easy (and fun) and changing the organisation inside is hard (and painful), the lures of lipstick-on-the-gorilla mask management can become irresistible. In fact, they can even be dressed up as a new theory. Remember when we were told that punters didn’t buy the beer, but its advertising? Remember George, the Hofmeister bear?

Next on the list is brand hubris. Not long ago, it was fashionable among brand consultants to show their clients a chart depicting the relative prices of different T-shirts. Some sold for a fiver or less, while branded ones were at least £50. “Which T-shirt do you want to be?” the consultants would ask. The difference between being able to charge £5 and £50 lies in “branding”, they would say. “We can help you become experts at ‘branding’.”

Well, they may have been experts at branding, but they were dunces at economics. If you sell 1000 T-shirts for £5 with a £1 margin, you make £1000 profit. If you sell 10 for £50 with a £48 margin, you make £480 profit. By implying that the supply/demand curve could be ‘branded’ away, these consultants were usually doing their clients a real disservice. While they were doing the rounds with their presentations on ‘branding’, full of impressive words such as ‘intangibles’, the brand that romped it on the high street was Primark.

That is not to say that discounting is always the best strategy. Rather, it is to challenge the widespread belief that it’s the ‘extra stuff on top’ — the stuff added by ‘branding’ — that is the source of brands’ margins and profits. The fact is that, apart from some special cases such as luxury goods, if you look at most successful brands — such as Amazon, Apple, Dell, easyJet, Facebook, Google, IKEA, Nike, Starbucks, Tesco, Toyota, Virgin and Wal-Mart — what marks them out is not superb ‘branding’ (sometimes it’s superb, but very often it’s not) but that they deliver outstanding customer value, often via breakthrough innovations, technology and/or underlying business models.
‘Branding’ alone hardly ever makes a business successful. It is businesses, including their culture and ethos, that make brands successful. And as soon as the business drops the ball on innovation, service, quality or price, or forgets its cultural roots, the brand quickly loses its lustre.

CLARITY OF PURPOSE
Brand narcissism is our third, closely related, occupational disease. Brand narcissism works on two levels. At the first, every brand manager desperately wants their target audience to recognise their brand, love it and be loyal to it by, for example, acting as an unpaid yet enthusiastic brand advocate.
There is nothing wrong with these dreams per se. They are natural. What is wrong is when we morph the wish into a ‘strategy’ of ‘success by being popular’ — where getting people to talk about and ‘love’ the brand becomes an end in itself, pretty much divorced from the value it’s supposed to be delivering.

The second level of this brand narcissism, which is even more dangerous, is where the brand manager forgets the underlying purpose of the brand and starts acting as if it’s the job of the customer to add value to the brand (by paying a price premium or being its advocate, for example), rather than the job of the brand to add value to the customer.

An obvious point, perhaps, but it can be difficult to remember in a world where your every passing thought, and key performance indicator, is about how well-remembered you are, how preferred you are, or how many people are talking about you.

Our final occupational disease is toolkit myopia. Brand managers are surrounded by a dizzying array of sophisticated tools and techniques for research, testing, data-gathering and evaluation. They are on an endless quest for the breakthrough insight and the sparkling creativity. It’s difficult to master all these things and the quest easily becomes obsessive. So much so, that it soon seems as if excellence at these diverse technicalities lies at the heart of successful branding — when it is not.

You can, for example, use exactly the same technical toolkit, excellence, to build a brand that perfectly communicates a brand’s unique value.
And to hide the fact that the brand is nothing more than a me-too mediocrity. You can use technical excellence to articulate specialness and hide sameness, but content-wise, they are opposites, having an opposite meaning to the customer.

The one thing that branding as mask management, brand hubris, brand narcissism and toolkit myopia have in common is that they destroy trust. They are potentially catastrophic mistakes, yet they are in the air brand managers breathe, growing naturally in their working environment. So they have to be combated on a daily basis.

How? What’s the antidote? To remember that a brand’s real job is to build trust, and that everything the brand does must be tested against this yardstick. It’s this simple human understanding that successful brand managers never let anyone forget.

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