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Less is More: Eliminating SKUs and Increasing Sales

While Innovation is a major growth driver today across all manufacturers, the question for today’s reduced Assortment and Space retail world is: How do I provide the Innovation shoppers want without eliminating the base products they still buy?

According to one recent Decision Insight client, a CPG Consumer and Customer Insights Manager, “We have so many package sizes and types. We had to make the options simpler. The benefits pushed us over the edge to look for effective solutions.”

The client had been offering three kinds of packaging types in multiple sizes that often confused the consumer and resulted in increased production costs – not to mention the push from retailers to reduce shelf space. The challenge for the company was to rationalize the various package types and sizes and produce an optimal assortment that would be a win for shoppers and retailers alike.

Using Decision Insight’s ShopperIQ-Assortment virtual shopping solution, the client was able to cost-effectively test multiple assortment scenarios – which resulted in two particularly significant conclusions against the three package designs:

  • First, when a particularly innovative package type was removed, there was a loss in buyers, volume and overall sales.
  • Second, removing the smallest size posed a risk, as a few shoppers switched to a national competitor rather than purchasing a larger size.

Ultimately, it was determined that the manufacturer could reduce packaging types from three to two, reduce SKUs by 25%, and introduce a smaller-sized version of the innovative package design to satisfy even more shoppers. The optimized line-up maintained brand buyers and maximized revenue and profitability.

According to the client’s Market Research Manager, virtual assortment was very powerful: “You are observing real shopper behavior rather than asking what they would do. Asking questions is not enough. What people say is not what they do. And this methodology is more reliable, faster and much more economical than in-market testing.”

If you need to develop effective assortment solutions, or need help creating alternative assortments to test, DI’s shopper experts can help.

See our recent newsletter for more on assortment and the shrinking retail footprint: Urban Assault on Aisle Assortment 

 

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4Ps of Marketing Need Extreme Mobile Makeover

The Fourth P is in the palm of your shopper’s hand. Are you there yet?

Remembering the Four Ps from Marketing 101 (Product, Promotion, Price, and Place), we bet the Fourth P, Place, is getting its fair share of attention these days. Watching the world change around us, with record numbers of store closings, Amazon offering one-hour delivery in some places, and Walmart experimenting with automated in-store pickup of online orders, we think the Fourth P must be feeling stretched. It’s part store, part website, part mobile site or app. We’re going to stretch it further and say that it’s all of these things, but to the shopper, more and more, it’s also in the palm of her hand.

We saw this firsthand at lunch in the office dining room when our colleague got the email from a luxury retailer. The perfect, low-heeled sandal was on sale! She clicked through to the site using her phone, found the sandal in her size, added it to her cart, and placed the order right there at the table. For her, the right place and right time happened to be in the palm of her hand at that moment.

She is on to something. The gap between PC/laptop online purchasing and smartphone online purchasing has narrowed quickly since 2015 (Source: MediaPost).

More Shoppers in More Categories

Some of you may be thinking, this is great for categories such as apparel and electronics, but not so fast: My category is in consumer packaged goods (CPG), and we’re just not there yet. Well, CPG may not be there yet, but all signs indicate it’s going there.

The number of online grocery and CPG shoppers is set to grow rapidly as options get better and shoppers become accustomed to the convenience of curbside or doorstep delivery. In fact, as reported by 1010data, online CPG sales grew a whopping 36% from 2015 to 2016, to surpass $10 billion. Consider this: With CPG growth flat or even declining in many mature categories, this brave new digital retail world presents an opportunity to grow. And, in this new digital world, 40% of online grocery shoppers are ordering with their mobile phones, according to analysis by Criteo.

Best Practices for Smartphone Shopper Research

When designing shopper research, as a best practice, consider the fourth P – Place – and whether it’s in the palm of your shopper’s hand. Two questions we recommend you ask:

  1. What % of my shoppers are using their phones to order online?
    Consider how many of your shoppers are ordering with their phones. For an eTail order, this could be as many as 1 in 5. For a quick-serve restaurant, this could be as much as half or more. You may need to include mobile phone shoppers in your research to better influence eTailers or internal stakeholders to adopt your findings.
  2. What % of my shoppers are using their phones to participate in my shopper survey?
    Consider that these days, as many as 20-30% of research participants are entering surveys using their mobile phones. These participants tend to be younger and more ethnic than their PC or tablet counterparts. Take a moment to think about whether your current shopper research is capturing the full spectrum of shoppers.

If you’re not quite there yet, but need a guide to get started on the journey, contact us. We’re there, and we’re ready to help you get there.

Virtual Shopping Goes Mobile: DI’s research platforms are ideally suited for testing Pricing, Promotions, Messaging, Layout, Product Assortment, Custom Offers, and more. Our Brick & Mortar and eCommerce Virtual Shopping studies are mobile-compatible, enabling us to reach shoppers wherever they are – PC, smartphone, and tablet.

Contact Leslie Downie at (816) 437-9852 to learn more about mobile research.

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Game-Changing Product Innovation with Virtual Conjoint

Innovation in the Detergent Aisle

While there have certainly been innovation victories in the detergent aisle over the category’s long history (liquid detergent comes to mind), bold changes have been the exception. Because of cost or testing-scale issues associated with research methodology, consumer product R&D investments are often limited to incremental product improvements – all too often, made just to achieve parity with competitors.

Virtual Conjoint from Decision Insight Enables Innovation

With Virtual Conjoint™, DI has combined virtual shopping with choice analysis to create a very powerful research tool to enable major product innovation instead of minor iteration. This proprietary approach applies the principles of shopper marketing to test product development, packaging, pricing, and product placement solutions. The process offers numerous benefits:

  1. Reveals the underlying structure of decision making. Decision Insight can then build mathematical models of what shoppers are likely to do – and why. With Virtual Conjoint, clients not only gain testing outcomes, they also learn the shopper decision-making that brought it about.
  2. More efficient than concept testing. Concept tests are static and require large sub-samples to evaluate ideas one at a time, independently of all others. The Conjoint study can simulate thousands of concept evaluations, each within the context of all others.
  3. Can be used to predict choices and marketplace activity. Virtual Conjoint allows reliable and cost-effective testing of new products, ideas, and concepts.

Test More Combinations, Achieve More Innovation
The advantages of Virtual Conjoint are most evident in concept and package testing. Traditionally a manufacturer vets a myriad of possible innovation ideas during internal brainstorming sessions.

Because traditional research methodologies limit the number of concepts that may be tested, ideas are discarded and narrowed leaving two or three final options for testing. The result is that most concepts are discarded well before they are thoroughly explored with shoppers. Virtual Conjoint allows clients to test hundreds – or even thousands – of concepts and combinations. Our solution delivers a specific set of “guiding principles” for each variable tested, including package design, price, claims and placement in store.

Virtual Conjoint works because it determines how important each feature is to shoppers and the preferred combination – enabling major product innovation instead of minor iteration.

Click to read more… Virtual Conjoint Enables Game-Changing Product Innovation

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Speed, Need & Innovation: The Best Practice CDT

Craig Hodnett, SVP of Client Solutions, talks Best Practices.

Best practices generally save time, money and lead to better results. For CDTs, I’ve learned to evaluate “best practices” through a rather narrow lens. In my experience, best practices in CDTs are those that best simulate the shopper’s real world experience.

My 30+ years of experience in category management and sales, partnering with shopper research suppliers to build CDTs, has taught me that the best research partners are those that place significant emphasis on how three critical market factors disproportionately influence the efficacy of a CDT. They are:

  1. Speed: The rapidly changing shopper
  2. Need: Segmentation with various occasions and need states
  3. Innovation: In retailers with a smaller footprint

Speed

Most CDTs are based on three years of historical data. In other words, traditional CDTs look backward, not forward. While historical perspective has merit, today shoppers’ needs, wants, desires and even beliefs can change quite rapidly. The beer category is a great example. Craft Beers drive a disproportionate amount of growth in the total beer category. For certain shoppers in certain categories, “newness” is intrinsic to their shopping decision. Building trees from historical data is a poor methodology for a category such as this.

Need

Historically, CDTs have been built in isolation. But if a category is driven by a strong set of occasions or need states, another best practice is using a phased process to address situational purchasing. Again, using the Beer Category, there are buying occasions based on need states that drive beer purchases (for example a Super Bowl game watch party). A key question might be whether an occasion based on need states is strong enough to warrant how both assortment and shelf arrangement should be built.

Innovation

Innovation at retail is at a record pace and shows no sign of slowing. Yet retail square footage is shrinking as growing numbers of consumers are returning to city urban centers with smaller available retail space. Retailers build smaller stores for time-starved shoppers that want convenience in their return to Urban. The question that looms for Innovation is if they deserve shelf space in smaller store formats. Being able to quickly and easily place new product concepts into the CDT process matters. Doing so, even before bar codes are established, might be the difference between success and failure.

Grounded in shopper behavior and attitudes within the context of the retail environment, DI’s best practice CDT provides forward-looking recommendations rather than a simply historical analysis of prior purchasing.

Read more about CDTs here, or contact Leslie Downie to request a demo or meet with our team.

 

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Craig Hodnett is SVP, Client Solutions.
He can be reached via email craigh@decisioninsight.com or call (706) 416-0039.

 

DI Blog digitaliq

Dreamers Should Dream Big in Digital, Forge a Future Tempered with Experience

Leslie Sarasin, president and CEO of the Food Marketing Institute, in her keynote during the winter FMI conference had a challenge to the audience that the team at Decision Insight found quite inspiring. As quoted by SmartBrief, Sarasin opined:

“This is when we must dare to dream and to dream big. And if we find we can’t, we should hire the dreamers and listen to them, tempering their visions with our experience and together forging a future worth having.”

Sarasin was referencing the wide-open opportunity that is the online marketplace. Like many fresh opportunities, the upside requires a break from business as usual, a fair amount of risk – and comes with no proven road map. There will certainly be wrong turns made along the journey, but stasis is certain death.

A generation ago many placed bets on AOL as the ideal online model. AOL was neat and organized – a stable pillar in an unruly internet frontier. But the internet consumer would not be boxed in. The internet resists boxing, and consumers, when seeing better price or choice options, tend to prefer exploring outside the box.

At the same FMI conference, Benno Dorer, chairman and CEO of The Clorox Company said, “This is not a technology discussion, this has to be a discussion about the consumer experience. We have to test and learn because I don’t think anyone in this room has the answer.”

In other words, dreaming big is great, but it might be a good idea to test your dream strategies! At Decision Insight we couldn’t agree more. In fact, we’ve expanded our innovative shopper research suite – including ShopperIQ – with Digital.IQ. Our Digital.IQ Test and Learn platform re-imagines the eCommerce experience, a retail world without physical limitations, and lets our clients ask, “What if…?”

What if we altered the product hierarchy or changed the way users navigate the site? What if we revised the messaging online, or featured non-traditional product bundles, or explored new pricing strategies?

The Digital.IQ Test and Learn platform allows us to understand how these actions impact what shoppers see online, what shoppers think about the experience and most important, what shoppers BUY… all without risk of alienating current users or implementing a strategy that could damage sales.

Our aim? To help create a true shopper-centric vehicle and approach that brings retailers and suppliers together to better craft the online shopper experience. This is our opportunity to engage and act, because those not shaping the future will get shaped by it.

Read more about Digital.IQ here, and contact Leslie Downie to request a demo or meet with our team.

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Lightning in a Dessert Carton

Ben & Jerry’s struck marketing gold back when they took an idea from an ice cream shop bulletin board and turned it into one of their top three selling ice cream flavors of all time.

For Ben & Jerry’s, a fringe brand rapidly gaining mainstream appeal, the Grateful Dead’s Jerry Garcia had a near perfect mix of alternative-culture street-credibility and mainstream acceptance. In many ways, Garcia was to music as Ben & Jerry’s was to ice cream.

The bulletin board suggestion for the “Cherry” Garcia ice cream flavor was a viral marketing dream waiting to explode – the perfect pun blended with the ultimate un-spokesperson. Creating the right mix of cherries and chocolate chunks to make the flavor a hit was almost secondary to preparing the company for the pop cultural storm that awaited. They had captured lightning in a dessert carton.

Cherry Garcia might have lucked into passion and volume thanks to a clever corkboard note and a counter-cultural marketing tsunami (experiencing advantages one might say are “atypical” to most flavor development plans). But passion and volume are the two most important ingredients in Decision Insight’s proprietary “Non-TURF” Flavor Analysis.

Decision Insight’s Flavor Analysis answers three key questions:

  1. What current flavors must remain in the line?
  2. What current flavors could be discontinued?
  3. What new flavors should be added to the line?

Using a series of simple exercises, we can efficiently evaluate a large quantity of products (we’ve tested over 100 flavors at a time). The process provides a clear framework for our clients to give every variety a “green light,” “yellow light” or “red light.” Operational factors can be combined with the consumer insights to begin to narrow down the set – and provide the intelligence needed to make informed go-forward flavor decisions.

Read more about DI & Flavor Analysis here or contact Leslie Downie if you’d like to set up a meeting with our team.

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Holiday Shopper Insights

Omnichannel is about true continuity of experience. To be “Omni” is to perceive all things. And, in order for a shopper to perceive “everything,” it’s important to give them the ability and tools help guide the creation and context of their shopping experience.

Your Attention Please

The most important thing for retailers has traditionally been foot traffic – getting shoppers into the retail store. Of course today shopping happens most anywhere – in stores, on the web, and on the web while in stores. According to Google Insights, 4 in 5 shoppers with smartphones used their phones while doing other activities last year. Attention is always at a premium, and retailers need to be present when and where shoppers are shopping.

It’s Not a Phone, It’s a Remote Control for Life

As shoppers look for the perfect gift – whether for the holidays, birthdays or other special occasions – there’s no one perfect way to reach them. The one common denominator is mobile. It lets marketers be everywhere in every moment. And for millennial shoppers, a mobile device is not just a phone, it’s the “remote control” for their lives.

The Most Important Word in Marketing: Free

Shoppers want it to be easy to buy something no matter where they are. It’s increasingly important that retailers offer multiple ways to buy a product – from buying online to picking up in-store. When they do buy online, shoppers want free shipping – according to Google, this was the promotion that shoppers used most last holiday season, even more than discounts or coupons.

Clearly, the Opportunity is Huge

The online marketplace is clearly different from brick-and-mortar stores and requires unique digital strategies. Do you have a digital retail plan in place for 2017 and beyond? If not, now is the time – and DI can test and optimize your solutions pre-launch.

Just as marketing efforts need to be adapted to eTail, so does the research approach. Decision Insight developed Digital.IQ, our eTail research platform, to clearly identify which digital strategies perform best and how to continue to improve future offers. We utilize rich diagnostics to understand the specific elements that drive success – and the elements that can be further improved.

Please contact Leslie Downie to learn more. Email or call 816-221-0445 x215.

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Aisle Arrangement Close-Up: Vitamins and Supplements

The following is an excerpt from our recent newsletter – click here to access the full article.

Lives are busy. Universally, shoppers want easy navigation in the aisle, the ability to find the products they want with ease, and an opportunity to explore new products through intuitive adjacencies. The optimal aisle arrangement is one that is intuitive to the shopper and thereby eases the shopping experience. For shoppers, more aisle time = less life time.

When Shopper Wins, Manufacturer and Retailer Win

In the Vitamin and Supplement category, aisle organization and arrangements are diverse and inconsistent across retailers and channels. With new products and innovations regularly entering the category, this lack of consistency at retail may threaten sales growth due to poor visibility and shelf communication.

For a Vitamin & Supplement manufacturer, key questions may include:

  • How should products be grouped (brand, type, health goal, etc.)?
  • What product adjacencies make sense to shoppers?
  • What flow/arrangement of products do shoppers prefer?
  • Are there products that don’t belong in the aisle?

Sports Nutrition might be grouped in a vertical block. Weight Support and Herbals too. Everyday Products, like Multivitamins, Letter Vitamins, and Minerals, might be grouped together for convenience. And even within alpha groupings, vitamins could be A-Z sorted by brand or intermixed.

The overall outcome needs to be a win/win/win: Improving the shopping experience for the shopper, increasing sales for the manufacturer, and maximizing category sales for retailers. DI’s Aisle Builder research provides specific guidance for planogram development that meets these objectives and more.

Click here to read the full article.

Please contact Leslie Downie to learn more!

 

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Election Poll Fail Exposes Behavior Prediction Flaws

What 2016 Presidential Election Polling Failure Tells Us About Consumer Decision Making And Why Traditional CDTs Don’t Work

The following is an excerpt from our recent newsletterclick here to access the full article.

In the days since the election, there’s plenty of chatter in the market research community – and in the world, really – about whether or not traditional polling is the best approach. Nate Silver and many other traditional pollsters were wrong about the 2016 presidential election.

There is a definite buzz in the air regarding American University professor, Allan Lichtman, who called the election correctly using a more non-traditional predictive approach that relies more on the big picture than on polling, using a series of 13 “key” true/false questions that are based on pass/fail decision rules. Lichtman’s prediction of a Trump win maintained his record of correctly predicting every presidential election since 1984.

For future elections, we may well see a shift away from confidence in traditional polls-based predictions like Silver’s and more emphasis placed on less traditional but more holistic diagnostic approaches like Lichtman’s.

Trust Issues with Traditional Methods

At Decision Insight, we faced a conundrum between traditional and non-traditional research approaches over a decade ago when our clients asked for our point of view regarding Consumer Decision Trees (or CDTs). Most clients had employed traditional research approaches that relied on historical sales data – and many found those approaches falling short.

Traditional CDTs weren’t shopper-driven, couldn’t accommodate innovation, and didn’t answer a lot of “why” questions. Like election polling research, there was becoming significant mistrust in CDT methodology and in their ability to help predict real-world outcomes. The time was right to develop a new and better “non-traditional” research methodology that could shore up many of the CDT shortcomings clients were concerned about.

Click here to read the full article or email us to learn more about our Consumer Decision Trees.