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How effective is Groupon for marketers?

Tuesday, November 20th, 2012

In this gloomy economy, when consumers are remaining frugal and actively seeking out deals and discounts, Groupon has become a household name. Why not?  After all, it offers its users up to 90% off restaurants, spas, various goods/apparel and hotels, and the CPG industry has also gotten in on the trend. Forbes has named Groupon as the fastest growing company in web history, and its subscription base is growing astronomically. However, being an avid user of this website myself, I often wonder if it really is an effective marketing tactic for a retailer or manufacturer.

Groupon can definitely be a great marketing option for new businesses as it leads to an awareness explosion which further translates into an accelerated revenue stream. Even if it fails to generate huge profits in the short term, it works out quite well in the long run.  Groupon can help sinking businesses as well by triggering a surge in traffic and an influx of revenues.

Though Groupon can be very profitable and increase revenues manifolds for many businesses, it definitely isn’t for all. Studies show that 66% of those businesses which offered Groupon deals were profitable, while 32% were unprofitable. And, 42% said that they wouldn’t run the promotion again.

The major risk of engaging in Groupon is the potential failure to acquire loyal customers and gain repeat business. A huge consumer segment might be just looking for freebies and never come back without a deal. Typical Groupon users can be categorized as economical buyers (who hate to buy anything at full price), penny pinchers (who are obsessed with trying anything and everything they haven’t yet experienced) and coup-o-holics (who consider deals as free money).None of these segments usually are known for their customer loyalty or giving repeat business.

Overall, Groupon can be looked upon more as an advertising tool rather than a marketing strategy. While Groupon takes a huge cut out of the voucher sales from the retailer/manufacturer and consumers enjoy a huge markdown, offering a Groupon deal can be a little overwhelming for many marketers and not necessarily a sustainable tactic in the long run. While many marketers are pondering whether to Groupon or not, it is critical that they have a proper vision and a sustainable objective before they dive into it. Though marketers can earn huge profits and sales by engaging in Groupon like many others, they need to be cautious of giving deep discounts without having a very good understanding of the ideal consumer base they are targeting in the long term.

What has your experience been with Groupon?  Would you recommend using this marketing tactic?

National Brands on the Defensive: Times & Trends Report Explores Private Label Share Loss

Monday, November 19th, 2012

Throughout the economic downturn, budget-friendly private label products enjoyed their time in the spotlight, but have hit the proverbial glass ceiling. During the past year, private label has made impressive gains in some channels, retail banners, and categories, but national brand manufacturers have not been just idly weathering the storm.

Our latest Times & Trends report, “Reversal of Fortune: National Brands Pick up Gains on Private Label,” outlines private label share losses across many CPG categories and some CPG channels and explores national brands’ strategies to defend their role in the marketplace.

National brands are intently focused on making up for lost sales by offering new value, quality and innovation. Still, for private label, despite share decline in some areas, there are opportunities for growth. Our analysis identifies attractive category, channel, and shopper segment opportunities and provides actionable recommendations to marketers of both national and store brand products.

Key findings of this report include:

  • Although private label unit share of CPG products slipped to 17.1% during the past year, dollar sales slightly increased.
  • National brand volume share is on the rise in 40 of the 100 largest CPG categories.
  • Private label share is above average and growing in the grocery channel, but slid in drug and convenience stores during the past year.
  • A majority of private label categories receive below average merchandising support, which has been declining at a faster rate than the industry average during the past several years.

As the first edition to add Walmart, military commissaries and select club and dollar chains sales data to our already extensive coverage, this issue of Times & Trends captures an even more robust snapshot of the CPG landscape than previous private label analyses.

For more details, please download the full report. Additionally, I hope you’ll register and join us for the corresponding webinar on Thursday, Nov. 29 at 12 p.m. CT.

HispanicLink 2012 Demystifies Diverse Hispanic Population

Friday, November 16th, 2012

Representing 16 percent of the U.S. population, Hispanics are the nation’s largest multicultural group. Increasing at a 43 percent rate, Hispanics accounted for 56 percent of U.S. growth during the past decade and are expected to comprise nearly 30 percent of the population by 2050. This rapidly expanding group also packs an impressive purchasing punch. Hispanics spent more than $135 billion on CPG in 2010 and are projected to spend 25 percent more in 2020— more than double the national growth rate.

SymphonyIRI’s HispanicLink 2012 report includes a Hispanic Shopping Basket analysis component and a Hispanic Survey and provides deep insight into the Hispanic population’s shopping habits. HispanicLink breaks down this diverse and complex group, comparing the purchasing and shopping habits of Unacculturated Hispanics, Acculturated Hispanics, and the non-Hispanic population. The survey was fielded through SymphonyIRI’s National Consumer Panel and supplemented by personal interviews with Unacculturated individuals living in the top U.S. Hispanic markets: Los Angeles, New York, Chicago, Miami and Houston.

The Q4 2012 HispanicLink is enhanced with new information, including SymphonyIRI’s EconoLink Segmentation, which examines how the economy has influenced Hispanic shoppers’ CPG-related attitudes and behaviors; SymphonyIRI’s DigitaLink Segmentation, which explores the extent of Hispanics’ new media usage and the roles that digital devices are playing in their lives with respect to grocery shopping; and data on their Walmart shopping preferences.

Among many additional insights, HispanicLink data indicates that compared with non-Hispanics, Hispanic shoppers over-index largely in terms of digital media usage for decision-making and grocery purchase activities. Hispanics are also more likely than non-Hispanics to make shopping decisions based on availability of low-price options. Among Hispanic shoppers:

  • 66 percent make a shopping list before heading to the store
  • 54 percent make additional, unplanned purchases after seeing products or sales in store
  • 41 percent download coupons from manufacturer websites
  • 26 percent use social media sites, such as Facebook and Twitter to get coupons
  • 17 percent use social media sites to research products

CPG companies that understand the values and attitudes of various subsets of the Hispanic market will be able to leverage these insights to develop targeted marketing programs and connect with new shoppers. With this in mind, SymphonyIRI is pleased to feature two special offers on HispanicLink 2012 for Q4:

1. HispanicLink Package with a 20% Discount

  • Hispanic Survey + Shopping Basket: $32,000 (originally $40,000)
  • Survey Only = $24,000 (originally $30,000)
  • Shopping Basket Only = $12,000 (originally  $15,000)
  • Bonus: “Hispanic Trip Mission Snapshot,” including Trip Type, a comparison of quick trips, special purpose visits, fill-ins and pantry stocking, including average money spent, percentage of all trips, and trip share percentage change, with two new survey questions regarding trip strategies and digital media usage, updated through October 2012

2. Channel-Specific Hispanic Market Basket Analyses andSlices” of the Hispanic Survey. These reports offer a unique opportunity to tap into and better understand the growing Hispanic market. Both can be purchased for as little as $5,000 and delivered in days.

For more information on the Hispanic population, please refer to SymphonyIRI’s “Diverse and Distinct” Point of View, published in June 2012.  For more information on the HispanicLink package or the survey specials, please contact me at Staci.Covkin@SymphonyIRI.com .

Sandy’s Impact and Aftermath on the Marketing Industry

Friday, November 9th, 2012

Hurricane Sandy ravaged the entire Northeast, impacting about 50 million to 60 million people, along with trillions of dollars worth of property. Though this super storm brought turmoil into many lives and caused widespread destruction, which will take months to recover from, it definitely will bring some positive stimulus to the economy while rebuilding and restoration of the infrastructure takes place.

SandyThe impact of Sandy on the retail space has been mixed. Supermarkets, chain drug stores, mass merchants like Walmart, Costco, and Target, as well as grocery and dollar stores experienced a huge surge in traffic. People stocked up on canned food, water, bagged ice, various non-perishables and other essential items. Buyers also rushed to home goods supply stores like Home Depot and Lowe’s to procure supplies like generators, flashlights, batteries and plywood.

Online sales also picked up during Sandy within the communities which were housebound but fortunately with power and Internet. Visits to malls and retailers selling discretionary items like clothing, toys, and apparel dropped significantly. Due to the timing of Sandy, holiday shopping is also expected to be impacted. Various households who incurred property damage costs will most likely slash their holiday budgets and focus more on ‘must-haves’ rather than ‘nice-to-haves.’

While communities are striving to bring normalcy back to their lives, various retailers and manufacturers are generously engaging in charitable efforts. Companies are working with relief agencies and local authorities to provide assistance and funds in various forms. Heineken USA has pledged to match all hurricane related employee donations by five to one. Various beverage companies, like Anheuser-Busch and Nestle Waters, are providing millions of bottles or cans of water to serve the Sandy affected communities. Market leaders like Coca-Cola, PepsiCo and Starbucks are donating funds to provide resources for necessary food and shelter in the short term and also providing long-term assistance to rebuild the impacted neighborhoods.

While various economists are still trying to assess the actual impact of Sandy on the economy, this traumatic experience certainly will not be forgotten anytime in near future. While the entire nation is struggling to float out of this harrowing experience, it is very critical that companies do not take advantage of the situation and use the excuse of Sandy to increase prices. It is definitely the time when manufacturers and retailers should contribute to the communities and show that they care.

What Sandy relief effort from CPG companies have impressed you the most? What were your observations on shopper behavior during this natural disaster? I look forward to hearing your comments.

Cautious Consumers Buckle Down for the Holiday Season

Monday, October 29th, 2012

During the past several years, shoppers have become increasingly diligent in planning their holiday celebration related food and beverage purchases. Frugal consumers have embraced coupons, sacrificed gourmet items, and learned to meticulously plan their lists. Saving has become a way a life, and even the approaching holiday season won’t be enough to loosen purse strings.

SymphonyIRI’s Q3 MarketPulse™ study examined consumers’ budgeting and shopping plans for the 2012 holiday season, finding that shoppers are still proceeding very cautiously, planning their purchases and seeking any and all savings avenues. Forty-one percent of consumers feel that their financial position has deteriorated in the past year, and many shoppers intend to rein in their holiday spending. Specifically, 45 percent of consumers plan to spend less this holiday season, with 36 percent planning to spend less on their holiday-related food and beverages.

Consumers across all shopper segments are keeping their belts quite tight, but moms are especially intent on stretching their holiday dollars even further this year than they have in recent history. In fact, 45 percent of moms plan to reduce their holiday celebration-related food and beverage spending this year, compared to 36 percent of the population as a whole, and forty-six percent of moms aim to cut back on unplanned CPG purchases.  But, even frugal moms can be swayed: 47 percent plan to take more advantage of in-store promotions, and 44 percent are still buying premium and gourmet items along their route.

Moms aren’t the only ones cutting back—even the wealthiest shoppers are concerned about their financial health and watching their budgets as the holiday season approaches. As a result, 27 percent of wealthy households are taking measures to save money during the holidays, and very few are planning to spend more than they did last year.

Consumers across the board will be shopping strategically this year, employing various tools and tactics to maximize holiday savings. In particular, many customers plan to up their coupon use this year, with MarketPulse data revealing a particular emphasis on online-based coupons:

  • 41 percent plan to clip more newspaper and/or circular coupons
  • 39 percent plan to download more coupons from manufacturer websites
  • 36 percent plan to use more coupons from retailer websites
  • 36 percent plan to redeem more coupons received via email
  • 32 percent plan to print more coupons from social networking sites
  • 31 percent plan to use more coupons from group couponing sites

With so many consumers keeping their wallets clamped shut, this holiday season presents a challenge for CPG manufacturers and retailers. Still, it will offer opportunities for marketers that can deliver against the needs and wants of their key shoppers.  Throughout the past year, SymphonyIRI has been examining the many faces of the CPG shopper to understand what it is that drives purchase behavior in difficult economic times.  It’s a complex puzzle.  When looking at influencers of brand decisions, for instance:

  • Gen-Xers are much more heavily influenced by price than boomers and seniors
  • Shoppers over the age of 65 rely quite heavily on existing brand equity
  • Hispanics are much more heavily influenced by household requests than non-Hispanics
  • Millennial shoppers rely quite heavily on online sources of brand and deal information
  • Moms are more heavily influenced by shopper loyalty discounts versus the average shopper

To learn more about the many faces of the CPG shopper, click here for our full coverage of consumer segment trends.  What strategies will you use to entice shoppers this holiday season?

Q3 MarketPulse™ Survey Results: Don’t Ignore the “Ignored Generation”

Thursday, October 25th, 2012

Often referred to as the “ignored generation,” Generation X is far from forgettable. Sandwiched between two larger generations, the post World War II baby boomers and their millennial children, Generation X borrows traits from both groups but more closely mirrors the millennials.

This quarter’s MarketPulse™ survey narrows in on Gen-Xers (aged 35 to 44) to reveal frugality despite a sunnier economic outlook. Twenty-four percent of the group believes their financial situation has improved during the past 12 months. Because of this positive view, it may seem that Generation X has much in common with the baby boomers. In fact, though, they actually share traits around price sensitivity and tech savviness with millennial shoppers.

Just as millennials are entering adulthood amidst a weak economic environment, Gen-Xers began their adult lives, job-searching and starting a household, during the recession following the 1987 stock market crash. They’ve adopted more frugal purchase habits compared to older generations and use technology to plan shopping trips ahead of time. The Q3 MarketPulse report demonstrates these Gen-Xer traits, such as:

  • Similar to millennial shoppers, 72 percent of Gen-Xers state price is more important than convenience in brand decisions
  • 37 percent buy brands that are on sale rather than their preferred brands versus 45 percent of millennials, 27 percent of boomers and 22 percent of seniors
  • 33 percent choose products based on loyalty card discounts versus 35 percent of millennials, 25 percent of boomers and 16 percent of seniors
  • 20 percent steer clear of certain aisles to avoid unplanned purchases versus 22 percent of millennials, 15 percent of boomers and 11 percent of seniors
  • On par with other generations, 69 percent pre-plan by making shopping lists, with Internet and retailer website usage comparable to millennials and higher than older generations

With established families and more advanced careers, Generation X is an influential group. Retailers and manufacturers should not overlook their spending power. Marketers wishing to reach Generation X should approach the group with a comprehensive arsenal of tactics, showing appreciation for their tech savvy ways, and the important role that new media are playing in helping them to get off to a solid start in their adult world.

For more details about Generation X’s shopping behaviors and this quarter’s Shopper Sentiment Index™, please read the press release:  http://www.symphonyiri.com/NewsEvents/PressReleases/tabid/97/ItemID/1605/View/Details/Default.aspx.

Capitalizing on Shoppers’ Cautious Optimism

Tuesday, October 23rd, 2012

Recent unemployment numbers brought the jobless rate to its lowest point since January 2009 and consumer confidence is on the rise, but what do these economic improvements mean for the CPG industry? Will they be enough to buoy shopper enthusiasm?

Last week, we released the second-annual SymphonyIRI EconoLink™ report, revealing cautious optimism among shoppers: 27 percent of shoppers anticipate they will be financially better off a year from now (up from 22 percent with this view last year), while 21 percent believe their financial positions will be worse a year from now (down from the alarming 30 percent with that opinion last year).

SymphonyIRI’s EconoLink report, “Economic Shopper Segmentation: A Look into How Shoppers Are Changing Their Behaviors in Today’s Economic Environment,” examines the attitudes and shopping patterns of six consumer segments, grouped according to financial outlook and behaviors. The new data provides CPG marketers clear insight into how categories, brands and stores are performing with specific shopper groups—information they can use to better address consumer wants and needs. The EconoLink segments are:

  • Downtrodden: Median annual income of $41,000; very pessimistic about their financial situations; tend to shop at mass merchandisers, dollar and convenience stores
  • Cautious and Worried: Median income of $42,000; bleak financial outlook; often shop at mass merchandisers
  • Start-Ups: Median income of $44,000; impacted by the recession but maintain positive outlook; shop at grocery, drug and convenience stores
  • Optimistics: Median income of $48,000; positive outlook; favor supercenters, drug and convenience stores
  • Carefree: Median income of $59,000 and financially stable; skew toward shopping at club stores and tend to be brand loyal
  • Savvy Shoppers: Median income of $81,000 and financially stable; enjoy shopping and the quest for value; favor grocery, drug and mass merchandisers

All six EconoLink segments demonstrated a generally positive outlook for the future, but optimism is highest among Start-ups and Carefrees. Start-Ups are twice as positive as last year; 18 percent believe their financial situation will be better next year, versus the mere 9 percent who felt that way last year. Optimism also climbed for the Carefree group (18 percent this year versus 11 percent last year). However, not all segments are improving: only 17 percent of Savvy Shoppers feel their financial situations are stronger now than a year ago, versus 23 percent last year.

In another demonstration of increased optimism, 64 percent of Downtroddens believe their financial situations will be worse a year from now than today, down from an astounding 79 percent in the 2011 report. Cautious and Worried shoppers are moving in the same direction; 38 percent today believe their financial situations will be worse in a year than today, while 46 percent held this belief last year.

Financial attitudes have seen modest improvement over the past year, but shoppers remain extremely cautious. Now more than ever, manufacturers and retailers must appeal to shoppers’ beliefs, behaviors and values. With EconoLink data, marketers can target specific segments and devise new products, promotions, merchandising, pricing and store layouts to improve each segment’s shopping experience

To learn more, read the press release, or register here for our free webinar, “It’s Still the Economy: How People’s Shopping Decisions are Driven By Their Economic Outlook,” which I will host Thursday, October 25 at 11 a.m. CT.

Cause Marketing: Are Shoppers Caused Out?

Friday, October 12th, 2012

Have you ever purchased a product because it supports breast cancer, or because it featured an Olympic athlete, such as Ryan Lochte, on the packaging? As marketers, we must be aware of which emotions are more likely to resonate with shoppers. In today’s retail environment, shoppers must decide what promotions provide the most value. There are several different strategies that CPG marketers use to increase sales, including associating consumer products with specific causes, events or giveaways.

According to Wikipedia, cause marketing refers to “a type of marketing involving the cooperative efforts of a ‘for profit’ business and a non-profit organization for mutual benefit.” Breast cancer awareness is one of the most prevalent causes associated with consumer products. Each October, and increasingly throughout the year, marketers coat their products in pink and donate a portion of their proceeds to research. Similarly, companies that release limited-edition products surrounding major events like the Olympics also rely on the power of cause marketing campaigns to provoke an emotional response that will influence shopper behavior.

Lately, some marketers have begun to question the effectiveness of cause marketing, wondering if it is any more influential than other promotional vehicles, such as coupons. While many companies have turned to cause marketing, some marketers wonder if “cause fatigue” has set in.  Recent research indicates that as cause marketing becomes more pervasive, some shoppers are starting to consider it gimmicky and disingenuous. To address this concern, Think Before You Pink, a project of Breast Cancer Action, launched in 2002 to address the increasing amount of pink ribbon products on the market. The campaign seeks more transparency from companies participating in breast cancer fundraising, and it advises shoppers to critically evaluate pink ribbon promotions.

Additionally, while consumers do believe CPG brands’ support of breast cancer has raised awareness of the cause, recent studies indicate that shoppers are concerned that the extensive support of breast cancer awareness overshadows other important causes. One mother, whose daughter has melanoma, was quoted in a recent USA Today article, and wishes this serious form of skin cancer “got even a fraction of the attention and funding.”

Several simple steps to overcome ineffective cause marketing programs include:

  • Choose a charity for the cause marketing campaign based on relevance to the product involved
  • Choose a charity that has achieved measureable results
  • Tell shoppers what charity the brand is marketing with and why
  • Provide shoppers with information about how much money the charity will receive through the campaign and how the charity will use the funds
  • Publish follow up information after the campaign ends

Oversaturation aside, it may no longer be enough for marketers to simply attach a specific cause to their brand – it’s time to get creative! Yoplait’s effort to raise awareness for breast cancer, “Saving Lids to Save Lives,” incorporated a more personal approach that included painting one woman’s house pink to honor the four friends she lost to breast cancer. Yoplait has donated a total of over $30 million in the last fourteen years.

Are consumers really more likely to purchase something because a certain percentage of the proceeds benefit a particular cause? Or, at the end of the day, would they just rather have a coupon and/or receive a giveaway upon purchase? It may be time for marketers to reevaluate their programs and revamp cause marketing as we know it.  What causes tug at your heartstrings?

Beyond Self-Checkout: Mobilizing Mobile Payments

Friday, October 5th, 2012

Last year, bold projections indicated self-checkout kiosks may become a thing of the past. After a self-service boom, leading grocery retailers announced a shift in their strategies, opting to focus on better customer service. But a year later, it seems that self-checkout, for the most part, has survived – perhaps because shoppers have defined improved service as including convenient checkout alternatives.

It seems self service is here to stay. However, uncooperative touch screen monitors and technology glitches can create long wait times. To ease this frustration, there’s a new mantra for the CPG industry: no lines ever. Leveraging recent advances in mobile technology, retailers are introducing new ways to pay.

In other retail sectors, mobile payment systems are already proving they may eventually eliminate traditional cash registers. At cutting-edge retailers like Apple, customers can walk up to any iPad-clad employee and pay anywhere on the shop floor. Many smaller retailers have adopted Square, a mobile payment service that expects to process $6 billion in payments this year. Starbucks and several apparel retailers are experimenting with similar systems.

The CPG industry is no exception to this modernization game, and has plans to go mobile as well. Walmart is testing a “Scan & Go” program that lets shoppers use their iPhones to scan products as they drop them into their carts. Customers then download their list at a payment kiosk. To expand this process beyond the world’s largest retailer, QThru, a smartphone app that works the same way, is present in Myers Group grocery stores, after a successful pilot program at a supermarket in the Seattle area.

As more shoppers embrace technology, mobile payments may do more than shorten lines. Apps capable of syncing to loyalty card programs and digital coupons may make it easier for customers to save. They could also serve as a differentiator for successful early adopters, and ultimately increase brand loyalty. Many shoppers will view updated technology that shortens lines and turns them on to savings as the ultimate in customer service.

Other shoppers may feel the retailer is fobbing them off to a machine and view mobile payments as yet another technology designed to cut costs by eliminating personal interaction.

Before investing in a mobile checkout system, retailers should evaluate their shopper base to gauge its potential for success. As not all shoppers are equally tech savvy, retailers should decide if a large enough portion of shoppers would prefer mobile payment options. SymphonyIRI’s DigitaLink research segments customers based on their digital habits, attitudes towards technology, and use of mobile devices. Applying DigitaLink or conducting similar segmentation can help make the decision to “mobilize.”

As I discussed in a blog about self-checkouts last year, each shopper has a preference as to how they pay. To prevent shopper confusion, until more shoppers embrace mobile technology, perhaps retailers’ best bet is to provide multiple checkout options.

What do you think?  How do you see this trend at play in retail environments? What is your retail outlet doing to embrace mobile technology?