In-Store TV ... still a work in progess

An interesting article today in Advertising Age, discussing the lack of progress of  promotion via "in-store TV".
  
See here:  http://adage.com/article?article_id=146257 

Of particular interest to me was the tortoise-like rollout of the Walmart TV Network, which when it was launched 2 years ago, gave every impression of being a killer application of in-store advertising.  Several potential reasons were given for the tardiness, but to my mind, and beyond the Walmart situation, the 2 key elements to overcome are:

- the high cost of wiring a store
- the messages need to do the job in 3 to 7 seconds

... one factor boosts the costs, the other affects results/revenue

Clearly this new medium has bigger challenges than originally forecast, and even in a captive "network" like Walmart, it's no lay down.

         if you would like to see what we do visit our web site www.foreknowledge.ca

The ground is beginning to shake ...

 Traditional marketing theory tells us that the purchase is the successful outcome of consumer-directed messages that create awareness which begets interest, desire, and action.

What happens when that is wrong?  What does marketing do when it STARTS with the purchase?

So wrote blogger Joel Rubinson a couple of months ago
http://blog.joelrubinson.net/2010/07/what-if-it-all-starts-with-the-purchase/

Joel is more than "just" a blogger on market research, of course. Beyond having his own market research consultancy, he is also Chief Research Officer for the ARF (Advertising Research Foundation).  With a "bent" for advertising if you will and his background in consumer research, his several posts on the sales impact of in-store conditions may be a further eye-opener for more traditional (i.e. advertising focused) marketers.  In this particular post he goes on to say

... based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it.  In those cases, it all STARTS with the purchase and ENDS with awareness.  The purchase funnel is totally flipped.

The traditional ground really began to shake, of course, back in 2005 when P&G (usually North America's largest major media advertiser) was featured in a front page article in the Wall Street Journal about P&G's "First Moment of Truth" (shoppers making their buying decision in 3-7 seconds in the store) and the growing emphasis FMOT was playing on the marketing of its products.  While this isn't news for many people, for others to have P&G seemingly acknowledge that advertising wasn't the biggest factor in the consumer's final buying decision was a shocker. 

It's a slow process, but marketing mankind does evolve.

if you would like to see what we do visit our web site www.foreknowledge.ca

Update to Last Post on Loblaws

The link to the Halifax Chronicle Herald in the last post now requires registering and a password.  Here is a copy of the article.  Hope it is readable.

You Gotta Follow Up!

Pity poor Loblaws (LCL), Canada's largest grocer.

I’m sure you have heard of their recently announced National programme to highlight “locally” grown produce over the summer months.

See the Loblaws press release here
http://micro.newswire.ca/release.cgi?rkey=1808119777&view=62151-0&Start=0&htm=0

Grown Close To Home is, to me, a good idea that ties in to all those things Canucks hold dear (hard working, salt of the earth farmers, tasty fresh produce in at least part of the year), it ties in to the trendy “100 mile diet”, and it’s also an answer to those critics in the past who have complained that Loblaws carries "mostly" imported produce even in the summer. What’s not to like?

Well, wouldn’t you know it, someone in Halifax noticed some mislabeling, and incorrect signage. Seems some U.S. and Ontario produce was signed Atlantic and Grown Close To Home.

Here’s the article from the Halifax Chronicle Herald.
http://thechronicleherald.ca/Metro/1196845.html

And senior PR honcho David Primorac at Head Office in Brampton had to respond. Because this is an important National CORPORATE programme remember.

Now, is anyone in our industry actually surprised? I doubt it. I’m not a betting man, but I would be immensely shocked if that was the only LCL store across the country where the produce stocking and displays weren’t according to Hoyle. Everything we have ever done on special promotions, displays over the past almost 20 years, says somewhere between 40% and 60% of stores will be non-compliant in terms of timing, location, signage etc. for the promotion without special attention, follow-up, or checking. And this isn’t just a Loblaws issue … it’s a retail "I have too much to do and only have so many people issue".

The learning? No matter how important, no matter how high profile the promotion, if you want your programme (even LCL's head office) properly implemented … you gotta follow up and check!

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy (Part 3)

For previous posts on the McNamara Fallacy, see these links

forethoughtsonretail.blogspot.com/2010/07/mcnamara-fallacy.html

forethoughtsonretail.blogspot.com/2010/08/mcnamara-fallacy-part-2.html

Why do I call FMCG’s in-store information resources a “data desert’? If we can agree that a very significant portion of a product’s sales (let’s say 40%-75%) are highly dependent on in-store factors (shelf position, pricing, display activity, POS etc.) then why on earth are there so few reliable in-store measures?

We probably would all agree that we have a good handle on sales, and also distribution.

The first step is to measure whatever can be easily measured. This is OK as far as it goes.

But beyond this, with in-store measurements we start getting into very arid data sets.

Let’s look first at out-of-stocks and distribution voids. There are NO standard on-going measures here. Retail chains may use DSR (Demand Signal Repository) software to indicate o-o-s, but these are notoriously inaccurate for this purpose, and manufacturers/suppliers may have their field forces gather some of this information. I would strenuously argue that self-generated o-o-s is often self-defeating (more on this subject in an upcoming post). The accepted world wide average in FMCG for out-of-stocks is 8%. Distribution voids (sku is listed in the account, but generally not carried in the store) can double that figure. Imagine the amount of lost sales if your product is missing 10%-15% of its expected distribution because these facts are ignored and not properly addressed. Yet the industry does not adequately track these basic fundamentals. The old adage “you can’t manage what you don’t measure” certainly comes to mind.

The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading

And what about planograms (POGs) and planogram compliance? The industry spends multi-millions annually, developing, changing, and implementing POGs. These are highly sophisticated computer generated shelf sets that theoretically provide the best (greatest sales, greatest profit etc.) alternative product list and shelf placement for each category for that account (and in some cases, store) based on various criteria. Yet who checks if they are ever implemented properly (properly being a rather loose term in relation to POGs)? And who (and how often) checks that the POG remains implemented properly? The truth is … no one. But in fairness, POGs have been notoriously difficult, and hence, expensive to monitor. Yet so much time, effort, and money are continuously invested in them! Presumably their proper implementation and maintenance is critical to category sales and profit. So why does no one care?

The reasons, I suspect, are four-fold
1) in-store has traditionally been second class (so-called below the line)
2) with high key account penetration and high supplier fees, the expectation is that implementation should be a fait accompli
3) if not, what do we do about it?
4) and anyway, it actually can be quite expensive and somewhat complicated to do properly

The third step is to presume that what can’t be measured easily really isn’t important. This is blindness

So there we have it. The McNamara Fallacy for FMCG. In-store determines product success to a greater degree than any other factor, and the packaged goods industry has developed no effective way of competently measuring and tracking it.

The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide

And now we are ready to roll out the Shopper Marketing caravan into the data desert in a very BIG way. Perverse, yes?

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy (Part 2)

Let's start to explore the McNamara Fallacy as it might relate to FMCG (Fast Moving Consumer Goods), or at least my take on it. For the first part see my previous post.

forethoughtsonretail.blogspot.com/2010/07/mcnamara-fallacy.html



Robert McNamara responded to those who criticized him for being too numbers oriented in his book In Retrospect.

Critics point to use of the body count as an example of my obsession with numbers. “This guy McNamara,” they said, “he tries to quantify everything”. Obviously, there are things you cannot quantify: honor and beauty, for example. But things you can count, you ought to count. Loss of life is one when you are fighting a war of attrition. We tried to use body counts as a measurement to help us figure out what we should be doing in Vietnam to win the war while putting our troops at the least risk. Every attempt to monitor progress in Vietnam during my tenure as secretary of defense was directed toward those goals, but often the reports were misleading.

In Retrospect – The Tragedy and Lessons of Vietnam
Robert S McNamara pg 238

I don’t think I have any major disagreement with that … as Yankelovich adds … as far as it goes.

In FMCG, we have good stats on many things … best of all on the most important stat, consumer sales. But then, what? Since P&G came up with “the first moment of truth” a couple of years ago, all hell has broken loose in-store. Suddenly everyone in FMCG thinks “in-store” is important. No kidding? Despite a product’s in-store position being the MOST important factor in its sales performance, Marketing has tended to ignore, pooh-pooh, or cast aside in-store measures … that’s for Sales to look after. After all, positioning, advertising and all that is a lot more important (and a lot more sexy!). Except it isn’t (more important that is).

I am, of course, exaggerating to make a point. The focus has definitely NOT been on the in-store environment, until recently. Not to say there aren’t in-store measures (principally AC Nielsen’s causal data). But this is more a tracking measure, rather than a diagnostic tool. And yes, there are several Marketing Mix tools now available … good … use them. But in the main, the shop floor has been what I call a DATA DESERT. We'll explore the in-store data desert more in my next post.

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy

Packaged goods is one of the most sophisticated industries for marketing and sales practices. At least we like to think it is. But sometimes, we aren't so smart. Have you ever heard of the McNamara Fallacy? The term was coined by well known market researcher/pollster Daniel Yankelovich.

The McNamara Fallacy
The first step is to measure whatever can be easily measured. This is OK as far as it goes.

The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading.

The third step is to presume that what can’t be measured easily really isn’t important. This is blindness.

The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide


from Adam Smith’s book Paper Money

Robert McNamara, a former President of the Ford Motor Co., was US Secretary of Defense from 1961-1968 (Kennedy and Johnston administrations), and headed up the most powerful, most sophisticated armed forces this planet had ever seen. (He also wrote a very enlightening and mea culpa book In Retrospect: The Tragedy and Lessons of Vietnam which, if you are a history buff, I very highly recommend).

But back to the fallacy. It's all about The War in Vietnam, and the use of body counts as a proxy to measure progress in a war without battle lines and a conventional enemy. From today's vantage point, it seems so clear now. In the 1960s, it was not so cut and dried.

What has the McNamara Fallacy got to do with Packaged Goods in the 21st century? More next time.

... to be continued

if you would like to see what we do visit our web site www.foreknowledge.ca

Welcome to Forethoughts on Retail

This blog is going to be about things “retail”. Mostly about how consumer products “do” at retail, or what retail is doing to “consumer products”. It will be, obviously, my “view” of things … my perspective on what I see happening. Based on 35 years in retail marketing research, and several years in retail/hospitality before that.

Yep … I’m an old fart. With a brain. And a memory, an attitude, and a need to explore the jungle that is retail. Why don’t you come along with me? And bring a mental machete, so together we can chop through a lot of the vines and underbrush BS.

if you would like to see what we do visit our web site www.foreknowledge.ca