Shop Talk breakfast in Malaysia
On the 27th of September 2012, Kantar Worldpanel Malaysia held the first of a series of Shopper events called Shop Talk breakfast seminar with the aim to build the reputation of Kantar Worldpanel as a Shopper expert and trusted advisor in the FMCG industry.
Three experienced speakers embraced the event to address some of the commonly faced challenges in the industry and covered the following topics:
- How Brand Grow by Marcy Kou, CEO Kantar Worldpanel Asia.
- Addicted to Price Promotions by Rachel Kennedy from the Ehrenberg-Bass Institute.
- What do Malaysians Look for in Every Shopping Trip by Andrew Foster, Regional Expert Services Director, Worldpanel Centre of Excellence.
A very commonly asked question is ‘what would be the key element to continue my double digit growth?’ and according to Paul Murphy who has spent the last 25 years analyzing FMCG behavioral data, it is through continuously attracting more people. But how?
Very commonly we tell clients that to grow their market share is through growing penetration but can we be more specific? Brands grow principally in one of four ways, i.e. through better/wider distribution, better value for money, successful NPD creating new usage occasions, and being trusted by more people.
But is it easier to drive more people or drive increased consumption to a brand? Using Worldpanel data, there are 2 key learnings about shopper behavior i.e. people change brands a lot (even within Detergent which is a mature category, 57% of shoppers will switch brands at the next purchase), and brands with more consumers have more loyal consumers.
Switching is a normal consumer behavior, we can’t stop people leaving – we can only keep attracting them, the same things that attract a consumer to a brand will keep them within the brand, and successful brands look at all initiatives in terms of their ability to drive trial. The conclusion moving forward is that penetration drives continual growth and we will need to take the lead with key customers, tell them how they are going to win, have more efficient promotions, more significant NPD launches and to be known and trusted by more people.
But price promotions are addictive! They give instantaneous sales uplifts, retailers demand them, and it helps to reach volume targets. But, there is no guarantee that they will make you more money! The volume increase comes at a cost of selling a large amount of discounted volume that would have been sold anyway at normal price. It also steals full-price sales from other brands and does not necessarily work at increasing profit.
Can price promotions help to induce brand trial? Studies show that price promotions are mostly bought by people who are already buying the brand and only drive volumes in periods they are runned. Promotions can also lead to stockpiling, competitor retaliation and entrenching promotions in the category.
Manage promotions well to drive short term volume sales, but long term growth is through penetration reach. How?
- Media. Continuous advertising (not campaign bursts).
- Consistency. Fewer variations of ads, more consistent advertising, and consistent usage of distinctive brand assets.
- Packaging. Use distinctive brand assets on pack to make it quick and easy for shoppers to choose.
- Targeting. Appeal and meet the needs of as many category users as possible.
Every shopping trip?
We look at two measures which are, what do most shoppers buy, and what do shopper buy most often to answer the question ‘How many occasions in a year does a category or brand actually reach the consumer with a purchase?’.
What is in the Malaysian shopping basket? 70% of all packaged FMCG baskets will contain at least one of the following categories = eggs, biscuits, sauces, snacks, noodles, cooking oil, health food drink, detergent, coffee, toothpaste, liquid milk, stocks & seasoning and shampoo.
So lots of shoppers buy eggs and biscuits, what’s the implication for me, the manufacturer might ask? Examining basket adjacency becomes important because looking at things that share the basket with presents a route to reaching a lot more buyers. For example, leading packaged FMCG combination to occur in a Malaysian shopping basket is Eggs with Flour, as well as Biscuits with Health Food Drinks. Purchase interactions do matter in-store therefore it’s important to get in-store layout adjacencies right; use partnerships to help win more shoppers as the ultimate objective is to get more potential trips and reach more buyers! Andrew then zoomed into the Laundry category to provide a real life case study of how shoppers make decisions at the shelves to reach more buyers.
We discovered that the purchase decision for this category is first split between Premium and Mass. For Premium, the decision then splits by Premium Powder large or small pack, Liquid large or small pack. For Mass, purchase decision goes by laundry bar, small sized powder or standard low cost powder.
Therefore, if we want to reach 100% of category buyers, the product range has to reach each of these 7 decisions. What if there are only 7 SKUs provided by a manufacturer? They reach only 3 out of 7 decisions and attract only 54% of all buyers. But if the range is adjusted to satisfy 2 more decisions, we generate an incremental spend of 50 million Ringgit and reach 63% of all shoppers! Andrew left the audience with 2 messages:
- Category partnerships and the right instore adjacency can reach more buyers.
- Improving the range to meet more decisions can reach more buyers.
Overall feedback from clients was positive and created many more questions on the topic of price & promotions especially in the area of promotional mechanics, managing customer relationship with retailers, more understanding of consumer buying behavior and most importantly, created more awareness surrounding Kantar’s shopper expertise.
More than half of all attendees rated the breakfast meeting as better than other agencies and said that working with Kantar Worldpanel will give them a big advantage in the area of retail and shopper compared to other research providers. We had Reckitt Benckiser quoting the phrase that ‘penetration drives growth’ at their category presentation the following day!
This event truly inspired us at Kantar Worldpanel Malaysia to continue to aim for excellence in our relationship with ou partners, maximizing our Curiosity and Imagination in developing new ideas with clients, using Precision and Courage in our recommendations to be the Trusted Advisor we aim to be.
The aim of the event was to build the reputation of Kantar Worldpanel as a Shopper expert and trusted advisor in the FMCG industry.
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