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Well here is some fresh thinking: And at the end, I will tell you a better way to get results

By Dan Alaimo

Shoppers do not necessarily fit into the demographic boxes marketers have traditionally used to develop promotional and sales programs. When consumers are divided into three groups based on shopping behavior, the usual definitions of size of household, income and age do not apply any more.

As a result, retailers and marketers have to rethink what drives the consumer to buy, said Mack Hoopes, manager of shopper insights at Henkel’s Dial Corp. More specifically, what is needed today is a better way to help retailers understand how their customers prefer to shop.

That was the central finding of new research from Henkel Consumer Goods, Scottsdale, Ariz., which markets Dial and Purex among other prominent brands.  The company is now presenting the study results to retailers, Hoopes told CPGmatters.

“We are helping our retail partners identify the proper timing of communication, and the type of communication by category to shoppers so they can increase baskets, trips, revenue and profits,” he said.

The study was published in the spring, and retailers are seeing it for the first time this fall, so “we are fairly new at this,” and there are no measurable results yet. “It is getting a very positive reception from our retailing partners, and we are understanding together how we can execute behind this.”

The company hopes the study will help retailers attract new customers, and then communicate to them with clarity and precision. The research will enable retailers to “understand which categories attract them and which categories don’t attract them so they can be more efficient operators,” he added. At Henkel, “we think we have some brands that play into that, and drive some of those attributes.”

Hoopes presented the results of the study at the LEAD Marketing Conference recently in Chicago. Using a common market research presentation technique, the study named the three groups as: ‘Shoptimizers,’ ‘Mainstreeters’ and ‘Carefrees.’

Shoptimizers is “a group that takes a lot of time pre-planning their trips, reading ads, cutting coupons, organizing lists. They spend an inordinate amount of time doing that,” Hoopes said.

Mainstreeters is a “group that says, ‘I don’t have that kind of time’ or ‘I don’t want to spend that kind of time.’ ‘I’m just going to go to the store with my simple list. I trust the store and I’m going to buy what I have to.’”

Carefrees are not responsive to marketing messages. “They are not going to spend any time (preparing to shop), and they are the kind of people who buy what they want when they want to buy it. Regardless of pricing or promotions, they are just going to go in and get what they want,” he said.

But the most surprising finding of the study was that none of these behaviors can be predicted based upon current demographic information. “Regardless of how much you make, how old you are, or how many people in your household, you could actually be anyone of the three behavioral types.”

So as a result, “we have to rethink how we go into the marketplace because each of these groups responds to the stimuli that manufacturers put in front of them very differently. It requires thinking about how we are communicating with the shopper and at what point in their shopping trip – or shopping style – we are going to talk to them,” he concluded.

Retailers and manufacturers need to evaluate implications in four areas, according to Hoopes’ presentation:

• Retailer Positioning Realize that different groups frequent different formats. There are opportunities to appeal to certain segments and define their place in the market, while taking into account key behavioral tendencies of core shoppers.

• Retailer Segmentation The study suggests more relevant and impactful ways for store clustering. Retailers can determine what type of shopper they want, and develop marketing and merchandising strategies to appeal to them.

• Promotion Targeting Shopper segments react differently to various messages and promotions, so focusing on what the desired segments respond to can lead to more effective targeting.

• Product Distribution The study could lead retailers and other marketers to rethink the 100% ACV (all commodity volume) objective. Some stores or store formats may not need to carry some products depending on the purchase behavior of their    core shoppers.

In conducting the research, Henkel, led by the Dial team which includes Hoopes, analyzed over 300 categories from 2006 through 2008. The company is continuing to track these segments to determine how or if shopping behavior patterns change during 2009 and beyond. Besides Dial and Purex, other Henkel brands include Combat, Dry Idea, got2b, Loctite, Renuzit, Right Guard, Soft & Dri, and Soft Scrub.

Summing up, Hoopes said retailers and manufacturers need to take a closer look at “what drives their shoppers to buy: where they buy and the types of media or vehicles that would stimulate them to buy.”

Integrating the latest cutting edge market research tools that measure emotional response and linkage, to a top grade tool to measure buying habits and patterns, with regular buyer and non buyer surveys, will help you understand what makes consumers tick.

Here is something to think about from Target Marketing:

The more you know about your customers, the better you can target them with relevant offers in a meaningful way. Different types of data—attitudinal, behavioral and demographic—enable different targeting abilities based on preference, purchasing and lifestyle. You can use each of these data types alone to create a marketing advantage, but they are most valuable when used in combination. Here’s how:

1. First, survey your customers to learn their attitudes about your brand and your products or services. Ask questions such as:

* What marketing channels do you use to purchase?
* What types of promotions are more enticing?
* What do you think about our brand, products, customer service?
* How do you research products before buying?

Use the answers to create selection data points in your marketing database. If surveying your customers is not an option, enhance your customer database with third-party attitudinal data. The data may be broader, but it’s still valuable to determine how to approach customers with a differentiated offer.

2. Next, create attitudinal segments (clusters) of your customers using the attitudinal data from the survey responses. (Keep the responders’ names and physical addresses—you’ll need that later!)

Once you better understand the attitudes and opinions of customer segments, you can customize products as well as target customers with better messaging and more relevant offers. Customers are far more likely to respond to an offer that resonates with their individual preferences than to a generic offer.

Attitudinal data tells you how to talk to a customer segment, not who is most likely to buy. For that, you need demographic and behavioral data.

3. By appending third-party demographic data to your customer and prospect universes, you can project the attitudinal segments by building a segmentation projection model (discriminant analysis). You also may further define subsegments by using other demographic data such as proximity to your stores, presence of children or generation (e.g., gen Xers or baby boomers).

4. Once you assign the segments on your customer database, you can build models within each segment using behavioral data such as previous purchases or campaign responses to improve targeting. These behavioral models tell you which customers within each segment are most likely to respond and/or purchase. This final, critical step allows you to limit your marketing spend to just those customers and prospects within a segment who are likely to purchase.

Attitudinal data drives the segmentation, telling you how to communicate with your customers. Behavioral data and demographics improve the targeting to just those customers who are most responsive and likely to buy.

Used in combination, attitudinal, demographic and behavioral information also provides enhanced strategic insights and help you improve product positioning and market intelligence. Varied information used together leads to better targeting to grow customers and increase your bottom line.

The Data Combo in Action
Let’s look at a hypothetical example:

Company: Furniture Store
Segment: Home Fashionistas; values high-end products
Attitudes: Prefers to research online, buy in-store due to online shopping security concerns and touch/feel product before buying; also likes new styles and premium fabrics
Behavior: High-value purchases, high frequency, all purchases made in-store
Demographics: Suburban, within 20 miles of a retail location, high household income, female, ages 45-55

You may find an attitudinal segment within your survey that describes a customer always on the lookout for the latest designs and fabrics. Projecting this segment onto your customer base reveals other like-minded customers. Look at past e-mail campaigns to this segment to discover the behavioral, geographic and demographic attributes that drive purchases at a local store through e-mail response. Next, develop an e-mail campaign that mentions new products added to the collection or fabrics that she needs to see in person to drive her into the store. You can see that isolating one data type over another leaves some part of the segment profile unanswered. Your ROI will be negatively affected if you talk to customers with these attitudes who don’t live near a store, or who aren’t likely to purchase.

There are better ways to get to know customers and have a real time understanding of what makes them buy, and what determines where they buy.

You can use the insights and relationships to effectively influence that behavior in YOUR favor.

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