In s i g h t s t o d a y f o r t o m o r row’s d e c i s i o n s

Spring 2005

Winning Retail Strategies Start with High Value Consumers

Ethnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New Opportunities Jack-in-the-Tiffin-Box: Unconventional Paths to New Product Idea Development Winning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized Manufacturers Canada’s Aging Boomers: A Golden Opportunity

CONSUMER INSIGHT:

For More Information

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Understanding Consumers, Completely.

In every issue…
Volume 7, No. 1 Business Tools Featuring: ACNielsen Retail ACView CBP—Category Business Planner Spectra Distribution Builder Homescan Shopper Trends ACNielsen Target Track 2.0 TDLinx Location Information Management Homescan New Product Alert Homescan Shopper Optimizer Spectra Advantage Canada LiquorTrack Spectra Category ShareCast Spectra Targeted New Customer List Publisher ACNielsen Editor Mark Chesney Contributing Writers Todd Hale, Senior Vice President Consumer Insights, ACNielsen Chris Hammer Senior Product Manager U.S. Marketing John Skolnicki Associate Client Director Client Service Sangeeta Gupta Subhransu Rout Seemeen Khan ACNielsen ORG-MARG Steve Kapinus, Director Spectra Business Development Design & Layout Blue Lemon Design Editorial Board Joe Bucherer Josie Cirasella Laurel A. Kennedy Marketing/Communications Kathy Mancini Renee O’Malley Danell O’Neill Slack Barshinger & Partners

Copyright © 2005 ACNielsen. Printed in USA. All rights reserved. ACNielsen, ACNielsen with globe design, ACNielsen Answers, ACNielsen Retail ACView, ACNielsen LabelTrends, Answers Interactive, CBP, Consumer Direct, DecisionSMART, Homescan, RDH and Scantrack are trademarks or registered trademarks of ACNielsen (US), Inc. Spectra, the Spectra logo, Spectra HispanIQ, Spectra InfiNet, Consumer 360 and the Consumer 360 logo are trademarks or registered trademarks of Spectra Marketing Systems, Inc. TDLinx and the TDLinx logo are trademarks or registered trademarks of Trade Dimensions International, Inc. Other brand, product or service names are trademarks or registered trademarks of their respective companies.

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Winning Retail Strategies Start with High Value Consumers
High value consumers no longer declare allegiance to a single channel for life. The battle for these sought-after shoppers is difficult. Like any good battle plan, success relies on the quality of field intelligence and the ability to deploy assets for maximum impact. The Food Marketing Institute (FMI), along with ACNielsen, conducted a landmark research study of U.S. households and how they shop for food.

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Ethnic Marketing by the Numbers: Integrating Diverse Data Can Reveal New Opportunities
The ethnic makeup of the U.S. grows by about 2.5 million people each year. Today, Hispanics and African-Americans comprise more than a quarter of the total U.S. population. With this demographic shift comes greater economic clout for minorities. Manufacturers of consumer packaged goods must increasingly appeal to minority groups and reflect their cultural preferences to succeed.

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Jack-in-the-Tiffin-Box: Unconventional Paths to New Product Idea Development
To grow, many companies today focus on new product development. Under the best of circumstances, product innovation is a challenging activity. The challenge grows when the targeted consumer is a child. How, then, can companies gather information to guide product development efforts, especially as they relate to children? In a recent effort, ACNielsen ORG-MARG researchers addressed this issue using an innovative approach to gather credible, useful data.

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Winning the Case for Better Distribution: Optimizing Distribution for Mid- to Small-Sized Manufacturers
Everyone knows the best packaging, best quality of food, and best advertising campaign gets you nowhere without distribution. With competition fierce on retail shelves, small manufacturers need insights that can help prove why they should be there. By gaining distribution in key retailers, the payoff can be huge.

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Canada’s Aging Boomers: A Golden Opportunity
They aren’t babies anymore. The brash, postwar generation that once lived by the anthem “I hope I die before I get old” is getting old, and is still the most influential consumer group in Canada. These baby boomers will continue to set purchasing trends for at least the next 20 years, which represents a golden opportunity.

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Tim Callahan President ACNielsen North America

A Drive for Innovation
Cultural Change. It has become a popular business term. When companies talk about globalization, branding, organizing, resourcing or outsourcing, we hear about it. Companies that are acquired (or divested) go through it. We have also seen consumer demographic shifts, right here at home, that speak to cultural change. And all of it impacts our business. At ACNielsen, we are also continuing our cultural change to meet the needs of you, our clients. Our recently completed Consumer 360 conference represented a key milestone in our journey, as we shared the ACNielsen and VNU vision for the future of our industry-leading services. Just one year ago, we unveiled our Homescan MegaPanel, the industry’s largest consumer panel. Today, it has expanded to over 90,000 households and is ahead of schedule for completion. We also introduced LabelTrends to understand product health claims at the shelf. Consumer Direct, DecisionSMART and Retail ACView are other new and exciting services now available. Spectra Marketing has also launched Targeting Plus, Spectra HispanIQ, Spectra InfiNet, and Category ShareCast, to name a few. The conference also served as a reminder to me just how much the industry has changed and how we all have to continually work to stay ahead. We will continue to be consumer-centric, comprehensive, technologically open and flexible. Our strategy will be sharply focused on the industry’s most challenging marketing and sales issues, including: • Complete coverage of consumer behavior at all levels of the marketplace— in the store, at home, on-the-go and online—along with measurement of media consumption; • Deeper knowledge of consumer attitudes and preferences, built on expanded consumer panel research, customized research and other sources; • A practical and action-oriented focus on the specific marketing and sales issues that have the greatest impact on growth, including marketing ROI, new product development, segmentation and targeting, assortment, pricing, promotion, supplier management, consumer management and in-store execution; • New data harmonization and business intelligence capabilities to integrate information from a wide range of sources and organize it effectively and accurately against specific marketing and sales issues;

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At ACNielsen, we are also continuing our cultural change to meet the needs of you, our clients.

• Web-based decision-support services that place information and analytical tools in the hands of the right people at the right time in the right place; • Advanced modeling & analytical services that deliver effective and easy-to-use tools for analyzing marketing initiatives and accurately forecasting the impact of alternative approaches; • Assertive, proactive client service that helps clients challenge assumptions and develop creative solutions, based on a strong blend of broad consumer marketing knowledge with deep expertise in specific business issues. At the conference, Steve Schmidt, ACNielsen’s president and CEO, put it best: “Our job, pure and simple, is to help the industry grow.” This is easily said, but in today’s complex marketplace—driven by diverse, ever-changing consumers—it takes focus and commitment. Our strategy is far reaching, but the associates at ACNielsen are confident and energized. Our goal is to match your drive for innovation in marketing with an equally intense drive for innovation in information services. We will continue to help you identify your best opportunities, focus your spending and reach the right consumers, at the right time, in the right place, with the right messages and incentives. To do that, we will:

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Listen—to your needs, to your issues, to the things that are keeping you up at night; Learn—your business, your challenges, and how we can help solve them; Leverage—the global power of One VNU to provide you the insights and expertise unmatched in the industry, and; Lead—the industry, by taking on the issues and initiatives that will continue to supporting your business. Listen, Learn, Leverage, Lead. This is our focus and commitment to you and the industry.

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Winning Retail Strategies Start with High Value Consumers
Todd Hale, Senior Vice President Consumer Insights, ACNielsen

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lthough cinematic in scope and intensity, there is nothing entertaining about the battle between grocery and other formats for high value consumers who no longer declare allegiance to a single channel for life. Like any good battle plan, success relies on the quality of field intelligence and the ability to deploy assets for maximum impact.

Key Learnings
Seven areas of learning emerged from the research. Some findings were surprising. Others reinforced historical trends. Still others were encouraging signposts for predicting consumer behavior. All provide a fact-based foundation that retailers, wholesalers and manufacturers can use to develop consumer-centric strategies to woo and win high value shoppers. 1. Grocery Trip Erosion Continues. Everybody wants a piece of the top-spend consumer. Grocery’s longstanding trip frequency advantage was based on three factors: proximity, proliferation and product set. Now that competitive formats have mounted aggressive expansion campaigns and awakened to the pulling power of fast-moving consumer packaged goods, those traditional Grocery advantages have diminished. Look for an increasing number of trip diversions to nonGrocery channels as consumers combine multiple trips into a single stop, picking up packaged goods at the dollar, home improvement or office supply store. 2. Shopper Focus Is a Must. It’s a case of lifestage strategies trumping monolithic marketing. The days of lumping customers into one homogeneous segment are over. The age of lifestage marketing is upon us, and shopping preferences reflect the progression of family formation from young singles to maturing families to older singles. Household composition surfaced as a major driver of channel shopping and category buying dynamics. Different lifestage shoppers exhibited different shopping and buying habits, calling for a diversified set of marketing and promotion strategies. Know thy customers’ wants and needs, and leverage frequent shopper programs to target topspend shoppers and specialty sub-segments such as the elderly and ethnic groups.

Setting the Benchmark
One of the most powerful allies supporting the 46,000 U.S. retail food stores in their crusade for food basket dominance is the Food Marketing Institute (FMI). In keeping with its charter to conduct programs in research, education, industry relations and public affairs, the FMI selected ACNielsen to “conduct a landmark research study of U.S. households and how they shop for food. This study is expected to create a basic benchmarking tool regarding consumer shopping behavior and attitudes.” The result of that initiative is the FMI/ACNielsen study Winning Strategies for Your Most Important Shoppers, which will be summarized in the pages of Consumer Insight magazine in a two-part article. This, the first installment, discusses research design, objectives and topline findings. Part two will contain a more granular discussion of store universe trends, alternative channel development, category trends and consumer-centric retail opportunities.

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Research Objectives
The purpose of the study was to demonstrate how retailers can leverage both behavioral and attitudinal consumer insights to create competitive advantage and differentiate offerings. Research objectives include: • Examine how shopping behavior differs across segments. • Determine the ways demographics and attitudes impact where and how consumers shop. • Detail the competitive arena for retail shopper segments, including the mix of channels shopped. • Identify the departments, categories and services that appeal to the unique needs of different retail shopper segments.

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3. Cross-Channel Shopping Opportunities. Two trends headlined in the business press these days afford intriguing opportunities for retailers: co-opetition and acquisition. Coined by Ray Noorda of Novell, and championed by professors at the Harvard Business School and Yale School of Management, the idea of co-opetition is simple: collaborate with the competition to succeed. It’s a spot-on approach for Grocery stores, given their high degree of interaction with other channels. In the case of Specialty Retailers like electronics, home improvement or office supply stores, Grocers could pursue store-within-a-store concepts to establish a satellite operation without investing in a capital-intensive Greenfield operation. Another alternative would be to propose joint promotions that benefit both parties like specialty retailer gift cards, sampling stations and cross-shopping reward programs. Either way, strategic co-opetition can strengthen grocery sales while diverting trips from poaching formats such as Mass Merchandisers or Warehouse Clubs [See chart 1].
Chart 1: Alternative Channels Important to Grocery
Trips per shopping household Top Supercenter Hardware/Home Improvement Liquor Pet Bookstores Stationery Electronics Office Supply Toy Stores 8.1 5.6 4.1 3.9 3.5 3.0 2.9 2.5 Top Hi/Lo 8.4 7.3 5.4 5.0 4.5 3.5 3.4 3.0 Top EDLP 8.8 6.5 4.7 4.0 3.7 3.4 3.0 2.6 Top Specialty 8.9 6.6 6.2 4.4 3.7 3.5 3.5 2.8

Assortment has been a pivotal tactical advantage for Grocery channel, but given the growth in valuepriced/reduced assortment retailers (like Wal-Mart, Club Stores, Save-A-Lot and Aldi), one must question the conventional wisdom of this practice. Increasing assortment above 320 items yields an incremental 25% sales gain for Hi/Lo Grocery vs. just 8% for Supercenters and 12% for EDLP formats. The challenge: optimizing assortment for maximum pull and repeat business without carrying excess inventory. One approach would be reducing center store assortment while beefing up natural and organic offerings, expanding the entertainment and home goods sections. 5. Attitudes Matter. Want to categorize customers by channel segment? Use behavioral data. But if you want to strategize how to differentiate offerings, examine shopper attitudes. For this section of the study, panelists answered a battery of questions to ascertain attitudinal differences toward grocery shopping. The wide-ranging scope covered preferences for everything from free-form to list shoppers, from scratch to RTE meals, from the promotional indifferent to ad sensitives, from shopaholics to the shopping challenged. Enough differences surfaced by format to suggest clear, attitude-driven competitive opportunities. Some examples: Hi/Lo Grocery retailers will find their top-spend shoppers highly responsive to ads and frequent shopper programs— more so than other channels. It will come as no surprise to EDLP formats that their budget-minded customer base uses price as the dominant selection factor. Specialty Grocery top-spend shoppers weighed in with high scores on questions about healthy foods, home cooking and scratch meals. Supercenter top-spend shoppers opt for one-stop shopping at large properties. 6. Food First—Perform on the Perimeter. Talk about a good news/bad news scenario. While Grocery earns high satisfaction scores on top-ranked selection attributes such as convenience, weekly specials, fresh produce, fresh meat and wide selection, it remains highly vulnerable to incursion by price/value-oriented operators on the very important good value and low price criteria. As competitors push forward with aggressive expansion campaigns, the current strongest point of difference for grocery—convenience—will begin to dissipate. Weekly ads

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Source: ACNielsen Homescan, Total U.S.—52 weeks ending 6/26/04

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Retailers might borrow a page from the manufacturer playbook (think P&G and Gillette) and consider mergers and acquisitions as an alternative strategy for fending off increasingly ravenous competitors. Operating advantages associated with volume buying clout, and an expanded footprint boosting brand presence and convenience, are just two of the potential benefits. 4. Trip Capture Opportunity. Grocery’s legacy strength in food remains a powerful force for offsetting trip decay. Top-spend Supercenter customers (defined as the top one-third of Supercenter shoppers based on their annual dollar expenditures within this retail format) head for the Hi/Lo Grocery frequently when looking to shop the dairy, deli, fresh produce or meat departments.

and frequent shopper programs serve as a means to distinguish grocery formats, but at a cost prohibitive to most EDLP retailers. The lesson: focus on what grocery does best—food—while providing a diverse assortment appealing to top-spend shoppers [See chart 2].
Chart 2: Areas of Strength Aren’t Driving Satisfaction and Satisfaction With Price/Value Is Very Low
Threat as price/value formats become more convenient % Responses from Attributes most Extreme Top Grocery Important in Satisfaction with Shoppers Grocery Store Selection Attributes Fresh Produce 45 33 Good Value 45 22 Fresh Meat 43 30 Weekly Specials 38 35 Low Prices 37 18 Convenient 35 52 Wide Selection 32 30 Source: ACNielsen Homescan

Demand was underwhelming for additional services which included drive-through pharmacy, in-store sampling, on-site coffee shop, gas pumps and cooking lessons. Adding these services to the format mix might attract a marginal number of new customers, but prove to be an excellent way to cement relationships with loyal shoppers by retaining their interest and patronage with intriguing new offerings. The cost-benefit equation would evaluate improved customer satisfaction and competitive differentiation benefits against incremental cost.

Survey Design
Three primary data sources were used to acquire the necessary input for the study: ACNielsen Homescan Consumer Panel, ACNielsen Strategic Planner service and the ACNielsen Wal-Mart Channel service. Behavioral (purchase) information was garnered from the ACNielsen Homescan Consumer Panel, which provides longitudinal buying and shopping information for 91,500 U.S. households. ACNielsen Homescan information encompasses purchase date, shopper demographics, retailer/channel shopped, frequent shopper card usage, payment method, coupon source, trip purchase amount, and for each UPC, the number of units purchased, price paid and deal type for each household shopping trip. Attitudinal information was captured by fielding a 38 point questionnaire that investigated how ACNielsen Homescan panelists: • felt about the grocery shopping experience, • defined and shopped the store universe, • ranked store selection characteristics such as size, assortment and perimeter departments, • responded to price and promotion strategies such as feature ads, frequent shopper cards or everyday low pricing (EDLP), • viewed meal alternatives including home-cooked meals, readyto-eat prepared meals and away-from-home meals,

7. Differentiate, but Don’t Forget Price/Value. Value pricing is here to stay, with a vengeance. The trick is finding the balance between spending on differentiating programs and services, without compromising the ability to price competitively in key categories. Hi/Lo Grocery and Supercenters registered the highest availability scores across the most services (prepared food/meals, fresh flower department, banking/ATM, instore pharmacist, longer store hours, natural/organic food section and in-store film development). Many services were available at fewer than six in 10 outlets, leaving room for geographic extension [See chart 3].
Chart 3: Interest in Additional Services Varies by Format— Most Do Not Appeal to Large Percentage of Shoppers
Most Requested Services Ranked within Top Hi/Lo Grocery Shoppers % Responses from: Self Check-Out Lanes In-Store Samples Coffee Shop On-Premise Gas Pumps Video Rental Drive Thru Pharmacy Longer Store Hours In-Store Cooking Lessons Pick-Up/Deliver to Car Service Dry Cleaning Bulk Candy & Nut Section Top Hi/Lo Grocery 16 14 13 13 12 11 11 11 10 10 9 Top EDLP Grocery 18 13 11 10 12 11 11 11 10 9 8 Top Specialty Top Grocery Supercenter 20 19 15 9 9 6 5 12 11 6 6 7 11 12 14 15 15 8 10 13 11 12

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• rated overall satisfaction with services provided by the store shopped most often for groceries. Additionally, panelists were asked to select the three most important attributes influencing the “where to shop for groceries” decision from a list of seventeen pre-determined options ranging from fresh meet, to good service, low price and convenient location. For the store shopped most often for groceries, panel members provided satisfaction levels with that store’s delivery against the same seventeen attributes.

Red indicates: Differentiation and Shopper Satisfaction Opportunities Source: ACNielsen Homescan

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Ethnic Marketing by the Numbers
Integrating Diverse Data Can Reveal New Opportunities
Chris Hammer Senior Product Manager U.S. Marketing John Skolnicki Associate Client Director Client Service

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he ethnic makeup of the U.S. has begun changing markedly. The total population grows by about 2.5 million people each year, led recently by a consistent, steady rise in the number of ethnic minorities. Today, Hispanics and African-Americans comprise more than a quarter of the total U.S. population, and their numbers continue to grow. If current trends continue, by 2050, close to half of the population in the U.S. will be non-white, and nearly a quarter of it will be Hispanic. With this demographic shift comes greater economic clout for minorities. In the U.S., the combined buying power of Hispanics, African-Americans and Asians now exceeds one trillion dollars—an all-time high—and is expected to keep climbing. Furthermore, many of these minority consumers are young. About one-third of all Hispanics and AfricanAmericans in the U.S. are currently age 18 or under.

For manufacturers of consumer packaged goods (CPG), these demographic trends add up to a timely marketing opportunity. Companies must increasingly appeal to minority groups and reflect their cultural preferences to succeed. And the time to build such brand loyalty is now, as this growing force of young consumers begins maturing and expanding its buying power. But how? The discipline of ethnic marketing, while established in the U.S., is still relatively new. As such, pursuing it presents a number of challenges for CPG manufacturers. For example: • Data sources on ethnic buying habits tend to be fragmented and segregated, making it harder to compose a well-rounded picture of the minority consumer and a strategic plan to reach him/her.

• The information infrastructure for tracking ethnic buying habits is not as robust as the tools are for studying general market patterns. To manufacturers, that means not always being able to track the success of a marketing plan focused on minorities and not knowing if they’re implementing the right type of ethnic marketing. • We lack an abundance of business divisions dedicated to multicultural business, which can make it too difficult to gain support and funding for addressing ethnic marketing needs.

• Picking the right category segments, or drilling down to the appropriate category/brand level to identify opportunities among items that are important to Hispanic consumers. • Picking the right marketing mix, or putting together the right product with the right promotion to create a winning ethnic brand. • Picking the right execution strategy for the right place, or knowing how to reach the consumer you seek in the store where he or she shops.

Integrated Data: A Source of New Insight
A case in point comes from a VNU client case study. Seeking to expand incremental sales of laundry care products to Hispanic consumers, the client wanted help in understanding where and how best to do it. For advice, it turned to VNU, parent company of ACNielsen. As an industry leader in market research, VNU supports about 9,000 clients in the CPG sector as they address complex sales and marketing issues. The traditional approach to ethnic marketing has been to take fragmented approaches to target the ethnic consumer, evaluate ethnic consumer opportunity, execute an ethnic marketing program and track the return on investment of implementing the program. To date, it has been difficult to find data integrated throughout this data process, and thus, it has been a challenge to gain a fully nuanced picture of ethnic consumer behavior. VNU’s insight into ethnic marketing has been to adopt a “One VNU Approach” that integrates data from multiple sources across our organization, including ACNielsen Target Track, ACNielsen Scantrack, ACNielsen Store Level Data and Spectra HispanIQ. The result, for this client as well as others, has been a deeper understanding of the ethnic marketplace and greater success in appealing to it. Successful ethnic marketing focuses on getting four things right—namely: • Picking the right geography, or studying an area where the relationship of the market to the retailer creates opportunity.

Doing Laundry in L.A.
Nearly half (48%) of the Hispanic population in the U.S. today resides in just six cities—Los Angeles, New York, Miami, Houston, Chicago and San Antonio. In each of these metropolitan areas, Hispanics comprise a significant percentage of the total population base. In analyzing Hispanic consumption of laundry care products for our client, VNU decided to focus its study on Los Angeles. The city is home to a large and very diverse Hispanic population that represents more than 45% of the total market. To find opportunities, we started by identifying retailers with the greatest share of the Hispanic market for laundry care products on the premise that category success for key retailers would be vital to overall category success in the market. In Los Angeles, one retailer holds 40% of the Hispanic laundry care product market. VNU focused its attention on understanding this retailer’s results. The next step was to identify the laundry care products preferred by Hispanic consumers. VNU wanted to know: Which brands are underdeveloped and which offer the best opportunity? Gathering information on consumption by minority group is a growing strength of ACNielsen. Using its Scantrack Retail Measurement Service, the company drills down into sales data by store and ethnic group, leveraging all Scantrack stores in the market. The resulting “snapshot” lets ACNielsen compare Hispanic buying patterns against total market performance.

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The data showed that Hispanic consumers prefer heavily scented laundry care products in powder form. Superimposed on its data for retailers, VNU saw these preferences held true by store as well as by total market. The second area of analysis was consumer targeting. To understand the Hispanic consumer in L.A., VNU used data to map out a continuum of buying behavior across the total market that it calls “acculturation segmentation.” At one end of the continuum are Hispanic shoppers who behave most like the market overall. This group is considered “acculturated.” At the other end are those whose preferences show a strong cultural influence. They are the least acculturated. In the middle is the bicultural Hispanic segment. Accounting for 53% of all Hispanic adults in the U.S., this group demonstrates a blend of buying patterns. The segmentation acts as an integration platform for linking databases on product consumption from Simmons, Scarborough, TDLinx and Spectra Store Trade Area. When VNU looked across the data, it saw that Brand A, the market leader in laundry care products among Hispanics, had been losing dollar share for the past year and was an underdeveloped brand. Furthermore, its sales slide for Retailer A mirrored a trend for the total market [See chart 1]. A gap was emerging when VNU looked at the market through all these lenses; namely, that Brand A was missing an opportunity to capture Hispanic dollars in this product segment of heavily scented laundry care products. But how could the gap be closed?

Measuring the Marketing Mix
To answer that, VNU needed data in one more area: Hispanic marketing execution. Knowing which UPCs offered the greatest opportunity for Hispanic sales, which stores to target, the demographics and psychographics of the customers frequenting those stores and the best promotional vehicles for reaching those customers could help the client decide where to focus their efforts. Further analysis of the databases revealed that Brand A was overdeveloped in heavily scented UPCs. It had more than its fair share on Retailer A’s store shelves, but was capturing fewer sales than could be expected from the segment. It made sense to focus on just the SKUs with a successful track record to close the gap. For the retailer, that share gap represented $2.2 million in incremental sales that were possible [See chart 2].

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Chart 2: Brand A Share Gap Represents $2.2MM Opportunity for Retailer A • Hispanic Total Category sales=$28.2MM –Each share point reflects $282K opportunity • Existing share gap=8.1 share points 31.8%

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23.7%

Chart 1: Heavy Scent Powder Is Preferred Form Among Hispanics
Percent of Dollars, Heavy Scent and Heavy Scent by Form

44%

46% 42% 36%

Retailer A

Retailer A Hispanic

Category Dollar Share
Source: ACNielsen Target Track, 2004

29% 25%

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The last step in successful ethnic marketing is execution— knowing which stores to target, which customers to approach and how best to reach them. VNU’s analysis identified the top 50 stores of Retailer A with declining brand sales. It targeted an additional 50 stores with heavy Hispanic
Laundry– Heavy Scent Liquid– Heavy Scent Powder– Heavy Scent

Total Market
Source: ACNielsen Target Track, 2004

Retailer A

penetration [See chart 3]. Focusing on these two areas will help realize nearly $2 million of the $2.2 million in potential sales. Further analysis revealed that Feature and Display delivers the best promotional lift among Hispanic consumers, and Brand A’s promotions are less effective than the category average.
Chart 3: Focus on Underperforming Brand Stores Uncovers $694K Opportunity
Implementing right assortment/promotion can result in an 8 share point gain Current Brand Share 18% 11% 20% 26% --20% New Brand Share 26% 19% 28% 34% --28% Brand $ Increase (K) 17.6 2.3 10.4 15.1% --9.3 694 Percent of Category Dollars 0.3% 0.0% 0.2% 0.3% --0.2% 13%

Business Tools for Retail Tracking
Trendable ACV Market Share and Store Count Information
Retail ACView™ is a revolutionary trendable ACV market share and store count reporting tool, providing retailers with an easy and reliable means to measure competitive market share for yourself and your competitors over time. Retail ACView offers the industry—for the first time ever—trendable, account-level market shares modeled to reflect total store sales across the full food, drug, and mass channels, as well as account-level store counts incorporated from TDLinx. TDLinx is the industry’s premier source of comprehensive coverage of retail location information. The Retail ACView suite of reports is accessible via the secure ACNielsen Answers® web portal and delivers: • Executive Summary Scorecards that provide performance results and insights at the total market and individual custom trade area levels. These quarterly scorecards are full of insightful charts and graphs that highlight key competitors’ performance, emphasizing ACV market shares and store counts, county-level trends, and competitive threats. With this level of information, you are able to quickly isolate organic from new store growth, quantify competitive threats, and identify the relative importance of certain geographic regions to your business. • Detailed reports that offer granular views of ACV market share, store count and cross trade area trends. These reports help you quantify seasonal and channel trends with previousquarter and year-ago comparisons, identify market entrants and high-growth competitors, and isolate promising or vulnerable trade areas. The reports are designed to reflect the way you evaluate your business, and allow you the flexibility to obtain market insights by: • Channel Type: Choose any combination of food, drug and mass; club and dollar are also available for store counts. • Market Type: View the market using industry-standard definitions (DMAs, MSAs, or ACNielsen SMMs) or your own custom trade areas. • Time Period: Analyze eight quarters of trendable history and gain visibility into long- and short-term drivers of share change. If you are a retailer and wish to learn more about Retail ACView, please contact your ACNielsen Retail Services representative or visit our web site at http://acnielsen.com. http://acnielsen.com/ci or call 1.800.988.4ACN

Store 1 Store 2 Store 3 Store 4 -----Store 50 Total

Source: ACNielsen

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Data from Spectra HispanIQ gave VNU a demographic breakdown of the Hispanic residents in the area defined by that store cluster—whether they spoke more Spanish or English, where they fell on the acculturation continuum, their education level, the size and age of their families and their media preferences [See chart 4]. From that analysis, our client could begin to craft the messages and promotions to reach those audiences. Once the marketing plan is implemented, the client can use Target Track to evaluate return on investment of the funds dedicated to this effort.

Chart 4: What Does Retailer A’s Hispanic Consumer Look Like?
Less Acculturated Psychographics Shop at stores (Opinions that stock my and Media) favorite brands Listen to radio for news updates Read newspapers on a regular basis Enjoy watching kid TV shows BiCultural Convenient location important Use Internet for shopping information Often notes ads at bus stops Enjoy watching kid TV shows More Acculturated Shop at specialty shops Use Internet for shopping information Magazines are a source of information Pay attention to ads in movie theaters

• Least Acculturated Hispanic consumers shop at stores that they know carry their favorite brand. • Radio and newspapers, not the Internet, are the best way to reach Least Acculturated Hispanics. • Both Least Acculturated and Bi-Cultural Hispanics enjoy kids TV shows. Source: Spectra HispanIQ

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Jack-in-the-Tiffin-Box

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Unconventional paths to new product idea development
Sangeeta Gupta Subhransu Rout Seemeen Khan ACNielsen ORG-MARG

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o grow, many companies today focus on new product development. It’s not an easy route; even under the best of circumstances, product innovation is a challenging activity that calls for creativity coupled with a sound understanding of the consumer’s sociocultural needs. The challenge grows when the targeted consumer is a child. While often amazingly perceptive and articulate, children can be limited in their ability to provide the kind of socio-cultural data that market researchers seek. They are, for instance, disinclined to articulate their “need gaps” in focus groups. How, then, can companies gather information to guide product development efforts, especially as they relate to children? In a recent effort, ACNielsen ORG-MARG researchers addressed this issue using an innovative

approach to gather credible, useful data. Although our study focused on schoolchildren in Delhi, India, we believe the methods used and insights obtained cross cultural and geographic borders.

Background and Objective
Mothers in India—like mothers everywhere—try each day to feed their children the nutritious foods their growing bodies need. One way Indian mothers do this is by packing traditional Indian fare that they consider healthy and nourishing into the “tiffin boxes,” or lunch tins, that children carry to school. During recess and on bus rides home, schoolchildren snack from these tiffin boxes—or at least their mothers hope they do. The fact is that children and mothers in India—like kids and moms everywhere—don’t always agree on food. And so the tiffin boxes often come home containing uneaten meals.

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*Tiffin box: In India, “tiffin” refers to a light meal eaten during the day. The boxes in which these meals are packed are called “tiffin boxes.”

Food manufacturers in the Asian Pacific region have identified tiffin box fare as an opportunity for new product development. The objective of our study was to create a brief that would support idea creation by our client’s R&D and marketing teams. In this effort, our focus was not defining final product ideas so much as understanding the market and setting context for product development.

The Approach
Our challenge in studying this opportunity was multifaceted. We had multiple audiences to understand; that is, children and their adults. We had multiple agendas to define—a child’s interest in food that’s fun and tasty as well as a mother’s desire for that food to be wholesome and nourishing. Finally, to study children effectively, we deemed it valuable to observe them “in the moment,” in their own time and place. Using regular research methodologies to explore this opportunity, therefore, would likely have been limiting. So ACNielsen ORG-MARG suggested a different approach, called ethnography. Ethnography emphasizes studying issues “live” by making the researcher an upfront observer at points of consumption. Since our study was highly focused and comprised episodic observations at multiple sites, we called our study a microethnography. Our microethnographic approach had several steps. First, we wanted to understand the child. So we began the project by reading extensively from the works of noted child psychologists about children ages 8–12 (our target market). Next, we observed mothers preparing tiffin boxes by going to their homes early in the morning. Without telling them that we were there to study tiffin preparation, we watched these mothers in their early morning chores. Then, when the children went to school, so did we, sitting and chatting with them during recess and on bus rides to learn about their interactions with tiffin boxes. As an additional step, we spoke with school teachers to gather their insights about the ways children use their tiffin boxes. Finally, we concluded the study by conducting synectic groups of mothers and children that were charged with generating ideas about tiffin boxes and tiffin box food, based on our observations. All fieldwork was conducted in Delhi during January and February 2004.

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| Consumer Insight | Spring 2005 Our process emphasized certain concepts and practices: • Seeking out reorienting and disconfirming observations. To keep our observations fresh, we kept challenging our assumptions about the study subject. One assumption was that the tiffin box is important to the child and something that he or she looks forward to using. This hypothesis was soon disconfirmed. • Revisits of the sites under study. We visited the identified schools repeatedly to observe recess behavior on different days among the same set of students. We also visited the same set of students at different times of the day to see their various interactions with their tiffin boxes and food. • Participative role relationships so that inquiry is unfettered. Our researchers were participative observers, able to ask questions in a non-intrusive manner. For example, when meeting with mothers, our researchers helped with the chores as a way to raise topics of interest in an informal and natural way.

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• Wide range of perspectives and groupings. We sought multiple viewpoints on the topic, including mothers, children, teachers, childhood experts and even fathers who were around the house in the morning.

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Consumer Insight |

• Collaborative “insider-outsider” effort. We sought and enjoyed a high degree of collaboration from both children and teachers. • Collecting data in multiple modes. We gathered information in many ways, including artifacts, photographs, spontaneous groups, etc. • Systematic data transformation. To ensure the data were examined from many perspectives, we used indexing, coding, decontextualizing, memoing, recontextualizing and more. Many of our research disciplines were based on research by Gouldner, Barker and Kondo.

One world in which the child operates—and the context for this study in consumer behavior—is school. Indian schools are relatively demanding. An eight-year-old’s day usually starts before 6 a.m., when he arises to catch the bus. Most children attend classes for several hours in the morning before enjoying a short recess of 25–30 minutes. A couple more hours of classes follow. Then children ride the bus home to eat lunch. It is during the brief recess and on the bus ride home that children engage with the contents of their tiffin boxes. These moments of recess are times of great release for the 8–12-year-old child—time that he would rather spend in energetic play. In this context, the tiffin is something to be done with as soon as possible. The other key player in this study is the mother. She has her own motivations and context as she packs the tiffin box, the result of her upbringing and culture. Many mothers have firm beliefs about and practices in tiffin packing— among these, the belief that tiffin fare should mimic the typical Indian meal, with its dal, roti, parantha, yogurt and sabji. So she packs such foods, even as she knows that her child probably wants something different and that the items she’s packing may come home untouched.
Continued on page 33.

The Insights
Children between ages eight and 12 are busy establishing a sense of self-worth while learning about their world. They shift constantly between feeling competent and feeling inferior, often based on responses from teachers and peers. Deeply curious, children this age love fantasy, surprises, mysteries and freedom from restrictions. They possess a keen sense of humor.

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Business Tools for Retail Tracking
Hit your target with CBP Powerful and flexible reportingfrom the retailer’s point of view
Category management is complex. You need tools that give you the answers and allow you to drill into the data. With CBP®— Category Business Planner, you can now zero in on critical information in the retailer’s own customized view—by category, channel, time period and market—and hit your targets every time. CBP makes it easy and allows you to take aim by providing powerful and flexible reporting from the retailer’s point of view. With CBP, you can understand what is happening—and why it is happening within a category and geography—delivered to you over the web. And now with a new module and new functionality, you can set your sights on Private Label and enhanced interactivity with CBP. The Private Label Module will help you better understand the category dynamics and compare performance against the marketplace, determine strategic direction of Private Label items and evaluate Private Label items against branded items. Broaden your Private Label offerings: • Enhance assortment by capturing key measures for Private Label groups and branded groups. • Reach the same Private Label penetration as the rest of the market by pinpointing the additional Private Label sales needed. • Optimize your Private Label sales by isolating opportunities within Private Label groups. • Expand your Private Label offering by identifying categories that lend themselves to Private Label. e.Analysis makes CBP even more interactive, enabling you to view, analyze and graph information precisely to your standards. • View the relationships among multiple fields with simultaneous filters applied. • Interact with key performance measures to analyze, slice and dice data in either tabular or graphical form with ease. • Save precious time with more productive analyses by creating charts and graphs on the fly. • Add value to your analyses through creating new metrics within the data cube. The New Item Report will help you capitalize on sales and profit opportunities when products are at their “hottest.” Maximize new product opportunities: • Track new product introductions in the entire marketplace. • Evaluate sales and pricing of new items against remaining market. • Determine strategic directions on pricing and distribution. • Identify the highest opportunity new items based on marketplace performance. The Wal-Mart Module will help you drive strategic business analyses with vendor partners through collaborative data use. Assess your performance against Wal-Mart: • Identify the categories/brands that are growing quickly within Wal-Mart. • Determine the portion of consumer category needs being satisfied by Wal-Mart store brands. • Uncover opportunities to ensure you are getting your share of total market, including Wal-Mart. Promotion Item Detail will help you efficiently plan and manage promotions to drive sales in your stores. Increase sales and profitability: • Diagnose what in-store promotion vehicles are driving your incremental sales. • Plan better promotions through the evaluation of various in-store trade promotion tactics. • Determine if the in-channel remaining market or all outlets are stealing volume via more aggressive promotions. • Ensure you get your fair share of promotion funds with your manufacturer vendor partners. CBP accesses ACNielsen’s patented RDH™, retailer-endorsed definition of the category hierarchy, to give you rich, relevant and robust information. Add to that integrated charting and graphing; flexible, personalized report views; an advanced search, delivered in a focused analytical framework, and you have all the tools to score a category management bulls-eye. See why CBP hits the target for more efficient category management. Talk to your ACNielsen representative or call 800-988-4ACN and find out how CBP will help you hit your mark.

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http://acnielsen.com/ci or call 1.800.988.4ACN

Winning the Case for Better Distribution

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Optimizing distribution for mid- to small-sized manufacturers
Steve Kapinus, Director Spectra Business Development

Consumer Insight |

E

veryone knows that you could have the best packaging, best quality of food and best advertising campaign, but without distribution you are nowhere. No one knows this better than Ben & Jerry’s, one of the best known consumer brands in the U.S. First opening in a vacant gas station in 1978, Ben & Jerry’s soon began expanding distribution throughout the U.S. and now sells hundreds of millions of dollars worth of ice cream that sport names like Chunky Monkey and Cherry Garcia. With competition fierce among manufacturers looking to secure their place on the shelves of Wal-Mart, Albertson’s and the like, small manufacturers are looking for consumer insights that can help them prove to their key retailers why they, and not their competitors, should grace their shelves. And if they can gain distribution in key retailers, the payoff can be huge, with sales often doubling or tripling in one year.

But up against tight budgets and mounting competition, what can small- to mid-sized manufacturers do to optimize their distribution at their key retailer? The answer lies in consumer information.

Knowing Your Retailer’s Shopper
Understanding whom you are working for is important. For example, when you interview a candidate for a job at your company, don’t you expect them to have thoroughly researched what your company does, what you stand for and who you are? It is no different when trying to enter into a relationship with your key retailer. Thousands of manufacturers are vying for distribution at the top retailers. A keen understanding of your retailer’s shopper is what will help you win the battle. While many retailers have a definite profile for many of their stores, each store is a unique composition of households who vary in terms of affluence, household size,

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household composition, etc. Understanding the unique nuances of each store’s shoppers is important. Therefore, while panel data can provide an excellent overview of the national or even regional shopper, drilling down to retailer-specific consumer insights on products selling within retail stores can only be done by integrating retailer POS information with Spectra’s proprietary consumer insights techniques.

Business Tools for Retail Tracking
Spectra’s OnDemand Small Business Solutions Gain, Expand and Protect Your Distribution at Key Retail Stores
With thousands of manufacturers vying for distribution at key retailers, competition is fierce for coveted shelf space. Successfully demonstrating the benefit of your product to the retail buyer is the key to gaining, expanding and protecting your distribution in key retail stores. Spectra’s Distribution Builder solutions are a set of retaileraccepted consumer insights and analyses designed to prove the value of your products to your retailer’s business. Specifically, Spectra integrates retailer POS information, such as Wal-Mart's Retail Link POS information, with our proprietary consumer insight techniques, to bring the retailer’s unique shopper profiles to life. This reveals store-specific shopper insights and opportunities. Distribution Builder allows you to: • Optimize your brand’s distribution potential by showing that your consumers are the ones shopping at your retailer’s stores. • Maximize your product’s sales in an account by focusing distribution and merchandising on the “right” stores. • Improve the effectiveness of your sales call by leveraging consumer-centric insights against your retailer’s objectives. • Deliver extraordinary ROI by promoting distribution in the right retail stores. Spectra Distribution Builder’s retail and consumer insights provide you with the information you need to accomplish your goals in the following business issues: • Distribution Builder: Gain new distribution for your brand at your key retailer. • Distribution Demonstrator: Build your case for expanded distribution at your key retailer. • Distribution Protector: Protect your existing distribution at your key retailer. • New Product Launcher: Make smart distribution decisions by choosing to place your products into stores with the greatest sales potential. • Merchandising Optimizer: Improve your retailer’s sales by optimizing your merchandising and product placement strategies. For information on Spectra’s OnDemand Small Business Solutions and to receive a free sample report for our product, Distribution Builder, visit www.spectramarketing.com/ondemand or call Steve Kapinus at 866-524-2568 or email him at steve_kapinus@spectramarketing.com. http://acnielsen.com/ci or call 1.800.988.4ACN

Matching your consumer information to your buyer’s objectives
When you walk through the halls of your retailer’s headquarters to meet with your buyer, bringing consumer insights that match the buyer’s objective of optimizing the shelf and maximizing revenue opportunities is crucial. Successfully demonstrating the benefit of your product to the buyer is the key to gaining, expanding and protecting your distribution in key retail stores. It is not about obtaining or expanding distribution in every one of your key retailer’s stores, it is about obtaining or expanding distribution in the right stores. This strategy meets the buyer’s objectives of meeting customer’s needs by having the right products in the right stores and it meets your objective of maximizing your product’s sales in the retailer by focusing distribution and merchandising on the “right” stores.

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Chart 1: High Opportunity Lifestyles Based on Consumer Demand
Jeff's Coffee Consumer Profile Index 137 94 115 147 71 81 123 48 91 100 Save-a-Ton with 120+ Demand Index for Jeff’s Coffee % ACV 29.17 18.24 11.84 15.25 3.57 4.18 9.77 0.41 7.58 100.00

Lifestyle Upscale Suburbs Traditional Families Mid/Upscale Suburbs Metro Elite Working Class Towns Rural Towns & Farms Mid Urban Melting Pot Downscale Rural Downscale Urban Total

To help you do this, Spectra provides you with a consumer profile of your brand and a store-by-store ranking of stores that fit your brand’s consumers and your retailer’s shoppers. Armed with this information you can: • Gain new distribution in key retail stores • Build the case for expanding distribution into your retailer’s stores • Protect your existing distribution by proving your value to your retailer, on a store, cluster or account level. • Make smart distribution decisions by choosing to place your products into stores with the greatest sales potential. • Improve your retailer’s sales by optimizing your merchandising and product placement strategies.

Brown indicates: High Consumer, 115+ Blue indicates: 3 Largest ACV Segments Source: Spectra and ACNielsen Homescan

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Chart 2: Actual Sales by Store Demand Groups
Demand Index 120 or higher Between 81 and 119 80 or lower Total Number of Stores 162 305 123 590 per million ACV 12.16 9.17 6.21 9.38

How One Manufacturer Expanded Distribution in Save-a-Ton Grocery Stores— A Case Study
When the brand manager for Jeff’s Coffee set out to meet with Save-a-Ton’s buyer, he had one of two objectives in mind: 1) Expand distribution to new stores currently not stocking Jeff’s Coffee but having a strong consumer fit and high sales potential, or 2) If Save-a-Ton does not want to expand distribution past current number of stores, adjust the stores to place distribution in high potential stores.

Consumer Insight |

Source: Spectra, 13 weeks ending 1/5/05

Chart 3: Optimizing Distribution Among Current Store Counts
Current Store Plan
Save-a-Ton Stores with Jeff’s Coffee Number of Stores ACV Sales 162 305 123 590 $7,117,500,000 $4,096,300,000 $25,054,900,000 $82,840 $24,917 $226,558

Step One: Collecting Evidence to Support Their Case
To accomplish this, Spectra analyzed the sale information for Jeff’s Coffee using Save-a-Ton’s point-of-sale information to generate a consumer profile for the product. The consumer profile was then compared to Save-a-Ton’s shopper profiles to create a demand index, which measures the consumer fit (demographic similarity) between the likely shoppers at the store and the consumers of the product. Stores with a strong consumer fit with Jeff’s Coffee (120+ Demand Index) received the majority of their store sales from consumers within Mid to Upscale Lifestyles [See chart 1]. To help highlight the differences in sales between those stores with a good consumer fit for Jeff’s Coffee and those without a good consumer fit, Spectra compared the store sales for each type. The analysis highlighted that Save-a-Ton stores with a strong consumer fit for Jeff’s Coffee sell 96% more Jeff’s Coffee than stores with a low consumer fit. In fact, stores selling Jeff’s Coffee

Demand Index 120 or higher Between 81 and 119 80 or lower Total

$13,841,100,000 $118,801

Improved Consumer Fit Store Plan
Save-a-Ton Stores with Jeff’s Coffee Number of Stores ACV Sales 162 123 305 590 $7,117,500,000 $5,343,000,000 $26,301,600,000 $82,840 $64,971* $266,612 17.70%

Demand Index 120 or higher (current 120 or higher (new) Between 81 and 119 Total

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$13,841,100,000 $118,801

Expected Percent Increase in Sales Source: Spectra and Retailer POS, 13 weeks ending 1/5/05

*The sales figure for the 123 new stores is estimated by multiplying the average sales per million ACV (for stores indexing 120+) by the ACV for the new stores: $12.16 × $5,343,000,000 / 1,000,000 = $64,971.

Business Tools for Consumer Behavior
Quantify Retailer Equity to Drive Sales
Available in the U.S. Homescan Shopper Trends is the industry’s first service that allows retailers and manufacturers to quantify the impact of shopper attitudes on retailer equity and actual sales. Shopper Trends links consumers’ attitudes on various store attributes that drive equity with actual purchasing behavior to provide the competitive edge necessary to develop plans that address weaknesses, exploit strengths and maximize opportunities. Developed jointly with ACNielsen International Research, this online survey-based service applies the globally recognized brand equity model Winning Brands to retailer equity, and links this information to the Homescan consumer panel. Pinpointing What Makes Retailer Distinct Can Explain Over- and Under-Leveraged Equity
Importance (Derived)
Retailer A

Retailers should use this information to: • Determine the strength and weakness of stores. • Compare your performance to competitive retailers. • Quantify risk and opportunities among core/occasional and “never” shoppers as well as competitor shoppers. • Develop competitive targets. • Quantify the impact of a change in attitudes on equity and sales performance. • Track the impact of marketing programs on attitudes and emotional loyalty. • Assist in real estate decisions. • Track the long-term impact on equity on sales and market share. • Determine market-level performance. Manufacturers should use this information: • As sales partners to provide retailer partners with insights into their performance compared to competition as well as pinpoint strengths and weaknesses. • As a category management/sales tool to indicate how a category and its brands can play a role to drive equity and improve attitudes. • As a sales planning tool to prioritize retailers in market based on equity in addition to sales volume. To learn more about the Homescan Shopper Trends, please contact your ACNielsen Client Service or Retail Services representative or visit our web site at http://acnielsen.com.

Distinctiveness Score
Retailer B Retailer C Retailer D High Importance Low Importance

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0.36
A place where it’s easy to quickly find what I need

Efficiency/Loyalty program

0.28
Staff provides good service

0.27

0.26
Efficient checkout counters

0.19
Ease of parking

0.18
Very good frequent shopper program -25 -15 -5 5 15 25

Distinctiveness analysis uses a statistical technique to isolate each retailers’ distinguishing characteristics, while taking away the impact of market share. Shopper Trends drills down to identify what drives a retailer’s equity perception so you can craft strategies to strengthen it.

http://www.acnielsen.ca or call 1.800.988.4ACN

which have a 120 or higher demand index sell $12 of product per million dollars ACV (e.g., store sales) compared to only $6 per million ACV for stores indexing 80 or below [See chart 2].

Step Two: Unveiling Their Supporting Arguments
If Save-a-Ton chooses to hold distribution constant at 590 stores, it is still possible to increase Jeff’s sales by 18% by adjusting the mix of stores with distribution.

By swapping out the 123 Save-a-Ton stores with a low consumer fit for 123 stores with a strong consumer fit, total Jeff’s Coffee sales in Save-a-Ton would be expected to increase by 18% [See chart 3]. The new stores are projected to do three times the sales of the stores they are replacing. Sales growth is achieved from both higher sales per million dollars ACV and from larger stores (the stores with a good fit for Jeff’s Coffee are slightly larger, providing more consumers access to the brand).
Continued on page 34.

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Canada’s Aging Boomers:

A Golden Opportunity

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he baby boomers aren’t babies anymore. The brash, postwar generation that once lived by the anthem “I hope I die before I get old” is getting old indeed—at least by its standards. But it’s still the most influential consumer group in Canada today, representing about one-third of the country’s 31.6 million people. And as the nation’s largest group of consumers, baby boomers will continue to set purchasing trends for at least the next 20 years. For marketers in the consumer packaged goods industry, this represents a golden opportunity. Determining the evolving needs of this generation, especially the older segment, will help shape a go-to-market strategy that accurately anticipates what senior boomers want.

This report focuses on identifying emerging trends as they relate to two age segments: preboomers and older boomers. Preboomers are not technically boomers at all; they were born just before the baby boom. Preboomers represent the 55- to 64-year-old age group. There are about three million of them in Canada today. Older boomers are the first members of the boomer generation, born between 1949 and 1959. There are about 4.6 million Canadians in this group today. Preboomers are included here because their purchasing behavior is a strong indicator of what following generations will buy as they age. Over the next five to 10 years, older boomers will reach this age, followed by the generation’s younger segment (born between 1959 and 1966).

By examining the purchasing behavior of Canadian households through ACNielsen’s Homescan Panel, we can see product purchases that are overdeveloped and underdeveloped within the preboomer segment, compared with older boomers. This provides a signal as to which categories can benefit from a boost in new or enhanced products [See chart 1].
Chart 1: Boomer Profiles
Pre Boomer
3.2 Million Pre Boomers in 2003 10% of Total Population 49% are Male 51% are Female 57% High School or Less 25% Some Post Secondary 18% University 64% Internet Penetration

The emphasis on nutrition will lead to consumer demand for minimally processed foods and for servings that are nutritionally complete. Aging, and the physiological experiences of metabolic illnesses such as diabetes and heart disease, provide an opportunity for companies to develop foods geared to the population at risk. The health benefits of seafood derived from the antioxidant properties of fish oil, particularly omega-3 fatty acids, are now widely known. Value brands and new flavors (lemon, curry) added to fish and seafood are also propelling the trend. As a result, according to ACNielsen Canada’s MarketTrack, total canned and bottled mackerel sales are up 9%, and total herring sales are up 4%. Both types of fish are excellent for the prevention of heart attacks and defense against memory loss. Peanuts and other nuts have also been associated with a lower risk of heart disease. Soy nuts are increasingly making their way into the mainstream. Nuts and seeds contain vitamin E, magnesium and cholesterol-lowering unsaturated fats, and they’re loaded with nutrients and antioxidants. Some consumers have added nuts to their diets as snacks or in salads. The total shelled nuts category is a $176 million business in Canada and increased by 20% this past year. Yogurt provides an easy way to add calcium to the diet. Today many yogurts feature additional benefits such as active cultures and lower-fat options that assist in weight management. There is a decided preference among preboomers for frozen yogurt over ice cream; not so with

Older Boomer
4.6 Millions Older Boomers in 2003 15% of Total Population 50% are Male 50% are Female 48% High School or Less 30% Some Post Secondary 22% University 76% Internet Penetration

Source: Statistics Canada, ACNielsen Internet Planner 2004

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According to a study of ACNielsen Homescan households, 70% of female older boomers were likely to try a new brand even if it was contrary to their customary buying habits, making them more likely to switch brands than their 18–34-year-old counterparts. A study by Research 100, a Princeton, N.J.-based firm, concluded that people over 55 are “neither frugal nor set in their ways” and that they spend more time considering new products and brands than any other demographic group.

A Healthy Attitude
Preboomers and older boomers share a preoccupation with health, well-being and a strong desire to hang on to their youthfulness. Their product purchases, as illustrated in this report, provide the proof. Preboomers want to enjoy life, and they’re on a quest for longevity. Foods high in vitamins and nutrients can help stave off illness. In many cases, traditional distinctions between medicine and food have become increasingly blurred. As a result, food companies may need to begin thinking more like drug or homeopathic companies. Recent changes in Canadian regulations are opening the door wider for the health properties of certain foods to be promoted directly to consumers.

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older boomers. There exists an opportunity here to increase sales of frozen yogurt; it could be as simple as refocusing advertising dollars. There may be additional potential to play up the benefits of calcium in the dairy aisle [See chart 2].
Chart 2: Maintaining a Healthy Attitude
Development Index
Canned and Bottled Fish
Anchovies/Sardines Herring Mackerel Salmon Seafood Spreads and Pastes 164 139 160 153 154 91 80 129 113 104

Semi-moist fruits such as currants, dates, apricots and prunes are overdeveloped with preboomers because they are primarily natural, without artificial sweeteners or preservatives. They are easy to buy, shelf-stable and are usually plentiful and widely available in retail stores. What opportunities exist to boost sales of these products to the older boomer generation?

Pre Boomers

Older Boomers

Aging Beautifully on the Inside
Drug companies and naturopathic remedy manufacturers have already benefited from preboomers’ interest in staying youthful and healthy. They are marketing many new over-the-counter supplements, and preboomers are buying them in increasing numbers. Antioxidant vitamin sales increased 25% this past year, glucosamine was up 15% and vitamin B complex was up 10%. Once again, marketers may want to assess why these products are not overdeveloped among older boomers, who share the same health concerns as preboomers. Nutritional supplement sales were up 12% in 2004. Agerelated ailments such as deterioration of vision, weight gain, diabetes, and joint and foot problems will result in preboomers consuming larger quantities of multivitamins and antioxidant supplements. Understanding Health Canada’s regulatory guidelines and leveraging “drug company” thinking may be good advice for food manufacturers in today’s and tomorrow’s marketplace. Finding a way to add a vitamin or mineral supplement to an existing food may be the ticket to attracting the attention of the massive aging boomer generation.

Nuts
Shelled Nuts Peanuts in Shell 116 134 121 115

Calcium Rich Foods
Frozen Yogurt Refrigerated Yogurt Ice Cream Milk 161 83 95 87 92 97 111 99

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Semi-Moist Fruit
Currants Dates Apricots Prunes Source: ACNielsen Homescan 2003 181 157 146 127 101 109 100 100

Consumer Insight |

What Is a Development Index? Index Calculation Example: Pre Boomers
(Age 55–64) A development index compares the distribution of the product’s dollar volume across demographic groups to the projected distribution of the panel to determine buyer development. • Baseline=100 • Overdeveloped=115 and above • Underdeveloped=85 and below Distribution of Category Volume The percentage of the category dollar sales contributed by age segment households. Total Projected Household Panel The percentage of total household panel represented by the age segment. 21.4

17.7

The index is computed by comparing the category dollar volume distribution to the demographic distribution. Dollar Index= (21.4/17.7)*100=121 Source: ACNielsen Homescan Consumer Panel

Aging Beautifully on the Outside

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Teas can reduce stress. Green tea has been shown to boost metabolic rates. A product capitalizing on this trend from Japan, introduced at this year’s SIAL d’Or Awards in Paris, is a soft drink containing green tea. Based on ACNielsen MarketTrack information, sales of green and black tea are up 28% and 6%, respectively.

Adult skin care and sun care products are big business in Canada, representing $530 million in combined sales. Sales of facial moisturizers alone increased 10% last year. Overall, preboomers and older boomers are clearly interested in maintaining their skin in as youthful a condition as possible.
Continued on page 26.

Business Tools for Retail Tracking
Measure Ethnic Marketing Return On Investment—ACNielsen’s Target Track 2.0
Available in the U.S. The explosive growth of the ethnic population, specifically Hispanics and African-Americans, has initiated one of the biggest opportunities for expansion within the consumer packaged goods industry. With increased purchasing power and evolving product needs and preferences, ethnic consumer groups are an essential target market for manufacturers. According to the U.S. Census Bureau: • Ethnic consumers will make up an estimated 49% of the total U.S. population by 2050. • Hispanics alone represent 13% of the current U.S. population and are expected to double in the next 50 years. With the ethnic population continuing to grow in size and importance, marketers can no longer go without a way to measure ethnic consumer performance in the marketplace. Current ethnic measurement tools are not as robust as general marketing tools and cannot track total ethnic sales performance and effectiveness of marketing efforts to reach these groups. To address these needs, ACNielsen is introducing Target Track 2.0. Target Track 2.0 provides the ability to break down and analyze total ethnic vs. non-ethnic product sales at a national, regional and account level across food, drug and mass channels. Utilizing innovative analytics at a store level and integrating the Spectra demographic model, Target Track 2.0 is able to decompose total product sales and associate purchasing across Hispanics, AfricanAmericans and the remaining consumer base. Target Track 2.0 allows you to: • Evaluate ethnic promotion/advertisement effectiveness. • Understand which of your brand’s flavors, sizes, price points appeal most to the ethnic consumer. • Quantify ethnic marketing ROI and answer questions such as: Did my investment in ethnic marketing pay off? Would allocated funds have been better spent against a general market campaign? • Easily integrate information into your existing data environment. For additional information on the benefits of Target Track 2.0, please contact your ACNielsen Client Service or Retail Services representative or visit our web site at http://acnielsen.com

Get Out on a LIM TDLinx LIM Location Information Management
Did you know? • 230 retail stores open or close every day. • 205 stores change their owner, supplier, or marketing group reporting relationship every day. TDLinx Does! Good, clean, accurate location information management (LIM) data provides you with long-term competitive advantage. Build a comprehensive data management strategy that enables effective utilization, delivery, and measurement of location information to improve business performance now. Why TDLinx LIM? There is an increasing demand for accurate, complete location information delivered by a systematic and repeatable process. With TDLinx LIM you can: • Organize and manage all locations, related hierarchies and commerce codes. • Improve data integrity/reduce business exceptions. • Use industry-endorsed standardized channel definitions to define your markets. • Aggregate sales and activity. • Integrate disparate data sources. • Communicate with outside promotion, marketing and merchandising suppliers in the TDLinx Network. For more information on how TDLinx LIM can return tremendous value to your organization, contact Scott Taylor at 203-563-3050 or visit www.TDLinx.com.

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http://acnielsen.com/ci or call 1.800.988.4ACN

With this goal in mind, it is interesting to note that both groups are underdeveloped in sun care products and yet overdeveloped in facial creams and lotions that promote age prevention. The opportunity here may still be to promote multipurpose products with cross-functional benefits, focusing on both age prevention and sun protection [See chart 3].
Chart 3: Boomer Health and Beauty Spending
Development Index
Anti-oxidant Vitamins Adult Multi Vitamins Calcium Supplements Glucosamine Herbal Vitamins Natural Health Supplements Cod Liver Oil Vitamin B Vitamin E Nutritional Supplements Sun Care Skin Care Face Creams and Lotions— Age Prevention
(includes: age control, anti-oxidants, anti wrinkle, firming, lifting, anti-aging, line eraser)

Functional and Fortified
The dairy aisle has seen an increase in activity of new and innovative products in recent years. These innovations can best be described as functional and fortified. Milk, at nearly $2 billion in sales, is the largest single purchase at food stores. Yet sales still grew by 6% this past year, outstripping inflation and the population growth. The reason is that milk has received more than passing attention by product developers. First, there was the innovation of filtered milk, which ensured longer shelf life and a fresher taste. That was followed by milk with added calcium, which appeals to those who believe they need more calcium in their diets, as well as older Canadians concerned with bone degeneration. Today there are two dairies in Canada offering versions of milk with added omega-3 fatty acids. With a well targeted message, these products should find ready buyers among the preboomer and older boomer generations. A similar situation has arisen with eggs. The numberone-selling branded egg in Canada today is an egg with lower cholesterol and containing omega-3 fatty acids. Its sales have grown 36% in the last year.
Continued on page 28.

Pre Boomers
171 121 168 181 141 151 174 155 153 133 81 31 128

Older Boomers
63 96 101 96 117 107 88 104 109 77 87 137 127

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Spring 2005| Consumer Insight |

Source: ACNielsen Homescan 2003

f e a t u r e

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Monitoring Self-Diagnostics
Preboomers are already experiencing some of the ailments that can come with age and are becoming more conscious of the things that are wearing out in their bodies. Some problems require devices to monitor the conditions in order to keep them under control. Blood pressure monitors saw sales increase by 14% in the last year, while diabetic test meters increased 17%. Anti-smoking products are overdeveloped among older boomers, since they are clearly the group most determined to quit smoking. Products that help maintain health or monitor a health condition appear to have a ready market.

Advertising and Marketing
28
Spring 2005| Canadian advertisers spent $6.7 billion in major advertising in 2003. This is a 12% increase year over year, according to Nielsen Media Research.

Vegging Out
Traditional vegetarianism is beginning to spill over into the mainstream as boomers try to find healthier foods and healthier ways of eating. They are not necessarily becoming vegetarian, but they have shown a willingness to try vegetarian products to change the way they get their nutrients. Sales of total tofu and meat substitute products (for example, veggie burgers) in Canada grew 10% this past year, driven mainly by older boomers. There may be an opportunity here for companies to build awareness around the benefits of these types of products to preboomers.

The findings of this report suggest that preboomers and older boomers should be a target for advertisers and marketers. Additionally, preboomers can signal trends and lead to new product ideas for following generations.

Consumer Insight |

How to Respond
Capitalizing on this opportunity requires strategic collaboration between manufacturers and retailers. The common goal is securing a connection with this key demographic. Specifically, manufacturers should consider: • Focusing on products and asking themselves what can be rearranged, removed, added or replicated in new ways to appeal to boomers’ changing needs? • Developing products that offer these consumers value-added benefits.

Retirement Is Cooking
With more Canadians retiring at a younger age, we are seeing a return to scratch cooking and the art of preserving. Many “from scratch” cooking ingredients are overdeveloped among those ages 55 to 64. With more time or potentially a refocusing of priorities, preboomers are getting reacquainted with cooking and preserving. This is an opportunity to take advantage of this renewed interest in home cooking.

Continued on page 31.

f e a t u r e

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30
Spring 2005|

Among those that tried the brand, almost 80% were very or somewhat likely to buy it again.

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Consumer Insight |

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Canada’s Aging Boomers: A Golden Opportunity continued from page 28.

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At the same time, retailers should consider: • Evaluating space allocation. What percentage of the store should be dedicated to a category or product that fits the demand of this growing mass target group? • Developing a communication plan on how to effectively connect with the aging boomer. • Engaging and connecting with the target demographic in-store by increasing product awareness via education sessions, dedicated thematic displays, and other interactive services and events. Further, manufacturers and retailers should consider: • Forming strategic collaborations for more efficient product development and marketing. • Integrating consumer-focused information into planning. • Increasing support for product launches (e.g., product and target education, advertising, trade activity, displays and signs).

• Create a common language between manufacturers and retailers, as well as sales and marketing teams • Enhance strategy development by executing consumercentric marketing strategies • Create strategic objectives based on consumer targets • Reduce or redirect consumer marketing expenditures based on your precise consumer target definition • Improve targeting effectiveness and efficiencies • Improve sales force efficiency and effectiveness • Reduce cost of retail coverage through prioritization To learn more about Spectra Advantage Canada, please contact your ACNielsen Client Service or Retail Services representative or visit our web site at http://www.spectracanada.com.

31
| Consumer Insight | Spring 2005

c o n t i n u e d

• Promoting long-term planning of strategy and tactics for the category.

Conclusion
The future is now. This is a different brand of senior consumer, one that spends money more freely than seniors of previous generations did. It’s time for marketers to refocus their efforts to fit the changing needs of the aging Canadian boomer.

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Jack-in-the-Tiffin-Box continued from page 16.

Conclusion
Although the context for our study was Delhi, India, we believe the developmental and consumer issues discussed are universal. The inherent conflict between mother and child around tiffin food presents a valuable opportunity everywhere. Ironically, we found that mothers in our study tended to trivialize the tiffin meal as a way of rationalizing their frustration with fixing food that goes to waste. In fact, the tiffin occasion is a time when the child can consume a healthy and nourishing meal because of group dynamics. At recess with friends who are also eating, the child can consume a significant amount of food—but only if the available food is in a form that he or she likes. We believe that trivializing this consumption occasion, therefore, misses an important opportunity. By understanding the mother’s and child’s needs, we have some clear directions now for the development of a range of tiffin foods. Several food companies are actually examining this specific opportunity in the Asian Pacific region. ACNielsen works not only with GSK, but also with Nestlé, General Mills, Kellogg and Britannia in this area. We also believe that a microethnographic approach to this issue yielded important benefits. First, it enabled a deep psychosocial understanding of the child and his environment. By observing points of consumption “live,” we were able to witness the child’s community behavior, forms of play, energy level and disinterest in food relative to his desire for activity and release. Another key advantage was the easy interpersonal dynamics that this method permits. The children quickly relaxed in the presence of researchers, letting us more easily perceive their feelings and attitudes. These might be unconventional methods, but they are innovative methods that could be used anywhere in the world to elicit insights. This article is an excerpted version of the paper presented at the 57th ESOMAR Congress and Exhibition, Lisbon, Portugal, September 19–22, 2004.

Then there is the box itself. Interestingly, we found that the tiffin box, unlike the child’s pencil box, was not an object toward which he feels much ownership or affinity. From the child’s perspective, the tiffin box is the mother’s arena—something she stuffs with her choices. These items are things the child usually finds boring, and he tends to regard eating from the box as an activity governed by adult rules. For the child, the tiffin box fulfills a functional—but not emotional—need. It is where the child’s desires vary from the mother’s attitudes that we found gaps. By talking with children, we learned what they actually want in their tiffin boxes— smaller portions, foods that are crisp and crunchy, that are spicy and tactile; foods that are mobile and can move with them as they play. Chart 1 summarizes some of the differences between the child’s and the mother’s perspectives.

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| Consumer Insight | Spring 2005

Chart 1: Differing Perspectives on the Tiffin Box
Mother’s perspective Nutritious and healthy Replication of typical Indian meal Filling Should not spoil easily Should not be inedible/ unappealing on becoming cold Not very spicy Should not be messy to eat Attractive shapes Hygienic, fresh Crisp Tangy Crisp and crunchy Tangy, fruity, chocolatey Surprising formats/ experiences on consumption Should be able to play with it Give food that needs to be consumed while stationary Give lots of food so that at least some is had Should be able to run around with it Smaller portions of many things Spicy Child’s perspective Fun Not everyday food

c o n t i n u e d

These gaps represent important opportunities for product developers. In addition to these findings, our study identified a significant beverage opportunity. Mothers rarely pack any beverages in the tiffin boxes, while a mobile, tasty, playful drink would appeal to children. Beverages also present mothers with another vehicle for adding nutrition to their child’s day, which they would likely welcome.

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Winning the Case for Better Distribution continued from page 21.

After identifying a better distribution strategy for their current 590 stores, the next step is to build the case for expanding distribution by identifying Save-a-Ton stores which have a strong consumer fit but are not currently carrying Jeff’s Coffee. After analysis, it was found that 172 stores had a high demand index for Jeff’s Coffee [See chart 4].
Chart 4: Expanding Distribution to High Opportunity Stores
Save-a-Ton Stores with Jeff’s Coffee Demand Index 120 or higher Between 81 and 119 80 or lower Total Source: ? Number of Stores 162 305 123 590 ACV ($) $7,117,500,000 $13,841,100,000 $4,096,300,000 $25,054,900,000 Save-a-Ton Stores without Jeff’s Coffee Number of Stores 172 654 309 1135 ACV ($) $7,606,300,000 $29,354,000,000 $10,553,400,000 $47,513,700,000

34
Spring 2005|

Consumer Insight |

Based on the latest 13 weeks sales, estimated sales of Jeff’s Coffee in these new 172 stores would be approximately $92,500* for 13 weeks—growing total Jeff’s Coffee sales in Save-a-Ton stores by 41%.

Case Closed: Gaining, Expanding and Protecting Distribution
As the case study highlights, gaining, expanding and protecting distribution can be achieved by putting the best consumer information together to help prove a fit between your brand’s consumers and your retailer’s shoppers. At the end of the day, those manufacturers, no matter how large or small, that have a keen awareness of the fit between their brand’s consumers and their retailer’s shopper will build a much stronger case for optimizing distribution in key retail stores. For information on Spectra’s OnDemand Small Business Solutions and to receive a free sample report for our product, Distribution Builder, visit www.spectramarketing.com/ondemand or call Steve Kapinus at 866.524.2568.
*The sales figure for the 172 new stores is estimated by multiplying the average sales per million ACV (for stores indexing 120+) by the ACV for the new stores: $12.16 × $7,606,300,000 / 1,000,000 = $92,492.

c o n t i n u e d

To learn more about Shopper Optimizer, please contact your ACNielsen Client Service or Retail Services representative or visit our web site at http://acnielsen.com.

http://acnielsen.com/ci or call 1.800.988.4ACN

Ethnic Marketing By the Numbers continued from page 13.

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Conclusion
Integrating available data from multiple sources enabled VNU to tackle the four steps to ethnic marketing success and provide a more complete picture of the Hispanic consumer for our client—that is: • Picking the right geography: VNU was able to identify significant Hispanic markets and the retailers in them valued by Hispanic consumers. • Picking the right category segments: Its data revealed the key SKUs and brand dollar opportunities. • Picking the right marketing mix: VNU determined which products to promote and how to best attract Hispanic consumers in that market. • Picking the right execution strategy for the right place: Based on the data, VNU’s advice was to target the bicultural and less acculturated Hispanic consumers with Spanish-language ads.

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| Consumer Insight | Spring 2005

Survey Design continued from page 9.
Yet another flight of questions asked panelists to identify services now offered in the store shopped most often for groceries, then select the top three services not currently available that they would like offered at the store from a list of 20 alternative services. A total of 34,804 households participated in the survey: 30,952 Hi/Lo grocery shoppers; 17,346 EDLP grocery shoppers; 3,955 specialty grocery shoppers; and 19,123 mass supercenter shoppers. Households were further segmented based on spending levels into top-, medium- and light-spending shoppers. Retail point-of-sale volume and share data was extracted from the ACNielsen Strategic Planner service, supplemented by the ACNielsen Wal-Mart Channel service. Primary channels included in the study were grocery, mass merchandisers, supercenters (includes Kmart, Target and Wal-Mart entries), drug stores, warehouse clubs, dollar stores and convenience/gas stores.

c o n t i n u e d

As emerging ethnic markets continue to become more mainstream in the U.S., their marketing importance also grows. Working with VNU’s stable of leading companies, clients are using tools, data and disciplines to integrate information and find the opportunities waiting within.

Note that, because ACNielsen Homescan measures household buying behavior, warehouse club information does not include purchases by small businesses or non-profit organizations. Likewise, immediate product consumption sales and gasolineonly sales are not recorded for the convenience/gas channel. Channel and retailer-specific store counts included in the survey have been assembled by TDLinx.

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Powered by Homescan® Spectra can help you understand the purchase dynamics of your customers from both a geo-demographic and share-of-wallet perspective. By combining Spectra’s consumer segmentation with Homescan panel data, Spectra Category ShareCast provides a measure of how much each cardholding household is spending now on each product category within the chain and across all channels in total. Category ShareCast creates a category-specific share-of-wallet metric, which enables you to understand where revenue opportunities exist across all customers, by segment, by store cluster or by store. Create strategies and tactics for targeted marketing and merchandising activities that will maintain loyalty among your best customers and close the gap on potential sales. With Category ShareCast, you can: • Understand what demographic groups are currently driving your total and category-level sales. • Identify which households are most loyal to your chain by category and which households are high category spenders but not at your chain. • Understand which shoppers use coupons, purchase private label products, buy random weight items or shop only for specials and use these insights to develop customized marketing programs. • Grow revenue by understanding and attracting customer groups that are a good fit for your store but may shop more at your competitor for specific categories. For more information, please call John Chesak at 312-583-5139 or email him at john_chesak@spectramarketing.com or visit www.spectramarketing.com/products/r_loyaltyAnalytics.jsp.

Spectra Loyalty Analytics Targeted New Customer List
Changing consumer behavior can be difficult and requires a targeted focus. You need to find specific households that are not shopping with you currently and create ways to target them. If you are looking for a proactive approach to acquire new customers, then Spectra can help. Spectra can provide you with a list of real people who live around your stores and are not currently part of your frequent shopper card program—including their names, addresses, phone numbers and demographics. Spectra can also help you understand what motivates their shopping behaviors and connect with them more effectively by providing insights into what products they have a greater potential to purchase and what media they are more likely to prefer. With Spectra Targeted New Customer List, you can: • Find households that match the key demographics of your current customers or your best customers. • Gain insights on their “potential to purchase” key categories, subcategories and brands and their media usage that can be used to develop promotional tactics to attract these new households to your stores. • Connect with real people and go beyond general mailings to “boxholders.” • Reduce your advertising expenses by focusing offers on specific types of households. For more information, please call John Chesak at 312-583-5139 or email him at john_chesak@spectramarketing.com or visit www.spectramarketing.com/products/r_targetedNewCust.jsp.

37
| Consumer Insight | Spring 2005

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