Global Shop 2010 Destination + Impulse

Destination + Impulse

How to Influence and Guide Shopper Behavior

Patrick RodmellPresident + CEO

prodmell@wattintl.com

www.wattintl.com

Patrick RodmellPresident + CEOWatt Internationalprodmell@wattintl.com

Thanks for letting me share some ideas with you about “Destination + Impulse” at GlobalShop 2010. The following is a condensed version of the presentation that I hope will inspire you to a “Big Idea”.

Please feel free to drop me a note if you want to discus the presentation further. And good luck in your quest to develop more compelling brands and retail experiences. Let me know if we can help in any way.

Sincerely,

Building Brands. Building Business.

Research + InsightsResearch + Insights

Consulting + StrategyConsulting + Strategy

Brand Strategy + PositioningBrand Strategy + Positioning

Design + MarketingDesign + Marketing

Research +Research +Consulting practicesConsulting practices Creative AgenciesCreative Agencies

From insight to integrated, creative execution

“(watt international is) a unique group of talent people, encouraged to think beyond their specialty”…

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THEIDEA

…and lots of examples for inspiration!

What NOT to do!

“I’d rather die of pneumonia than deal with the headache of choosing the right medicine!”

What NOT to do!

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Is it Destination or Impulse?

Whatever the case, the package still rules!

Some fresh thinking to consider…

1. The changing world of Insight Development at Retail

2. A look at strategies that drive Destination and Impulse Behavior

3. Integration is the key to doing more with less- Integration of input sources - Integration of output strategies

Source: 2008 GMA/Deloitte Shopper Marketing Survey

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Insight Development is radically changing at retail

- Significant growth in internal resources – hiring their own CPGs!

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Launched in June 2009, the Supermercado de Walmart is already exceeding expectations.(Source: Wal-Mart press release)

Insight Development is radically changing at retail

- Depth of insights into Hispanic consumer and shopper insights were profound

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And they’re getting more more innovative about how they apply insights to marketing strategies

Insight Development is radically changing at retail

- Significant growth in internal resources – hiring their own CPGs!- Tapping into the value of loyalty data

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Insight Development is radically changing at retail

- Significant growth in internal resources – hiring their own CPGs!- Tapping into the value of loyalty data- Scrutinizing their data to optimize category mix, with a focus on private brands

Walmart’s Project Impact:15% less skus (optimal sku selection)

What will happen with the extra shelf space?

Fewer skus = smaller stores

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Walmart is planning to reduce the square footage of its stores by 8% or the equivalent of 260 Supercenters

vs.

What can you do that will enhance the experience and build loyalty with your

customers?

Merchandise($/sq. foot)

Experience(Customer satisfaction)

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Insight Development is radically changing at retail

- Significant growth in internal resources – hiring their own CPGs!- Tapping into the value of loyalty data- Scrutinizing their data to optimize category mix

What does this mean for CPGs?

- More pressure to deliver meaningful insights for the category (not just your brand)- More pressure to demonstrate the value of your brand to the retailer

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This just isn’t going to cut it anymore

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Marketing + Advertising

Store Planning + Design

Merchandising(PB + CPG)

Operations

InsightsInsights

StrategyStrategy

InsightsInsights InsightsInsights InsightsInsights

StrategyStrategy StrategyStrategy StrategyStrategy

A place that sells products

The old retail model...

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Marketing + Advertising

Store Planning + Design

Merchandising(PB + CPG)

Operations

Insights

Customer loyalty

An integrated, well-oiled, branded customer experience

Where retailers are heading

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StrategyStrategy

Some fresh thinking to consider…

1. The changing world of Insight Development at Retail

2. A look at strategies that drive Destination and Impulse Behavior

3. Integration is the key to doing more with less- Integration of input sources - Integration of output strategies

Destination + Impulse

What drives a “Destination”? What motivates “Impulse”?

Most importantly, how are they connected in our new Mobile World?

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Imagine:An application that sources the best overall price for anything you want to buy…in your local market

How does a retail environment remain relevant?

What can a retail experience deliver that can’t be realized virtually?

Sensory engagement (touch and try)

For CPGs, it’s about generating the need/want, then getting on the shopping list

For Retailers, it’s about getting customers to drive past the competition

Primarily driven by understanding the

“needs” behind the Needs States

Destination

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Creating destination through consumer insights

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7. Packaging that works in the store, and looks great at home!

Creating destination through consumer insights

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Swivel Saucer Tray for meals on the go Juice box holder to allow for mess-free sippingFrench Fries holder with ketchup container

Consumer insights that have the potential to ‘drive’ destination behavior

Nike - Pioneers in Need State Merchandising (“Don’t just Do It; Look Great while you’re doing it!”)

Gatorade running shoes?

Nike sports drink?Understanding “the need behind the need” creates broader brand appeal

Understanding the needs states behind fashion

Creating destination through consumer insights

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What type of store is this?

Creating destination through a unique value proposition - “Value Gurus”

Whole Foods offers recipes and lists for shoppers’ smart phones

The company has teamed up with Apple to provide the applications for the phones

The Store as a Media:What is your “Refresh Frequency”?

9. …but Clorets perfected it!

For CPGs, it’s about creating interest in the category, then being first for consideration

For Retailers, it’s about a clear offering and a compelling retail experience

Driven by shopper insights and in-store activities

Impulse

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Digital signage strategies that drive impulse

Digital signage strategies that drive impulse

Because for most people, it’s not the grape, it’s the taste!Tesco understands Needs States and delivers packaging and communications solutions that drive behavior

Driving impulse through strategic cross promotion

45%

32%

23%

38%

28%

34%

Insight:

The flavor combination changed the participants ranking of the CSD beverage, suggesting that a consumer’s enjoyment of a CSD beverage is effected by the food it’s paired with.

Question:

Which beverage do you prefer?

Question:

Which combination of beverage and chip do you prefer?

The Shopper-centric reality

Intuitive shopping at Piggly Wiggly Branded merchandising that helps get more out of meals

The ultimate ‘Solution Sell’!

Some fresh thinking to consider…

1. The changing world of Insight Development at Retail

2. A look at strategies that drive Destination and Impulse Behavior

3. Integration is the key to doing more with less- Integration of input sources - Integration of output strategies

9. …but Clorets perfected it!

Integrating Insights: Integrating Execution

For CPGs, it’s about generating the need/want, then getting on the shopping list

For Retailers, it’s about getting customers to drive past the competition

Consumer Insights and Media

For CPGs, it’s about creating interest in the category, then being the preferred choice

For Retailers, it’s about a clear offering and a compelling retail experience

Shopper Insights and In-store Activities

Destination + Impulse

The Mobile Connection is driving the need for greater integration

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Integrated Solution

Set the Strategy

brand strategymerchandise strategy

experience mapcreative brief

ActionPlanTM

Define the opportunity

increase share

grow category

improve margin

accelerate frequency

enhance brand perception

new concept/ product

grow footfall

reposition

Analyze

synthesize inputsdistil conclusions

insights

Establish the inputs

current state review

stakeholder interviews

shopper/consumer behavior

consumer attitudes

financial analysis

industry research

competitive audit

best practices

trends

Execute

brand identity

packaging

communications

retail environment

advertising

web

social media

promotions

events/p.r.

Measure

share

revenue

customer

attitudes

customer

behavior

margin

profit

traffic

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Define the opportunity

Integrated Solution

increase share

grow category

improve margin

accelerate frequency

enhance brand perception

new concept/ product

grow footfall

reposition

Establish the inputs

current state review

stakeholder interviews

shopper/consumer behavior

consumer attitudes

financial analysis

industry research

competitive audit

best practices

trends

ROI (Return on Inputs):What combination will deliver optimal insights?

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Circular Study

Proprietary Customer Perception Study

Perception vs. Reality

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1. Quality – perimeter products2. Quality – private brand products3. Price – CPG basket – perception vs. actual 4. Price – PB Basket – perception vs. actual5. Out of Stock – perceived # items/trip6. Out of Stock – which brands

(price parody) 100

Q1 Q2

Q3 Q4 Q1 Q2

Customer Perception Index: Pricing

105

110

95

90

85

Competitor Actual Price

Competitor Perceived Price

Opportunity Gap

Experience Mapping: the RIGHT message, in the RIGHT place, delivered in the RIGHT way

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Experience Mapping: the RIGHT message, in the RIGHT place, delivered in the RIGHT way

Define the opportunity

Integrated Solution

increase share

grow category

improve margin

accelerate frequency

enhance brand perception

new concept/ product

grow footfall

reposition

Establish the inputs

current state review

stakeholder interviews

shopper/consumer behavior

consumer attitudes

financial analysis

industry research

competitive audit

best practices

trends

ROI (Return on Inputs):What combination will deliver optimal insights?

Integrate insightsRationalize conflicting inputs

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The Key: Consolidation of Inputs

360 Retail Insight ManagementTM

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Integrated Solution

Set the StrategyDefine the opportunity

increase share

grow category

improve margin

accelerate frequency

enhance brand perception

new concept/ product

grow footfall

reposition

AnalyzeEstablish the inputs

current state review

stakeholder interviews

shopper/consumer behavior

consumer attitudes

financial analysis

industry research

competitive audit

best practices

trends

Execute

brand identity

packaging

communications

retail environment

advertising

web

social media

promotions

events/p.r.

How do you integrate execution?

Measure

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Creative Strategy

Tactical Strategies

Our Philosophy: Brand Council to ensure Synergy of Activities

BusinessObjectives

Marketing Advertising / Website / Brochures / Catalogues / Flyers / In-store signage

HRRecruitment/Retention Training Incentives & Rewards

Business PlanningStore FormatsStore OperationsPrice ProgramsSupply Chain Strategic Partnerships

OfferingNational brands Private label Services

BrandNameIdentityColors, FontsInternal Communications

Public RelationsSponsorships EventsLaunches

EnvironmentArchitecture Décor Layout

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Integration of Destination and Impulse

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Apple: A business that gets it right

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Apple: A business that gets it right

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The end of the “Abundance Era”; the beginning of

• Born +- 1990: The coming consumer generation• Don’t know life without the internet• Short attention spans• Don’t trust advertising – look to their social network• Mobile technology is a commodity• Sensitive to our environment• Developing their consumer DNA during the global recession.

Generation M

“Authenticity is the benchmark against which all brands are now judged…” John Grant in The New Marketing Manifesto

AuthenticityToday’s consumer is skeptical about marketing messages, looking for products and experiences that have a closer connection with a true human element.

Juan Valdez has been used to promote Colombian coffee since 1959.

“humble but uncompromising, dedicated to the hard work of raising coffee by hand.”

Authenticity: Juan Valdez

General Mills offered limited time retro packaging from the 1960s and 80s in February 2010

The company was responding in part to the trend on Facebook of members sharing pictures of their favorite retro brands

Authenticity: General Mills Nostalgia

Nike assembled a Skateboarding team that “lives and breathes” skate. It worked with hard-core skaters to develop a shoe customized for skateboarding, and signed hot young skaters to represent the new Nike SB division.

Nike is also building “street cred” with their “Support Your Local” campaign – building authenticity by paying tribute to skateboard retailers who are pioneers in the industry.

Authenticity: Nike

• Sensory engagement is key – demos, sampling, motion, touching, etc. will all support destination AND impulse behavior

• Treat the Store as a Media – responsive, effective integration of external messaging with in-store communications and activities will help you do more with less

• When looking at consumer need states, explore “the need behind the need” and where it makes sense, develop Need State Merchandising (vs. product categories)

• Experience Mapping will help you understand shopper behavior and lead to more impactful, cost-effective in-store solutions

• “Authenticity” is a core brand value of the M-Powered Generation.

Winning at Retail

Destination + Impulse

Comments or Questions?President + CEO

prodmell@wattintl.com

www.wattintl.com