LOYALTY MARKETING
SECTION ONE
SECTION TWO
 |
Five Benefits of Using Loyalty Card Data
To Enhance New Product Launches
There are many advantages to using loyalty card data, whether from select retailers
or from a loyalty card-based shopper panel, to dramatically improve the chances of
success with new product launches.
Consumer packaged goods companies spend tens of millions of dollars developing
an innovation pipeline. Many new products don’t succeed. So getting an early read on shopper behavior as it relates to trial and repeat, as opposed to waiting months, which is typical, enables CPG companies to make course corrections quickly that will enhance the chances of success and the innovations sticking.
Here are five key benefits of using loyalty card data to analyze new product launches:
Speed of analysis
Early reads on new product launches can be obtained from loyalty card sources within just a few weeks, compared to the months typically needed for new products to reach a significant sample size within syndicated scan-based panels.
Rapid course correction
Having an early read on trial-and-repeat curves provides companies with the ability to adjust marketing, merchandising and/or pricing support early in the product launch. At that juncture, there’s still enough time to build product success before the critical cut-off point when distribution will begin to wane. There are three reasons for this:
1) Loyalty card-based analysis provides the means to diagnose the shopper behavior that is problematic, so key elements of the marketing plan can be tweaked to improve results. For instance, if trial is the key barrier, more aggressive marketing and merchandising may be needed to reach targets. If repeat is low, product quality may be an underlying issue. If repeat is strong, but skews heavily to promoted repeats vs. full-price purchases, the new product pricing may be out of line with the shoppers’ competitive frame of reference. If buy rate is low, use of specific merchandising and marketing levers, such as multiples pricing, may be indicated.
2) Loyalty card-based analysis provides the means to do a detailed assessment of the impact of specific elements of the marketing plan. For instance: What was the impact from the in-store sampling program? How many of the shoppers in the stores during the sampling program tried the product? Were they more likely to repeat than all other triers? Importantly, given these results, is this type of program worth leveraging more broadly across retailers in support of the launch?
3) Loyalty card-based analysis also provides the sample size and data depth required to assess new product performance at the item level; for instance, by flavor or by size. Understanding which flavors are greatest trial drivers enables marketers to prioritize key items for display and secondary stocking locations. Assessment of repeat levels by initial flavor tried can provide clues as to flavor quality issues. Analysis of cross-purchase patterns across the new line can provide insights into which items are most critical to sell in to retailers taking on fewer items due to space constraints.
Improve sell-in to retailers quickly
When loyalty card data is used to read the results of an early launch or test, the results can provide ample insights to bolster broader sell-in efforts. Loyalty-card based analysis can demonstrate the incrementality of the product to the category and brand portfolio, as well as the value of the new product buyers in terms of category and total store spending. Affinity analysis can help marketers identify and support optimal adjacencies for the new product, and cross-merchandising partners. Analysis of where the new product fits into existing category assortment can help retailers improve category segmentation to drive accelerated cross-purchase across key category segments.
Improve understanding of the target from shopper behavior point of view
Many marketers understand their target consumer prior to launch, but most do not necessarily understand their target shopper. Loyalty card-based analysis can provide critical insights into the key shopper segments that are driving trial and repeat trends for the new product, which can lead to revised marketing plans. In addition, understanding the target shopper better can help marketers identify opportunities to use targeted marketing — via retailer-driven programs, direct mail programs, digital programs, or in-store programs — to reach key growth targets. Shopper marketing programs can also be tailored to meet the needs of the target shopper, either solo or in partnership with other portfolio brands that appeal to a similar target.
Improve the accuracy of product forecasts
Quick reads on trial and repeat curves based on loyalty card data can help marketers determine if new product performance is tracking with forecasts. Is incrementality of the product as high as expected relative to the parent brand? Is the new product sourcing volume from the brands, sizes and even categories to the extent that was anticipated? Importantly, loyalty card data can help marketers determine the financial impact of new product launches given a range of distribution and marketing plan scenarios, and enable smarter decision-making on new product forecasts.
By better leveraging shopper panels and understanding shopper behavior as it pertains to new triers, CPG marketers can improve the odds of success for their innovation.
Content for the above article was provided by Megan Margraff, chief analytics officer, Spire, LLC, Monroe, Conn. Spire leverages the second largest shopper panel in the U.S. with advanced analytics and consultative services to help retailers and manufacturers grow. More information: www.spirenow.com.
Click on the LinkedIn logo to join the new Shopper Technology Institute Discussion Group
SECTION THREE
