Ever had an epiphany? Viewing through the lens of the interdependent holy trinity;
1) shopper research 2) trade research and 3) data - can even resurrect your category! Here we explain how the relationship works and how to get inspiration as well as practical application out of your research initiatives.
So, you’re thinking of conducting a shopper research project?
In our last Talking Shop issue we discussed what questions you need to be asking before you embark on such a project to ensure you get relevant, usable information.
In this issue, we thought it would be pertinent to explore the relationship between the three core elements required for a 360 degree view:
- Shopper research
- Trade research
- Data (sales / basket / market / channel data)
The role of data
The primary role of data in the research equation is to establish the size of the opportunity. There is no point conducting a major quantitative shopper research project if the size of the prize doesn’t warrant it, so we want to establish this as early as possible.
Having said that, often times what the data provides is a sense of what the opportunity might be based on yesterday’s sales. It has limitations in terms of tomorrow – you may be creating a new category with your NPD initiative, or servicing an entirely new channel where your category is not currently present. In those instances, we would use data to inform a series of assumptions in order to ‘guesstimate’ the size of the opportunity.
The secondary use of data in research is to inform assumptions around sample sizes, shopper profiles, ‘strike rates’ for instore research components such as intercept interviews and exit interviews, and best placement instore for observations.
Basic information such as channel/category sales, basket penetration (homescan), and co-purchased products (other products in the basket) can assist with shaping the above.
In channels such as grocery reasonably sophisticated data is available, including category and sku splits and market shares, basket penetration and so forth. In less sophisticated channels, we are reliant on claimed sales versus actual scan data (eg many of the BIS Shrapnel and IBISWorld reports), or no data at all, in which case we build it from the bottom up by making assumptions based on trade interviews.
That brings us to the role of trade research.
The role of trade research
This is where the rubber really hits the road. The data might tell you it’s a big opportunity, but will it fly with the retailer / customer? Trade research acts as a ‘realism reflector’ for what you plan to do, helping to underscore the trade motivations that will make your category or product fly and any barriers or roadblocks to be aware of in getting your instore category strategy or product executed.
During trade research, we determine the key commercial considerations for your potential growth opportunity. These will be different from project to project.
Examples include: what is the role of the category to the channel, and the channel to the category? Does the retailer use the category as a loss leader, or as a high margin low volume profit driver, or to drive frequency, penetration or AWOP? How important is the category to the Customer, versus other categories in the store? How do competitor brands compare to yours – who does the Retailer consider your competitors to be (might not be what you think). What kind of average weekly unit sales are expected? How many shoppers are walking through the store each week and how do they behave (from the Retailer’s perspective)? What sort of sales and service model is ideal for the Retailer? What pack sizes and formats are working in the channel, and why?
When you combine trade research with data, you can arrive at reasonable forecasts for a market opportunity. For example, the data says X is a $200M category in a given channel. Your trade research has helped you to establish that you think you can snare 25% share by adapting your pack size and format – something the Retailer said was an opportunity nobody has currently looked at.
The other benefit of conducting at least some trade research upfront is that it both engages them in the project, so they’re more likely to believe the results, and it helps identify the best outlets in which to run the instore components of the shopper research.
Now you need to see if that would be likely to work, from the shopper perspective.
The role of shopper research
So, you have determined that the size of the prize is worth researching further, the trade said that adapting your pack size and format would enable you to leverage the opportunity. Now you need to test that with shoppers.
Some shopper research is ‘diagnostic’ (asking questions to understand a category or attitude) rather than testing a hypothesis, so the shopper research methodologies employed will vary from project to project depending on your objectives. You may use any number of in store methods such as intercepts, interviews, accompanied shops, eye tracking, immersions – or out of store methods such as focus groups, diaries and online surveys.
Ultimately what you want to discover is what we call the 5Ws and 5Hs of shopper behaviours and attitudes:
The 5 Ws:
- Who (are your shoppers)
- What (they buy, what else they buy with it)
- When (they buy it)
- Why (occasions and missions, why they didn’t buy)
- Where (channel choice and within store).
The 5 Hs:
- How (they buy eg purchase decision hierarchy)
- How many (items do they buy at a time)
- How much (do they spend)
- How often (do they buy the product or category)
- How long (do they spend in store, aisle etc).
Exploratory / diagnostic research covers most or all of these, whilst issue specific research will cover some of them.
Once you’re clear on how shoppers behave in your category and your channel, you’re in a position to determine how realistic your potential opportunities for growth are.
Combining the three elements
What the Holy Trinity of shopper, trade and data research ultimately provides is commercial direction.
It might be incredibly interesting that shoppers look at nutritional guidelines on breakfast cereal more than in other categories, but what are you supposed to DO about it and how are you supposed to GROW your category as a result?
Too many shopper (and consumer) research projects get relegated to the ‘interesting but not useful’ pile over time because there is no real sense of the commercial size of the growth opportunity and to what extent the idea will fly with the Retail Customer.
By cross referencing market data with trade and shopper research, it is possible to arrive at a quantified commercial case, hone in on where specifically the opportunity is and determine what the go to market strategy and picture of success might look like.
It’s even possible to witness a miracle – like the resurrection of a declining category – with the application of good, 360 degree Insight drawn from the Holy Trinity approach.
So, time for a ‘Holistic’ view of your next research project!
