Retailers work hard to attract shoppers to their stores, but how well does marketing work once they are through the door? Tracking consumer behaviour inside supermarkets is vital if retailers and manufacturers are to exploit the full potential of their merchandising programmes. Katy Humphries & Catherine Sleep report on a new formula that gauges the effectiveness of in-store marketing.
The supermarket is one of the oldest marketing environments, but it is also the least understood. Traditionally it has suffered from underinvestment in marketing evaluation, perhaps because it is viewed primarily as a sales channel, with transaction data the standard metric of evaluation. This omission has masked its potential as a brand-building vehicle and made it difficult for brand owners to compare the store environment alongside television, radio and other forms of mass media for its ability to deliver consumer reach.
The In-Store Metrics Consortium (ISMC), a collaboration of manufacturers and retailers led by the In-Store Marketing Institute in the US, has devised a new formula to measure the effectiveness of in-store marketing so that it can be assessed in line with the GRP (Gross Rating Points) of other elements of the marketing mix.
Christened PRISM (Pioneering Research for an In-Store Metric), the model was developed and tested at four leading retailers and equips brand owners with the ability to determine consumer reach in-store. It builds on traffic data already collected though Point of Sale systems and other easily obtainable information such as store format, product category, units sold and number of category baskets. Using this data to predict in-store traffic, and then determining what marketing communications are in the store, a calculation is made on the ‘opportunities to see’ a specific communication.
Existing statistical models factor out ‘duplicate impressions’ to account for multiple visits to an area of the store by the same customer and the metric then calculates the GRP for specific locations in the store. Accurate chain-wide projections are then possible by using this metric and data from a limited sample of stores.
There are numerous applications for the data. Retailers will be able to assess areas of high and low traffic density, which could lead to more effective store layouts, category adjacencies and product selection, to name a few possibilities. The data could also be a catalyst for determining the effectiveness of various methods of in-store communication, and therefore ultimately could lead to improved profitability.
For example, a snack foods brand might find that it can reach the same number of consumers over a one-week period by running a certain number of 30-second spots on broadcast TV, print ads in 20 magazines, or aisle displays in three leading supermarket chains. Based on the campaign’s objectives, budgetary guidelines and return-on-investment goals, the brand could then determine which media options make the most sense.
The In-Store Marketing Institute and several of the world’s leading branded manufacturers formed the consortium that supported the study through funding and other resources. Procter & Gamble, Coca-Cola, Walt Disney, Kellogg’s and Miller Brewing sponsored the study while Albertsons, Kroger, Walgreens and Wal-Mart were the retailers supporting it.
“This project will unleash new potential for retailers and marketers. Armed with the information only available through this metric, they can create more efficient, pleasant experiences for consumers,” explained Jim Stengel, global marketing officer, Procter & Gamble. “I applaud the industry collaboration that it took to make this new measurement initiative possible.”
The world’s largest retailer also gave the new metric its backing. “This study has tremendous importance for retailers. Informed by the sophisticated data that this new metric will provide, retailers, for the very first time, can now consider new store layouts and product adjacencies to create an in-store experience that is more relevant, and thus, even more satisfying,” Stephen Quinn, senior vice president of marketing, Wal-Mart, said.
“Our organisation has scrutinised the methodology of this study. We find its implications for both retailers and consumers are far-reaching. We are eager to move forward with the next phase that will refine and expand the application of the metric,” Quinn concluded.
The ISMC hopes that, after further verification studies, the PRISM metric will be rolled out nationwide and eventually globally to put in-store marketing on a level playing field with other forms of mass media. This will represent a move to equality it believes is long overdue.