P I VOT P OINT
M A G A Z I N E
Razor Sharp JANUARY/FEBRUARY 2010
A lmost 15 years ago, I started asking the best and
brightest in marketing questions about the future of
this business, first on Reveries.com and now in the Hub.
That probably translates into thousands of questions
asked. But, in fact, I’ve really only posed variations of
one, pivotal probe: Where’s it all headed? COVER STORY
Some of the answers have been more memorable
than others, obviously. If there’s one I recall best, it was Positively Safeway
the response from Geoffrey Safeway chief marketing officer Diane Dietz gets
Remembering Frost, a former chief marketing inspiration from innovation. An exclusive Q&A
interview by Tim Manners.
the late, great officer of Motorola, during late
Geoffrey Frost. summer, 2005.
It’s memorable partly
because, tragically, Geoffrey passed away within weeks
of our conversation. But it’s more because he was so
damn clear about what he saw coming.
He was remarkably prescient when he referred to ROUNDTABLE
his product as “the device formerly known as the cell
phone.” He also suggested we should think about our Better Things
business as “the industry formerly known as advertising.” Innovation just isn’t what it used to be. A discussion
But my favorite part of the interview was when featuring Claudia Poccia of Avon mark, Jevin
Eagle of Staples, Randy Carlson of Diageo, and
Geoffrey talked about the famous William Gibson
Jim Porçarelli of Active International.
quote: “The future has already arrived; it’s just not
As Geoffrey explained, “What he’s saying is that
there are people of the future, already here, walking
among us. If you can figure out who they are and
co-create with them, you’re actually doing a rather
amazing job of not only anticipating, but also shaping W H I T E PA P E R
where the world can go.”
It’s a new year, and a new decade. What’s new, for Map the Gap
you, in the industry formerly known as advertising? Winning at retail requires innovation across
Where’s it all headed? bundles of brand benefits. By Vinit Doshi.
Peter F. Eder
Art Director COOL NEWS
Consumer Intelligence, Twittovation, Keds Collective, Little Nike,
Design Concept Here/Nau/NYC and Full Yield.
Alexander Isley Inc.
John S. Dykes 12 R ESEARCH R EPORT
The New Super | What makes a supermarket innovative? An executive
summary of a Reveries.com survey.
14 S U RV E Y A NA LY S I S
Supermarket Savvy | Innovative supermarkets tap into emotional and
functional desires. By Randi Moore.
EURO RSCG Discovery
Henry Rak Consulting Partners E SSAY
Hoyt & Company
Insight Out of Chaos Popping for Shoppers | The “pop-up” trend is driving retail innovation.
Landor Associates By Beth Ann Kaminkow.
Triad Digital Media
27 W H I T E PA P E R
The Shopper Aperture | Let’s put a new lens on the future of shopper
marketing. By Anne Howe.
30 W H I T E PA P E R
The “We” Decade | Creating community and higher purpose will elevate
our brands in the 2010s. By Dori Molitor.
David X. Manners Co.
107 Post Road East
Westport, CT 06880
34 W H I T E PA P E R
Smooth Selling | Integrated Selling drives bottom-line sales and better
brand performance. By Paul Kramer.
203-227-7060 ext. 227
n Brought to you by the editors of Reveries.
com and Cool News of the Day, The Hub
magazine is dedicated to exploring insights,
36 R ESEARCH R EPORT
The Socialized Shopper | New research shows how social media is changing
shopping behavior. By Mark Renshaw.
ideas and innovation as the ultimate drivers
of business success.
n Published bi-monthly since July
2004, The Hub’s circulation is exclusive
to Reveries’ proprietary database of
40 E SSAY
Beauty in Virtue | Luxury brands can make us look (and feel) truly good.
By Cable Daniel-Dreyfus.
approximately 3,500 senior-level, client-
side executives in Fortune 1000 marketing
departments and major ad agencies.
n Advertising: For more information on
The Hub’s collaborative sponsorship and
Makers, Think Twice and Start-Up Nation.
advertising opportunities, please contact
Joseph McMahon (joseph@hubmagazine.
com) or 845-238-3516.
COOL NE W S
Consumer Intelligence Keds Collective
The defense industry has a long history of feeding innovations to consumer markets — the Keds is engaged in a “wholesale
internet, satellite navigation systems and the computer itself originated as military projects, business-model change” in which its
for instance. consumers not only design footwear,
but can also sell it. “Marketing has
Now, the consumer-electronics industry is returning the favor. For example, the U.S. Air
evolved into a conversation with
Force just ordered some 2,200 Sony PlayStation 3 videogame consoles, which it will use as
the consumers,” says Kristin Kohler
“building-blocks of a supercomputer.”
Burrows, president of Keds.
Meanwhile, in Iraq and Afghanistan, soldiers “are using Apple iPods and iPhones to run
To keep that conversation going,
translation software and calculate bullet trajectories. Xbox videogame controllers have
Keds has launched a site, called Keds
been modified to control reconnaissance robots and drone aircraft.”
Collective, where consumers can
This is occurring because the military spends “only a small fraction” of its $1.5 trillion choose from a palette or upload their
budget on electronics, leaving it outspent on R&D by the consumer-electronics industry. own design elements.
Electronics firms are also able to “move much faster than the slow, If Keds likes a design, it makes a deal
multi-year grind of military procurement programs ... And with the consumer, who receives
the emergence of open-standards and open-source a 10 percent cut on any sales. The
software make it easier to re-purpose off-the-shelf shoes can either be ordered online by
technologies or combine them in novel ways.” consumers or stocked by retailers for
Leaving such innovations to the private sector sale in stores.
meanwhile enables the military to “focus their
So far, this hasn’t exactly made
spending on the development of new technologies,
anyone rich, but that’s not the point.
rather than reinventing the wheel.”
“I’m totally thrilled,” says Jeriana
[S o u r c e : The Economist, 12/12/09] San Juan, who has “sold six pairs of
Keds with her designs.”
For Keds, its all about turning
Twittovation “custom sneakers into an advertising
juggernaut when the designers ...
proudly holler about them from the
“Twitter’s smart enough, or lucky
rooftops of the internet.” Jeriana,
enough, to say, ‘Gee, let’s not try to
for instance, “has posted her Keds
compete with our users ... let’s outsource
designs on Facebook and is adding a
design to them,’” says Eric von Hippel,
Keds link to her website.”
author of Democratizing Innovation.
Similarly, Nike not only publishes
Twitter CEO Evan Williams agrees:
a “gallery” of consumer designs
“Most companies or services on the web
on NikeiD, but also provides
start with wrong assumptions about what they
“convenient icons to click to ‘share’
are and what they’re for,” he says. “Twitter struck an interesting balance of flexibility
them on Twitter, Facebook and
and malleability that allowed users to invent uses for it that weren’t anticipated.”
Among other things, Twitter users invented the idea of putting the @ symbol before their
Champion, meanwhile, asked its
user names (e.g., @cool_news). They also picked up the idea of using the # symbol to
“consumers to design hoodies and
categorize topics — another innovation Twitter initially resisted.
submit them for votes.” Darren Paul
The # idea came from open-source advocate, @chrismessina, who says Twitter thought of Night Agency, the social-media
the # concept was too nerdy for mass appeal. Well, now Twitter “hyperlinks the hash consultancy that helped create the
tags so readers can click and see all the other posts on a topic.” Keds Collective, comments: “People
feel much more connected to the
Evan Williams says Twitter’s plan is to keep following its followers. “You get a bunch
brand because they’re part of the
of users interacting and it’s hard to predict what they’re going to do,” he says. “We say,
advertising, in reality.”
‘Why are people using this and how could we make that better?’”
[S o u r c e : Christina Binkley,
[Source: Claire Cain Miller, The New York Times, 10/26/09]
The Wall Street Journal, 12/10/09]
Cool News of the Day, a daily e-mail newsletter of marketing insights, ideas and inspiration, is edited by TIM MANNERS. For a free subscription, visit www.reveries.com
COOL NE W S W S
Mark Parker thinks acting smaller will help Nike grow bigger. It’s not as
though Nike, now 37 years old, is having any problems growing; its “stock is
up 50 percent over the past five years while the S&P 500 is down 7.7 percent.”
According to Interbrand, Nike’s brand value “has jumped from 31st to 26th”
in the four years since Mark assumed leadership at the company. Despite
this, Mark sees the Nike brand as something of a liability, particularly among
younger consumers in action-sports categories.
Jeanne Jackson, president of Nike’s retail division agrees: “Kids think it’s cool
not to have a big, hairy name over the store,” she says. And so Nike’s latest
retail venture not only doesn’t carry the Nike name, it has no name at all.
Instead, the action-sports store, dedicated to skateboarding and snowboarding,
simply displays the logos of “its three key brands at the entrance: Hurley,
Converse and 6.0 (an action sports line that does have a Swoosh on it).”
“The hardest thing for a company to do is to change when it doesn’t seem
like change is necessary,” says Mark. One thing that hasn’t changed is Nike’s
connections with celebrity athletes.
“We always want to be connected with the world’s top athletes,” says
Mark, himself a distance runner. “Our relationships with athletes fuel the
innovations,” he says.
And, of course, there’s China, where Nike invested some $1.5 billion in 2009,
and may invest even more in the year ahead. “No matter how much you’re
investing there, it’s not enough,” says Mark.
[S o u r c e : Bruce Horovitz, USA Today, 12/7/09]
Here/Nau/NYC Full Yield
Jean-Pierre Veillet is creating a pop-up boutique “using materials ... “We need to put food back in the heart of health care,” says Zoe
almost entirely rooted in New York City’s waste stream.” Finch Totten, chief executive of Full Yield. “It’s the cheapest way
to deal with health and the simplest, and definitely the most
This includes “fallen tree limbs found on the street, timber and
pleasurable,” she adds.
metal pipes from derelict Brooklyn factories and piles of discarded
cardboard boxes — so that when the store closes, at least the Zoe’s focus is on the way people eat in the workplace. Her solution
garbage won’t be new.” is a branded “12-month nutritional program” that’s designed to
“take the guesswork out of what constitutes a healthy diet” and
The boutique is called Here/Nau/NYC and naturally “will carry
help reduce health-care costs.
products from several environmentally minded companies,
including shoes from Timberland and Toms, organic dresses and The Full Yield menu features “fresh items made with natural, whole
sweaters from Stewart + Brown, bags made of recycled truck tarps ingredients” and “will be sold in corporate cafeterias and in the
from Freitag and the sleek, athletic designs of Nau.” prepared-foods section of local supermarkets” in the Boston area.
John Hancock, the insurance company, is among Zoe’s first customers,
And so Jean-Pierre is busy fashioning displays out of cardboard
with some 300 of its employees adopting Full Yield next year.
and trying to turn bubble-wrap into lampshades. He’s got clothes
“hanging from a rolling rack made of old pipes, timber and Meals are priced at $6 to $7 a meal, and employees will receive
mismatched wagon wheels.” His main worry, he says, “is that it “$100 worth of coupons that can be used in John Hancock’s
could end up looking clunky and cheap.” cafeteria and at 18 local Roche Brothers grocery stores.”
Gordon Seabury, who owns Nau, refers to Jean-Pierre’s approach as Full Yield plans to take various biometric measurements of
“dumpster-diving” but is “confident that the resulting decor would Hancock participants throughout the year, and then “analyze the
ultimately reflect the company’s approach to considered design.” data against insurance claims to gauge improvements in health.”
[S o u r c e : Eric Wilson, The New York Times, 11/5/09] [S o u r c e : Melanie Warner, The New York Times, 11/29/09]
Cool News of the Day, a daily e-mail newsletter of marketing insights, ideas and inspiration, is edited by TIM MANNERS. For a free subscription, visit www.reveries.com
M ay /June
de a s |
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Innovation just isn’t what it used to be.
What are you trying up. Every single Staples store in always been that it’s not innovative
the United States has easy-tech if it’s a solution in search of a
to accomplish with technicians who can provide a free problem. The goal of innovation is
innovation? tune-up of your PC. really to ferret out a keen insight,
to deliver something that is
Claudia Poccia: With new products, A product innovation is our Mailmate
needed, wanted or lacking.
we constantly challenge ourselves Shredder. Our customers were
to look outside of the cosmetic opening their mail in their kitchens The word “innovation” clearly is
industry into the broader landscape but their shredders were in their overused. So many people use it
of change. We try to leverage offices. So, we made a shredder as “give me something different
inspiration across the convergence that’s just perfect for the kitchen. to save me for six months” or
of media, technology and other There are many more examples of “something different for the sake of
A product forms. solving problems for customers being different,” so that I can say
R oundtAble We also engage with our customer
embedded in our culture. that I have fostered innovation.
F eAtuRing or representative because, for the
most part, she is one and the same. We try to leverage inspiration across
That’s why bringing our product
to her, where she lives, and where the convergence of media, technology
Jevin Eagle she’s most receptive to receiving and other product forms.
Staples our message, is so important.
C L Au DI A P o C C I A
Randy Carlson We bring direct selling into the
Diageo digital age through social media and
other nascent technologies. We’re Randy Carlson: The goal of But innovation really is about
Jim Porçarelli going to her in a place where she’s innovation should be to bring new paying attention and looking for
Active International open to receiving our message and ways to delight consumers that are sometimes the simplest things that
engaging with our brand. relevant for them. For Diageo, and solve the issue in a way that no one
a lot of mature businesses, maybe else has done before.
Jevin Eagle: At Staples, the goal
that’s more “renovation” than
of innovation is to provide customers
with value, product or an experience
“innovation,” but it’s really about How do you create a
breathing new life into our brands.
that solves a problem or helps make culture of innovation?
their lives easier. That’s the link Some people look at innovation
between the customer, the innova- as inventing the un-invented. But Poccia: Talent is the key ingredient
tion, Staples and its shareholders. our obligation, as companies, is to to creating a culture of innovation.
deliver business results. Inventing If you have a team of forward-
For example, we offer free delivery
the un-invented is a nice, long- thinking individuals who can
that, in almost all cases, arrives
term aspiration, but innovation had look at things with a fresh, new
the next day. That would be an
better create revenues and profits. lens, it creates an environment
experience innovation. A service
that fosters innovation throughout
innovation is our free PC tune- Jim Porçarelli: My mantra has
8 THE HUB JANUARY/FEBRUARY 2010
the company. High emotional Proven results are what get the organization
intelligence is also paramount.
gelled around innovation.
You need people with great,
cutting-edge ideas, but equally R A N Dy C A R L S oN
important is a team that has the
ability to initiate and execute
You also need an element of In fact, she demands it. She inspires
those ideas in a strategic manner.
pragmatism. Rather than just us. She co-creates with us because
It’s important to build a team of
thinking about an idea, you need we’re both a brand and a channel.
creative thinkers who reach for
to go and do it and focus on results. So, whenever we ideate a product,
the stars, but also keep one foot
Otherwise, your innovation is not our favorite expression here is,
firmly planted on the ground so
going to have a long life. Proven “let’s take it to the Girl Lab.” That
that everything aligns with the
results are what get the organization means going to our consumer and
gelled around innovation. our representative and engaging
Eagle: We not only have a market her in the ideation and decision-
Porçarelli: You have to give people
research department at Staples, but making process up front.
also groups of people who are not
to fail. If people aren’t afraid of This co-creation partnership
exactly in “market research,” but
making mistakes, they are going enables us to bring forth products
are constantly doing, testing and
to come up with more and more that allow for our consumers’ and
trying new things. For example, we
creative and interesting ideas. representatives’ self-expression. So,
have what we call our “usability
she’s got a more immersive brand
group.” Their job is to observe how You need people who say things that
experience at a higher level of
customers use things, either online you hadn’t thought of yourself. If
emotional engagement with us.
or in person. people are just repeating everything
I already know, they are not right Eagle: I have a strong point-of-view
At any given time, we have
for my team. Leaders need to allow on this. We used to run a contest
dozens of tests going on of either
themselves to be challenged by at Staples called Invention Quest,
new products, new ways to display
their teams. where we asked customers and
products or to develop offers. The
employees to create new product
culture when we go out into the Managers have a responsibility
ideas. I’m so glad we did this — I
field is the culture of listening, whenever someone comes to them
was one of the judges — but I don’t
whereas in traditional retail it’s with an idea — no matter how big
think it was the most effective way
a culture of telling. We have or how small — to sit with them
to get insights because customers
tremendous respect and awe for and help tweak the idea until it
are not product developers.
our store managers, and when works. It’s imperative to continue
they give us ideas we take the conversation because it can A better way to get customers
voracious notes. foster other ideas in other arenas engaged is for us to listen to them.
that will solve bigger problems. How do you live your life? How do
Carlson: Innovation really starts
you work? How do you play? How
at the top. There may be a heretic
who’s trying to push innovations How should consumers do you use products today? That’s
where the much bigger ideas come
uphill, but heretics have a very be involved in the from. We listen, observe, and take
low probability of getting anything
innovation process? it from there.
done without leadership support.
Poccia: Bonding over beauty and Carlson: For us, the involvement
Second, you need people who
fashion fosters community and is three-tier, including consumers,
believe in possibilities and are
brings young women together. customers and distributors. If you
willing to beat their heads against
Because direct selling is inherently have a brokered sales organization,
the wall. With innovation, you are
participatory, it’s really natural for you should include them, as well.
going to hear “no” a lot. You have
us to engage with our customers It’s critical.
to have people who are willing to
work in that kind of environment and representatives to create a co- I personally find that the trade —
and aren’t brought down by it. branding experience. including distributors and sales
JANUARY/FEBRUARY 2010 THE HUB 9
organizations — has a kind of
What is the most taking any money you make and
“fingertip feel” for what’s right or applying it to lower prices, and
wrong with your product offerings. innovative idea then focusing everything in your
It’s a great thing to get that kind of you’ve seen? culture on leveraging scale to get
feedback sooner than later. lower prices. I think Starbucks was
Poccia: True innovators create the first to not require a signature
On the other hand, your customers, products or services that customers at the register when you use your
your consumers or the trade are not can personalize to meet their credit card. That was brilliant.
going to come to you with the next, needs. I find TiVo fascinating. For
big breakthrough idea. That’s just decades, all of us were happy to I do think that Staples’ ink
not going to happen. So, hopefully view pre-determined and recycling program is breathtaking.
that’s where the innovator’s thinking scheduled programming and then We give three dollars back for
comes in. It’s really up to the out of the blue comes TiVo. every cartridge you bring back to
innovator to identify the problem recycle. This meets the customer’s
being solved, and how to solve it. Now we have the power to need for doing something good for
decide when we want to watch the environment, while also giving
Porçarelli: First of all, their this programming. This TV-by- them money for it. We’re going to
involvement is about the due appointment culture has created a recycle more than 50 million ink
diligence of the marketer. seismic shift in consumers. jet cartridges this year.
There’s so much information
and data available to us today, Something that we’ve done at mark Carlson: My favorite innovator
but you need to understand the is a franchise called Hook Ups. Hook right now is Tesla Motors.
attitudes, concerns and buying Ups are dual ended, customizable What Tesla has done is make a
behaviors that are intrinsic to your makeup products for eyes, lips completely electric car using cell-
consumers. So, don’t be afraid to and cheeks. We provide a wide phone battery technology. It’s the
preview ideas with your audience. assortment of textures, tones and same kind of battery you have in
product forms. The consumer can your Blackberry, just stacked up.
Procter & Gamble had a wonderful put together over 2,000 combinations
formula where every single brand and make it their own. That has They make a sports car that’s
super light, looks a lot like the
Lotus, and can go from zero to 60
mph in 3.9 seconds, with a 250-
The culture when we go out into the field is mile range. It costs $100,000, but
the culture of listening, whereas in traditional it is twice as efficient as a Prius.
They are also making a 4-door
retail it’s a culture of telling. sedan for 2011 delivery.
J E v I N E AgL E What Tesla has done is turn the
efficiency issue on its ear. They’re
taking this notion of a car you
had to set aside a little bit of its really gotten the industry’s attention want to be in and the right thing
budget every year for testing — even because it puts creativity in the to be doing for the world, and
though they knew that 80 percent of hands of the consumer. put them together. And they’ve
the results may not give them an actually executed it. It’s brilliant!
Eagle: With Amazon, one innovation
insight worth acting on. But the
was giving away shipping and Porçarelli: There’s a product
other 20 percent was invaluable. As
tying that to extremely low prices. called New Energy Solutions — it’s
a result, they had the greatest insight
Most business people would have this pad that you can put on your
into the package-goods consumer.
said “no” to that. Another innovation dresser, and it charges all of your
While consumers generally don’t was buying back used books and electronic devices without having
really know what they do want, then reselling them, which to plug them in. That really adds
they pretty much know what they GameStop does with games. to your quality-of-life because
don’t want. By knowing what to they’ve solved an everyday
At Walmart, the innovation
eliminate, it’s often a lot easier to problem.
was Sam Walton’s concept of
figure out what to offer.
10 THE HUB JANUARY/FEBRUARY 2010
T HOUGHT L E ADER S
In a very different realm, there’s for us — if not at the moment,
a technology in radiology called then over the life of customer.
micro-bubbles that are injected
There are plenty of things we do
into the bloodstream to take better
where we’re not maximizing profits
“pictures” of a specific organ. -
on a transaction basis, but we are
The idea is that if you inject the
on a customer basis. That’s the key. CLAUDIA POCCIA is global
bubbles with chemotherapy, you
president of mark, Avon’s trend
might be able to treat cancer more For example, during back-to-
beauty and fashion boutique brand,
effectively. It’s still being tested, school season, we offered free
where she is reinventing the direct
but could have a huge impact. backpacks — 100 percent back in selling business model for the
Staples rewards on any backpack. next generation by tapping into
How do you Why did we do that? Not because
the world of social media.
measure the return we thought we were going to
JEVIN EAGLE is executive vice
make money that day. The
on innovation? president of merchandising and
innovation is in how we create marketing for Staples. Jevin was
Poccia: R.O.I., at mark, means value for customers. It all comes a principal architect in developing
“Return On Innovation.” It’s a back to our customer economics. the Staples brand promise to make
buying office products easy.
metric for success that has never Carlson: At Diageo, we have
been more critical to the bottom business performance metrics
line. We measure it through our that are attributed to innovation. RANDY CARLSON is global
most important asset, and that’s the In fact, in our annual report, innovation director for Diageo.
mark representative. That’s because half of our growth last year Previously with Ralston Purina,
not only is she our consumer, but came from innovation. It’s a real Tropicana and PepsiCo, Randy has
she’s also our retailer. a diverse perspective on common
number. There’s real bookkeeping
success factors for innovations
So, for us, the innovation imperative and accounting associated with
is to deliver an entrepreneurial innovation that’s done both in
platform to this representative aggregate and individually.
JIM PORÇARELLI is chief strategy
officer at Active International,
a global marketing and business
If people aren’t afraid of making mistakes, solutions firm. He can be reached at
they are going to come up with more and more
creative and interesting ideas.
J I M P oRç A R E L L I
that reinvents direct selling for In a broader context, your return on innovation and reinventing
them, and allows them to play on innovation requires short-term themselves. Is there a return on
in a digital space through their metrics in addition to the long- innovation? You bet your life
social networking platform. As term investments, and you have to there is, because innovation is the
her engagement and connection roll them up together. If you start lifeblood of every business.
through these platforms rises, so doing activity-based costing on each
There’s a huge return because
does her sales productivity. So, it individual innovation, there will
innovation fosters innovation.
generates organic growth. be more things you kill than you
When someone comes up with an
launch. When that happens, then
Eagle: Innovation is all about the innovative idea it becomes almost
somebody else invents the future.
notion that if we do things for our addictive because as you begin to
customers that meet their needs, Porçarelli: Without innovation, have success with innovation you
they will reward us. Our underlying a company will begin to die. want to have more success, and more
assumption is that doing good Great companies falter because innovations follow. Innovation is its
things for customers is also good they didn’t put enough emphasis own impetus for greater innovation. n
JANUARY/FEBRUARY 2010 THE HUB 11
RE SE ARCH REP ORT
What makes a supermarket innovative?
Where would shoppers most like to see
innovation? Which supermarkets are
How innovative is the supermarket you shop most often?
Conventional wisdom has it that many — if
not most — supermarkets haven’t changed much Somewhat 55.0%
for about 50 years. True, there’s more in the way
of prepared meals. And the number of products Very 21.7%
offered has grown. Store brands may have
improved in quality, too. Not at all 17.1%
But has the basic construct of aisles of
ingredients really budged all that much? We put Extremely 6.3%
this question to Reveries.com readers and the
answer came back somewhere down the middle:
A majority of 55 percent said the supermarket
In which ways is your supermarket innovative?
they shop most frequently is only “somewhat”
(pick as many as apply)
As one respondent put it: “It seems grocery
Product Selection 54.3%
retailers perceive innovation as being creative with
inventory and don’t give enough consideration to Prepared Foods 46.6%
environment and space.”
The only area a majority deemed innovative Private Labels 38.9%
was “product selection” (54 percent), followed
by “prepared foods” (47 percent) and “private Store Layout 31.7%
labels” (39 percent).
However, in nine out of ten areas, survey Checkout 31.7%
more in the way of innovation: product selection;
respondents suggested they would like to see
Customer Service 29.8%
format/store layout; checkout; customer service;
promotions; new services; online tools; and
displays. The only area shoppers indicated they
are satisfied is “private labels.”
Online shopping tools appear to be especially
Online Tools 13.5%
ripe for innovation, as an overwhelming majority
of respondents (74 percent) said they do not use New Services 12.0%
retailer websites. An even larger majority of 80
percent said they do not use “any other online
planning tools for grocery shopping.”
Some remarked that they weren’t aware that How important is a supermarket’s prices versus its
such tools exist, while others confirmed that this innovations to you?
may well be the case: “I wish I could get ads via
my phone and use mobile coupons. I would also Somewhat 39.6%
love to be able to upload coupons to my loyalty
card and not have to deal with paper coupons.”
Frustrations were many, with crowded
stores and slow checkouts being the most
frequently cited complaints. Others aimed their Not at all 5.0%
ire at stores that rearrange aisles for no apparent
reason: “Shuffling where categories are found,
12 THE HUB JANUARY/FEBRUARY 2010
THE HUB JANUARY/FEBRUARY 2010
Where would you most like to see innovation at your
supermarket? (pick as many as apply)
sometimes just from the right to the left are
annoyances, not innovations.”
Self-checkouts also received mixed reviews.
others said they only benefit retailers. One
Some said they liked the convenience while
respondent had a similar complaint about store
formats: “I’m tired of grocery stores being laid out
to help the grocer and the vendors.”
Product Selection 51.5% Overall, there was no shortage of suggestions
on where supermarkets could improve in ways
Store Layout 50.6% both big and small:
Checkout 41.6% “ Why can’t grocery bakeries make good,
healthful, preservative-free breads?”
Prepared Foods 35.5%
“ This business of forcing me up and down aisles
and across the store to find the things I need is
Customer Service 33.3%
tiresome and makes me tired and angry.”
Promotions 31.6% “ I wish I didn’t have to go to three different stores
in order to supply our home.”
New Services 31.6%
“ So many carts with wheels that don’t work right!”
Online Tools 29.9% Despite such grievances, a perhaps surprisingly
large majority of 70 percent said they generally
Displays 25.5% enjoy grocery shopping, especially discovering
new items. And even though most do not consider
Private Labels 15.2%
their supermarkets to be innovative, a plurality
of 43 percent felt their grocers were up-to-date.
But as one respondent observed, the
In general, do you enjoy grocery shopping? innovations of the future may well be rooted
in the past: “I shop at a small, family-owned
Yes 70.3% supermarket that prides itself on personal service.
Another hinted that maybe it isn’t up to
Its innovation is old-fashioned customer service.”
supermarkets to be innovative at all: “Since I
purchase groceries from three stores and one farmer’s
market each month, maybe I’m the innovator.”
Overall, which era does the supermarket at which you
And this comment may provide the greatest
usually shop most resemble?
insight of all: “Here’s the deal, when money is
2000s 42.7% in short supply and entertainment dollars are
small or non-existent, grocery shopping becomes
1990s 21.4% entertainment … When money is flowing and we
can eat out more often and I’m cooking less, then
1980s 11.5% grocery shopping goes back to being a chore.”
The supermarket picked at the number-one
2010s & beyond 10.7% most innovative? Whole Foods, followed by Trader
Joe’s and Wegmans. Curiously, nowhere near as
the supermarkets they shop most frequently. n
1970s 7.7% many respondents selected these same stores as
Complete survey results can be found at:
1960s 2.1% www.hubmagazine.com/survey/supermarkets
JANUARY/FEBRUARY 2010 THE HUB 13
JANUARY/FEBRUARY 2010 THE HUB
SURVE Y ANALY S I S
he latest Reveries.com survey asked a I m pl I c at I o n s : Improve navigation — beginning
savvy shopping crowd whether today’s in the parking lot and continuing through the store
supermarkets are innovative. What we and checkout. Create a shopper-centric store layout
heard back was how shoppers want us to with intuitive assortments and adjacencies in an
innovate today’s shopping experience. uncluttered environment.
What do they want? Well, as one respondent Fix the broken carts. Smooth the checkout
succinctly said, “I want it all.” And today, to get it all, experience — if not with technology with good, old
shoppers go everywhere. fashioned, helpful, happy, engaged employees.
When asked, our shoppers reported that they Relevant Rewards. This means delivering more
patronize an average of three different supermarkets, than price incentives in a format that is relevant to
making one or two trips per week. But that’s not today’s shoppers. It is about innovating both in terms
the whole story. When we dig into where they are of content and delivery. It is about informing and
shopping, we unearth an eclectic, channel-blurring motivating shoppers along their paths-to-purchase.
I m pl I c at I o n s : Provide relevant, convenient
rewards and tools that are customized to shoppers’
Innovative supermarkets tap into needs and localized to their markets. It is about
consistently reinforcing that membership in retail
emotional and functional desires. reward programs has privileges.
To do this, retailers need to build in additional
value and convenience. To help communicate, augment
list that includes traditional supermarkets, specialty outbound retail email campaigns with innovative
stores, club, mass and drug. product information, planning tools, recipes and a link to
What drives them? From a functional perspective, coupons. Consider extending to mobile applications.
shoppers want: From an emotional perspective, shoppers connect
Product selection. Provide affordable, one-stop with retailers and brands that:
shopping without sacrifices. This starts with providing Understand them by having the right assortment,
quality produce — including both local and organic right offers and then something extra. Strive to
choices. It extends to value-added product options, understand the cooking-shopping-nurturing connection
with shoppers looking for specialty, gourmet and that drives both the function and emotion around
prepared-foods offerings. many shopping trips. Don’t underestimate shopper
I m pl I c at I o n s : Provide an array of quality products commitment to more sustainable and green solutions,
that meet their needs and their wants to build baskets. even in a down economy.
Be consistent in your product offerings and eliminate I m pl I c at I o n s : Understand your shoppers and
the critical out-of-stocks that drive shoppers out of their preferences. Become a resource for more than
your store. merchandise, and become a partner that helps provide
Convenience. It’s not all about location, location, innovative solutions that entertain and nurture their
location. It is about time: Get shoppers in, get them families.
out — fast, with everything on their list. Provide them Engage them personally with communications
with helpful and happy personal service. that inform and educate — before and during the
14 THE HUB JANUARY/FEBRUARY 2010
shopping trip. Shoppers are looking for information
that provides ideas and inspiration. Ask them their
opinions! Truly Super Markets
I m pl I c at I o n s : Understand your shoppers’ paths-
to-purchase and engage them along the way. Don’t In survey respondents’ own words, here’s what
undervalue the role of personal service. Create simple, makes supermarkets super:
relevant planning tools that integrate with how Whole Foods: Product Selection; Convenience
they plan today. Engage them visually in-store with (Store Layout and Service); Engagement
attractive displays and signage — remembering that (Communications and Causes).
value is much more than price.
Entertain them. Take the mundane out of the Trader Joes: Product Selection; Convenience
shopping experience — make shopping an event. You (Checkout and Service); Entertainment
have a live audience. Make it fun for them and for (Sampling and Surprises).
family members in tow. Wegmans: Shopping Experience; Product
I m pl I c at I o n s : Add music, demonstrations, Selection; Convenience (Layout and Signage);
sampling, wine tastings, product specialists and good, Engagement (Communications, Causes, Recipes
old-fashioned customer service to add a personal and Service); Entertainment (Sampling).
element. Introduce them to new products and invite
Tesco Fresh & Easy: Product Selection;
them to explore.
Convenience (Checkout Options and Layout);
Success requires solutions that drive the mutual
Engagement (Social Media).
goals of both the retailer and the manufacturer. This
means listening to the shopper and delivering against
multiple shopper needs.
Manufacturers need to find connecting points
between their brands and the retailer. If your Build programs to deliver against shoppers’
product benefit is about convenience or speed, partner multiple needs. For example, when we create
with retailers to deliver convenient solutions and programs that inform and educate (e.g., recipes, meal
services. For example: This checkout or checker plans, activities, in home entertaining tips, healthy
brought to you by Brand X. living guides, etc.) We show that we understand that
If your product makes folks smile, sponsor an our shoppers are looking for ideas and solutions.
employee recognition program that delivers improved When these ideas include complimentary (and
customer service that engages shoppers and improves potentially private-label) products, we are building
convenience. If your brand entertains, find a way to baskets in a way that leverages the retailer’s product
bring that into store in a way that builds on both the selection. When we overlay incentives in a tips booklet,
brand and retail platform. or through shopper targeting, we are providing relevant
Listen to the voice of the shopper and understand rewards.
the impact of changing shopper behavior. Irrespective By collaborating with retailers to develop in
of any shortcomings, 70 percent of our survey store “solution centers” with attractive fixtures and
respondents say they like shopping and discovering informative signage, we maximize convenience while
new things. engaging shoppers. Add an educated, animated
So, create events that encourage shoppers to go demonstrator, and we entertain the shopper, as well.
on a “treasure hunt.” Purposefully drive consumers When we bring these elements together, we are on the
throughout the store to fulfill their missions to discover road to true super marketing. n
something new — it both engages and entertains.
Shoppers are pre-planning as never before, but
according to this survey 60 percent of them are RANDI MOORE is vice-president
not using retail circulars and 74 percent are not and account director with
leveraging retail websites. Marketing Drive. She leads the
Engage consumers where they plan by integrating agency’s shopper-marketing
into relevant online activities like popular cooking practice. Randi can be reached at
(Epicurious, Food Network) and couponing sites to
build on planning behavior.
JANUARY/FEBRUARY 2010 THE HUB 15
WHI T E PAPER
Gap By Vinit DoShi
h e n r y r a k c o n S u l t i n g Pa r t n e r S
he real story behind the growth of store brands is less often about price gaps
than the shrinking value gap between national and store brands. This narrowing
value gap is real, and marketers anticipating an economic recovery to lift their
sales in a “rising tide” effect are bound to be disappointed.
Consumers are fundamentally changing their consumer behavior that holds as true today as ever:
attitudes towards more conscientious consumption National brand manufacturers need to innovate across
on matters of environment, health and value. The the entire value bundle that comprises the brand —
heightened importance of value-for-money is leading positioning, product, packaging, pricing, etc. — in
them to rethink their attitudes and behaviors order to deliver relevant benefits to the right targets in
concerning the value of branded products and the a superior way and align with consumers’ needs and
price premiums they are willing to pay for frequently desired benefits.
consumed necessities. Mature markets demonstrate these principles
of consumer preferences all the time. In the last
five years, for example, marketers have successfully
Winning at retail tapped into consumers’ health and wellness needs
with a variety of innovatively-positioned and
requires innovation precisely-targeted beverage products that promise
to deliver specific functional benefits such as quick
across bundles and lasting energy, meal replacement, or vegetable
nutrition — often to selected targets during specific
of brand benefits. parts of the day.
These consumer preferences lead to consistent
behaviors that collectively create markets organized
The trend is further reinforced by better consumer around bundles of relevant benefits. This results in
perception of store brands, backed by improvements product groupings that deliver primarily against one
in the quality and range of these products (according of those benefit areas and compete closely with other
to a recent study, 70 percent of millennial women products in the same group.
perceive the quality of store brands to be “excellent”). Regardless of the market, price-value invariably
This portends the potential continuation of store manifests itself somewhere in the structure, although
brand sales and share growth, and a steep challenge the role of price-value relative to the role of brand
to the growth of branded products. varies considerably across different markets. The
To look for answers, we turn to a key principle of price-value dynamic depends on the importance and
16 THE HUB JANUARY/FEBRUARY 2010
types of consumer needs, nature of product usage, A market map provides a precise understanding
role of trust and imagery in the category, the presence of how consumers are behaving, for what reasons,
and strength of dominant brands and levels of and with what trade-offs. It is a proven platform for
marketing and innovation. evaluating and predicting the impact of different
Ultimately, however, the price-value relationship marketing strategies. As such, it is an essential
depends on how well marketers have managed to define foundation for managing a brand to a better outcome.
and deliver relevant benefits. In some cases, marketers Unfortunately, many organizations do not fully
have created benefit-structured markets based on years appreciate or understand the power of a correct,
of advertising, innovation, and effective positioning precise, and behaviorally-based understanding of
against relevant functional and emotional benefits. their market. Too often, a brand’s competitive frame is
In these situations, brands or brand groups play a based on category definitions, consumers’ opinions, or
significant higher-order role in which they effectively a less-than-rigorous evaluation of consumer behavior.
stand for and own key benefits to the exclusion of As a result, the hierarchy of benefits may be
other brands. Store brands may play a smaller role — out of order, or the spheres of influence through
existing but interacting in an undifferentiated way — which consumers make choices and trade-offs may
or in a limited way that does not preclude the growth of be misrepresented. Managing a brand with a flawed
branded players. The example of soy milk demonstrates understanding of the market is bound to inhibit or
how branded products used precise positioning, even derail growth.
marketing, and innovation to establish and own a value- So, the first challenge is to understand how the
added position as a tasty, healthy, nutritious, dairy- market is organized, what your brands really compete
free alternative to conventional milk, leaving behind with, and on what basis. After developing a precise,
the commodity dynamics of the dairy milk category. behavior-based understanding of the market, you
At the other extreme, markets that lack meaningful are ready to understand how to guide your brands
differentiation of relevant benefits to consumers, to more advantageous positions of sustainable and
significant marketing, and effective innovation, profitable growth. You can also identify and prioritize
predictably degrade into attribute-driven markets in the most viable innovation opportunities among many
which form, flavor, price-tiers, or easily replicable seemingly reasonable options.
factors become the primary organizing principle of
the market (for example, conventional dairy milk). Finding growth opportunities
In such cases, national brands often play a The logical first place to look for growth is among
weakened role in the structure, and store brands do your established brands in their current, competitive
well as consumers reward the brands that deliver the frames-of-reference. In some cases, a brand may have
only differentiating benefit of relevance — price-value. significant upside potential in terms of consumer
Most markets fall into a continuum between these behavior that can be accessed. Well-differentiated
extremes in which many national brands are fighting a brands often find that their strong loyalty puts them
losing battle, struggling to stem losses or eke out small in the enviable position of being able to bring in new
gains. Some are dealing with the added burden of budget buyers or increase usage simply by increasing media
cuts and cost reductions that affect product quality. spending.
All the while, store brands are racking up growth. More often than not, however, brands have not
Fortunately, the picture is not all gloom-and-doom fully optimized their potential from a positioning
for marketers of national brands. If they are committed standpoint. Many brands may be competing in an
to understanding and leveraging the principles of undifferentiated way with other brands, representing
consumer preferences and benefit-structured markets, the same benefits to the same consumers in more or
they have good reason for optimism. In a previous less similar ways.
issue of The Hub, my colleague Eric Greifenberger Insights based on the market map can provide
introduced the concept of a market map (see: Map the a breakthrough understanding of how to deliver the
Market, July/August, 2009). functional and emotional benefits of a market in a
JANUARY/FEBRUARY 2010 THE HUB 17
Concentric spheres of competitive interaction illustrate
the range of competition from close-in to furthest-out
Fruit-flavor All flavors of Desserts/ Desserts in other
Ice Cream Ice Cream Sweet treats situations
S o u r c e : Henry Rak Consulting Partners
more compelling, effective or different way. Or, it differentiated itself as a high-quality, more effective
can show how to expand the benefit appeal to more laundry care product. Chanel owns a certain mystique
consumers, or across more occasions. in perfumes and luxury accessories. Victoria’s Secret
In recent years, some brands have leveraged and Starbucks have come to stand for distinct benefits
consumer trends by emphasizing the simplicity and to selected consumers that allow each to transcend the
freshness of their ingredients to consumers who are products themselves to own an experience.
most motivated by health and wellness. One particular An integrated view of the market with consumer
brand of lunch and dinner products has done well by needs and usage behaviors can also help identify
elevating its appeal from basic product attributes to a emerging opportunities to meet unaddressed or
sharper connection with old-world Italian sentiments. unknown needs. The bigger and further out the idea,
In other cases, positioning a brand to bridge multiple the more likely it is to require significant product
benefits has proven effective in improving relative innovation. The process begins by examining the
value perceptions versus store brands. different needs that people experience across occasions
A market map represents “concentric spheres and their satisfaction with the current solutions, all of
of consumer interaction,” in which each sphere which helps identify problem areas and gaps.
represents gradually broader sets of needs being met For example, the basic “hydration” benefit of
by a wider array of competitors (see chart). In this beverages has been redefined and segmented to meet
sense, a brand can look for growth by extending its different nuances of the basic need, including portable
positioning to stand for something bigger and broader. hydration for everyone/everywhere/anytime (bottled
Taken to its logical conclusion, such brands can water), hydration with replenishment (isotonics),
begin to own a “benefit platform” to a sufficiently hydration with nutritional benefits (vitamin and
distinct degree that they command greater loyalty and enhanced waters), and so forth.
source volume from brands in other segments of a Exploiting the sufficiently large and viable white-
market. This is known as “partitioning the market.” spaces can sometimes provide more significant and
A brand that has partitioned the market is sustainable growth opportunities than battling for
characterized not only by strong market-share, but share within crowded areas of the market. Effective
also by strong loyalty and a price premium. Tide has innovation requires brands to extend their positioning
18 THE HUB JANUARY/FEBRUARY 2010
platforms and equities to reach further out (or develop competitive frame includes Subway and Quiznos,
new brands), secure larger marketing budgets, and then product testing on that brand should include
manage to a longer-term investment horizon. the sandwich chains’ products. Following that,
An effective portfolio plan that balances risks simulating the trade-offs between different levels of
and rewards by optimizing the shorter-term and product positioning, quality, pricing, and margins can
longer-term opportunities of established brands and provide management a quantitative range of options to
innovation simultaneously, can enjoy significant factually determine what size business is most viable
competitive advantages and drive sustainable growth. from a total perspective of volume, revenue and margin.
Drive ROI at the Expense of Growth. Optimizing
Av o i d Q u i c k F i x e s the marketing mix is a powerful way to understand the
Having examined some examples of how to drivers of the business, to quantify what works and
use the market map to one’s advantage, it is equally what doesn’t, and to evaluate the mix of tactics and
important to note some principles of what not to do, campaigns. However, when used in an isolated fashion
or what to avoid as singular quick-fixes. to reduce costs or improve ROI without effective growth
Fight Fire with Fire. The temptation to fight strategies to guide the decisions, such “optimization”
store brand growth by “right-pricing” the brand, or does nothing more than facilitate a more efficient
increasing price promotion, may yield short-term deterioration of the brand (using proven tactics to do it!).
relief. However, unless the brand aspires to become Of course, continuous improvement in execution
just like a store brand, this is unlikely to drive is important, but effective marketers seldom use the
profitable, long-term growth. It may even focus the efficiencies only to cut costs, reduce risk, or make
brand on fighting an unwinnable battle in the wrong minor corrections to the mix. Effective marketers
part of the competitive frame. use it primarily to fund their most promising top-line
That said, pricing and promotion clearly play growth strategies — and to do it smarter along the way.
critical roles in the overall marketing mix. Our
recommendation is to simulate and test pricing and
promotion strategies. This should be done as part of a Marketers need a precise, fact-based understanding
comprehensive growth strategy in which these levers of the market to determine the linkage between consumer
play a precise supporting role to the main storyline of needs, benefits and behaviors. Knowing the basis of
a consumer benefit-centered strategy. competition is critical, not only against store brands,
Undermine Product Effectiveness. Every but against the entire relevant frame of reference.
promising strategy is ultimately predicated on the A market map is a dynamic reflection of the ever-
assumption that the product must deliver on consumer changing ways that consumers prioritize needs and
expectations. Reducing costs to improve margin can organize behavior. With this knowledge, the marketer
be risky. For some brands, years of small, seemingly will understand the benefits a brand should reasonably
innocuous cost reductions affecting ingredients, strive to own through positioning and innovation.
packaging, amount, and quality have compounded Markets can be changed by the actions or inactions
themselves into noticeable changes in overall product of marketers — to the benefit of some brands and the
appeal. It is clear that the growth of store brands detriment of others. Only the fittest will survive. n
in several categories is due to years of gradual cost
reductions by the branded products.
Without meaningful product differentiation VINIT DOSHI is a principal with Henry
versus store brands, justifying a price advantage Rak Consulting Partners, a growth-
becomes difficult for a branded product. For this strategy consulting firm. Vinit can be
reason, we recommend testing for relative product reached at firstname.lastname@example.org
preference in the context of a brand’s full competitive or (203) 540-5524. To learn more about
HRCP, visit www.hrcpinsights.com.
For example, if a frozen sandwich brand’s true
JANUARY/FEBRUARY 2010 THE HUB 19