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ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
ECR Europe Forum '08. Differentiate or die: shopper-driven solutions
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ECR Europe Forum '08. Differentiate or die: shopper-driven solutions

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Differentiate or die: shopper-driven solutions …

Differentiate or die: shopper-driven solutions

Today’s winning retailers find new ways to connect with shoppers. With insights and expertise, FMCG partners play a key role. Whitbread uses brand marketing to deliver retail propositions while Kesko transforms the shopping experience through segmentation techniques. Carrefour Italy and Coca-Cola share their latest insights on shopper missions. Unilever and Shoprite target families through innovative media. Speakers: Vicki Belcher, Bob James, Oxford Strategic Marketing; Adele Whitehorn, Unilever; respresentatives of Carrefour Italy, Coca-Cola Italy, Kesko, Shoprite. Facilitated by Oxford Strategic Marketing.

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  • 1. Differentiate or Die: © Oxford Strategic Marketing 2008 Shopper Driven Solutions
  • 2. Purpose of session In today’s competitive marketplace, successful retailers and suppliers work together to segment shoppers and deliver clear, unique propositions in store. Why do retailers need to differentiate? How do retailers differentiate? What are the implications for manufacturers? © Oxford Strategic Marketing 2008 1
  • 3. Why do retailers need to differentiate? US sub-prime Retailers are chasing a crash finite amount of consumer spending In developed markets, Top 12 EU retailers will have retailer consolidation is c.60% share by 2010 intensifying retailer brand share battle © Oxford Strategic Marketing 2008 2
  • 4. Why do retailers need to differentiate? Shoppers use a Typical store loyalty is 26% portfolio of stores 73% of shoppers use 5+ channels In-store is a powerful Up to 70% of purchasing and necessary decisions are made in-store branding opportunity Each week twice as many Vs people in UK visit Tesco as watch primetime ad breaks © Oxford Strategic Marketing 2008 3
  • 5. How do retailers differentiate? Using strategic skills the same ways as brands . . . Segmentation Insight Proposition Joint Strategies © Oxford Strategic Marketing 2008 4
  • 6. How do retailers differentiate? . . . and by translating these strategies into differentiated solutions via shopper touchpoints Environment Product People & Services Communication © Oxford Strategic Marketing 2008 5
  • 7. How do retailers differentiate? Touchpoint Examples Environment Product A real “wow” factor – premium, energetic & dynamic 1st Price Artisanal Organic Gourmet Film set style lighting and glamour Shop-in-shop – El Corte Ingles, cues © Oxford Strategic Marketing 2008 6
  • 8. How do retailers differentiate? Touchpoint Examples People & Services Communication Clubcard Cheese counter Promotions Master butcher Special interest clubs Wine expert © Oxford Strategic Marketing 2008 7
  • 9. What are the implications for manufacturers? Upgrading the Customer Marketing role Brand and Customer marketing co-creation of commercial strategies and plans - requiring new processes, skills and ways of working Continuing to create systems to generate and apply shopper insight Improve strategic marketing techniques to achieve mutually beneficial in-store differentiation © Oxford Strategic Marketing 2008 8
  • 10. How will this session help? This session demonstrates the sophisticated brand marketing techniques used to target shoppers with unique differentiated propositions Result: joint sustained value for . . . Shopper Retailer Supplier 9 © Oxford Strategic Marketing 2008
  • 11. Agenda Strategic retailer Bob James – differentiation Oxford Strategic Marketing Differentiation through Janne Anttila – Analyse2 shopper segmentation Maija Mustonen - Kesko Turning shoppers into Detlef Koch – L’Oréal buyers Duarte Fragoso - Sonae Joint Oral Care Plan Joao Miranda – Colgate Key Success Factors Kay Boycott – for Differentiation Oxford Strategic Marketing © Oxford Strategic Marketing 2008
  • 12. Strategic brand differentiation in retail - and its impact on suppliers © OxfordStrategic Marketing 2008 © Oxford Strategic Marketing 2008
  • 13. Key points • Complexity of retailer differentiation • Need for new brand model – FMCG models don’t work • Need to cascade brand strategy into day to day operational guidance • Customer-noticeable impact demands fewer, bigger bundles of activity co-ordinated across touchpoints © Oxford Strategic Marketing 2008
  • 14. Hospitality retailing – same scale of challenges as many product retailers 10 million monthly customers 67,000 employees Leading European Hospitality Retailer 19,000 outlets © Oxford Strategic Marketing 2008 2
  • 15. Whitbread wanted stronger Brand differentiation across all its business sectors © Oxford Strategic Marketing 2008 3
  • 16. Costa Coffee We will focus on Costa Coffee as: • Global retailer – Europe, Middle East, India, China • Like grocery, competes on product sales, service, instore environment and location Core format is High Street but format & estate segmentation are key to expansion • Aggressive brand-literate global competitor © Oxford Strategic Marketing 2008 4
  • 17. Retailer branding is different from FMCG External Internal Highly intangible needs Maximise capacity e.g. “people like me”, utilisation of asset atmosphere, etc Desired brand experience Manage wide range of varies by mission and “in-use” touchpoints mode of use Customer mental and Operationally-led physical state can vary organisations and cultures within single visit © Oxford Strategic Marketing 2008
  • 18. 3 critical tools were used to address the challenges of managing a retailer as a brand Touchpoint Brand House Brand Staircase Guidelines Shopper Insight – a Journey Mapping critical component required to define of the Insight Packs Touchpoints Sequenced shopper-noticeable brand-building initiatives © Oxford Strategic Marketing 2008 6
  • 19. Costa’s Brand House ITIAL NT AL INFIDEN F DE CO N CO © Oxford Strategic Marketing 2008
  • 20. Brand House Illustrative example Feel special BRAND PROMISE Entertaining Live life to the full PERSONALITY & Stylish Treat people as individuals VALUES Informal Don’t rely on tradition Friendly Give good value Visiting friends & relations in North America OCCASION Business trip to East Coast via New York Short break holidays to New York (+2 week trip) Couples 45-65, cost conscious, not one of Executives, 35-55. Make my own choices. Couples 25-45. Metropolitan. Work hard. CUSTOMER the crowd. Spend to enjoy life. Style conscious. Direct: BA World Traveller Direct: BA First Class Direct: BA Business COMPETITOR Secondary: US Airlines Economy Secondary: US Airlines 1st Class Secondary: US Airlines Business Class INSIGHT “Even though we want great value, we don’t “I need a hassle free trip from end to end, and “We have earned our holiday, so the fun has to want to feel like we’re in cattle class.” to be recognised as an individual” start the moment we get to the airport”. Great value without being just another name, Pampered from start to finish, and so feel The best fun in the sky, and so really enjoy BENEFIT and so feel special. really special. self. More stewardesses. Greater range of films Door to door care. Hostesses (who are a cut WHY THEY’LL and games. above the rest) at beck and call. Fantastic Fun loving staff. Responsive service. Great BELIEVE US entertainment. Prices 10% cheaper than BA facilities. No-one gives such individual treatment and No-one gives such individual treatment and so DISCRIMINATOR facilities at this price. makes you feel so special. No better entertainment on a flight. Note: fictitious example © Oxford Strategic Marketing 2008
  • 21. How do Touchpoint Guidelines fit into Whitbread’s management toolkit? 1. Enduring strategic definition of the brand 2. Enduring strategic guideline to shape the thinking behind executional plans C ore Oc ca sion S uppo rt Oc ca sion Sup port O cc as ion En viron me nt S OME TO UC HP OINTS S TR E TCH ACR OS S CO RE & ALL O THE R S UP P OR T O CC AS ION S Pe ople & Se rvice SO ME TO UCH P OIN TS S TR ET CH ACRO S S CO RE & SE LE C TE D S U PP O RT OCC AS IO NS Produ cts S O ME TOU CH PO IN TS ARE SP E CIFIC TO TH E C ORE OCC AS IO N ONL Y Com mu nic ations 3. Executional definitions which may need revisions and upgrades S OME TO UC HP OINTS AR E S PE C IFC TO A S UP P OR T O CC AS ION O NL Y Bridging strategy into operational Operational Standards action Brand Standards © Oxford Strategic Marketing 2008
  • 22. Customer journey mapping was critical to defining Touchpoint Guidelines OXFORDSM ‘HEART MONITOR’ Example: Coffee Shop An OxfordSM Tool to map the total customer experience and identify: what matters most to customers; performance highs and lows; and levers for solution hunting Approach & Enter Choose & Queue Order, Sale, Pay Receive Settle at table Relax & Enjoy Readying to go! Efficiency of Getting No smoke Parting Great Great Enviro to take break Choice of pay process the extras People gesture food like me See a table Quality deliverable Music Team buzz Taste Know what interaction Make product to do drink External appearance Toilet Customer experience Customer Journey Visuals of food/ pricing Accessible Poor Poor Space available Specials Appropriate Moment of truth Levers for Solution Hunting Environment People & Service Products Communications NB. Populated with fictitious data for illustration only © Oxford Strategic Marketing 2008
  • 23. Touchpoint action was then aggregated and prioritised across occasions to create major noticeable initiatives It’s not Costa unless... Core Occasion Support Occasion Support Occasion Environment SOME TGs STRETCH ACROSS CORE & ALL OTHER SUPPORT OCCASIONS • Challenge for retailer People & Service SOME TGs STRETCH ACROSS CORE & SELECTED SUPPORT OCCASIONS brand builders is not to Products SOME TGs ARE SPECIFIC TO THE CORE dissipate activity and OCCASION ONLY Comms SOME TGs ARE SPECIFIC TO investment across so ONLY ONE SUPPORT OCCASION many individual Symbolic Momentum Builders Priority Quick Wins touchpoints WAVE 1 • These then become DO-ABILITY WAVE 2 Lower Priority Action Priority Challenges invisible to the shopper WAVE 3 Low Low High IMPACT © Oxford Strategic Marketing 2008
  • 24. Brand Staircase combines short term Touchpoint action with more radical initiatives Brand Ambition Brand Ambition Innovation A: Bundled Vision Touchpoints Bundled for New Touchpoints Occasion → Key Measures to Innovation B: quantify the long term brand Bundled development → Develop Existing Touchpoints objective competence in Touchpoint new area Improvement → Extend consumer perception on key driver START START → Address major → Attract new consumer consumer group negative → Current situation → Differentiate Touchpoint © Oxford Strategic Marketing 2008
  • 25. Costa’s Brand Staircase combined short and longer term change Brand Ambition Brand Ambition → Winning customers loyalty by delivering the Best Coffee Moments Pre-pay card Frescato Store design and Support grower communities merchandising START START → No need to waste time queuing to pay when Costa Book Awards you’re rushing to work. Reduce walk-aways to drive commuter → Reduce seasonality skew occasion revenue to warm weather Italian pannini snacks → Build awareness of consumption via summer Frescato launch Costa’s support for grower communities → Improve store design → Increase loyalty and Italian coffee cups and merchandising to dwell-time among core increase authentic customers for pitstop Italian atmosphere occasion through → New Italian designer association with relaxing → Improve food quality reading: renaming of coffee cups consistent with Italian Whitbread book awards authenticity NB. For confidentiality, reconstructed from externally observable initiatives © Oxford Strategic Marketing 2008
  • 26. The Results: The Process “This isn’t airy fairy marketing. It will fire up every person from Chief Executive to front line” John Derkach Marketing Managing Director Society Costa Coffee Global Award 2005 (for marketing capability) For more information see the full case study at www.oxfordsm.com © Oxford Strategic Marketing 2008 14
  • 27. The Results Year One Year Three “Customer noticeable relevant “Brand transformation and hike improvements” in commercial performance” “We now understand why the Costa experience can hook 66% of surveyed customers the guest and the role our would strongly recommend coffee plays” the brand – Coffee Annual Report 2006/07 nirvana of New Food Offer Advocacy! Re-imaged stores +16% like for like growth in 2 years external & internal © Oxford Strategic Marketing 2008 15
  • 28. Implications? FMCG Supplier Implications Retailer investment in Shopper insight investment; shopper/customer insight increase research collaboration Adoption of sophisticated brand Brand-literacy in customer roles management techniques “Brand” no longer a comms silo – now driving operational Alignment of supplier brand and decisions total portfolio with retailer brand Strategic development of retailer brand – crucial criteria Deep customer insight & open for resource longer range strategic dialogues (e.g. store fit, merchandising, estate formats, product listings, staff role and training,etc) © Oxford Strategic Marketing 2008 16
  • 29. Differentiation through Advanced Shopper Segmentation Maija Mustonen, Kesko Food Ltd Janne Anttila, Analyse²
  • 30. Agenda Kesko’s Segmentation Challenge Advanced Shopper Segmentation Case Study : How Trend Segmentation Boosts Promotions Key Learning Points & Conclusion
  • 31. Kesko in Brief Kesko Food Grocery trade 41% Rautakesko Building and home improvement 27% Finland VV-Auto Car and spare parts Norway 5.3m St. Petersburg 8% 4.5m area 5m Estonia 1.4m Anttila Sweden Department store trade 9m Latvia 2.3m 6% Lithuania 3.4m Kesko Agro Agricultural trade Belarus Moscow 8% 9.8m area 15m Other operating Total approx. activities 10% 56 million consumers Group’s total net sales €9,5 billion (2007)
  • 32. : Vision & Goals • Our Vision requires us to develop deep customer insight – this helps us understand & anticipate customer expectations • We use this insight to build the best shopping experience – we are always looking for new ways to delight our customers
  • 33. : Food Stores How does this translate to our Food Stores? Hypermarket. A versatile and competitively priced store for the whole family. The selections include all food delicacies and branded products for clothing, leisure time and home Supermarket. A high quality food store. Motivated and skilled staff at your service and a versatile selection of fresh quality products always available Convenience store. A store with a good selection of food. K- markets are located in suburbs or rural centres Small convenience store. Focuses on personal service and, in addition to daily essentials, offers many extra services
  • 34. : Why we are interested in Advanced Segmentation? Know your customers, differentiate from competitors, implement chain concepts Kesko’s challenge in 2004: Consumer studies, POS data and loyalty card programs are not sufficient No direct linkage to strategy and day-to-day business decision-making Target: Everything has to be based on customer information CUSTOMER SUPPLIER
  • 35. Analyse² in Brief Specialized in customer segmentation methods Leading consultant in consumer insight management Advanced Segmentation tools, reporting and analysis systems Over 30 retail and supplier customers Long term collaboration with Kesko: 2004 2005 2006 2007 2008 Collaborative CM Processes Market Next Information & information Segmentation Foodstyle steps Services Advanced Services ... (CIS) Segmentation
  • 36. Advanced Shopper Segmentation: Case Kesko
  • 37. Advanced Segmentation – Trend Segmentation Products Stores Consumers Trends Customer segments
  • 38. The Benefits of Trend Segmentation Strategic alignment Trend segmentation Chain concepts, target groups etc. Analysis & Control Customer programs, sales programs Supplier Collaboration Processes CRM Product Portfolio Assortment Mgmt NPI Brand Portfolio Space Management Promotions R&D Pricing Marketing Implementation
  • 39. Supplier Collaboration Process CRM Product Portfolio Assortment Mgmt NPI Brand Portfolio Space Management Promotions R&D Pricing Marketing New service launched to Kesko’s suppliers Jointly agreed goals Information, tools and scorecards are common for both Kesko and suppliers Different levels of collaboration
  • 40. Case Study: How Trend Segmentation Boosts Promotions
  • 41. Advanced Promotion with Trend Segmentation Background Cannibalisation between Mammutti (Mammoth- promotion) and sales Totally new approach to promotion planning Promotion target groups and tactics were selected based on trend segmentation methods • : price-oriented promotion with wide range of product categories • : target customers prefer value beyond price Several suppliers in co-operation
  • 42. Trend Segmentation in Action Target group analysis Measuring the results Trend analyses in target groups Category selection based on Trend segmentation Matching products, target groups and trends Selection of tactics based on the understanding of the target groups Marketing message designed using target group and trend information Trends involved in every phase
  • 43. Price Recipes etc.
  • 44. Case Study : Results The promotions went live in stores in Feb-Mar 2008 Sales, total +19,1% +8,4% Sales, meat +13,3% +19,7% Target categories +150-200% +130-250% # of customers/chain +14,0% +1,4%
  • 45. Key Learning Points & Conclusion Key promotions designed with the help of trend segmentation do not cannibalize each other! Explicitly defined target customer segments are in a key role in focusing the promotions Continuous implementation from chain strategy into Category Management processes and supplier collaboration
  • 46. Key Learning Points & Conclusion Differentiate or die! Change the segmentation paradigm Total change in mindset From projects to processes Commitment from strategic level Change the collaboration in the value chain Common language between retailer and suppliers Innovative ways to add value to the consumer
  • 47. Thank You! Analyse² Kesko Food Ltd Mr. Janne Anttila Ms. Maija Mustonen CEO Sales Manager janne.anttila@analyse2.com maija.mustonen@kesko.fi www.analyse2.com www.kesko.fi VISIT US AT STAND 15/5
  • 48. L’Oréal: No. 1 in Beauty 100 years of expertise in cosmetics 17,1bn Euro consolidated sales turnover 19 global brands 560m Euro investment in Research & Development 60.851 Employees
  • 49. L’Oréal: Distribution in all channels Channels Brands Professional Food, Drug and Mass Parfumeries and department stores Pharmacies The Body Shop
  • 50. Turning shoppers into buyers Wednesday 28th May 2008 Detlef Koch L’ORÉAL Germany
  • 51. The Beauty Exception Different consumption behaviour 3100 Spending for all FMCG from category buyers 3050 Highly profitable Spending in € 3000 category 2950 Ø Above average 2900 spending for FMCG 2850 2800 2750 Colour Colorants Facial care Cosmetics Source: GfK Consumer Panel
  • 52. Colorants Very emotional category Quite complex Very interesting for retailers: above average spending for FMCG
  • 53. Colorants: Quite a challenge Development of the colorant market in % difficult market in recent 0,4 years -0,7 1 -0,1 A strong decrease of -8,4 -8,9 2003 2004 2005 2006 2007 younger users Source: Nielsen Market Track Hair colorant users +12,1% +11,6% +6,6% +6,2% +1,9% No demand anymore? -21,5% -21,7% 18 - 24 25 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 yrs+ yrs yrs yrs yrs yrs yrs Source: GfK Consumer Panel 2008
  • 54. Look outside one’s own territory Consultancy Professional application certainty for consumers
  • 55. Colorants at hairdressers Coloration development Overall, yearly spending in salon in % in salon has increased … + 4,5 + 4,7 2006 2007 …and the driver for this growth is coloration Source: GfK Hairdresser Panel
  • 56. What does the mass market offer? Hugh selection of colorants Product diversity = complexity (up to 500 items on shelf) Lots of innovation Limited product consultancy in-store
  • 57. Current situation at shelf: hugh potential Percentage of buyers vs non buyers in different distribution channels 30% non-buyers at shelf 31,6 32,5 27,6 26,3 40,4 Non-Buyers mainly due to uncertainty Buyers 72,4 73,7 68,4 67,5 59,6 Total Drug Client 1 Drug Client 2 Hyper Client 1 Hyper Client 2 Why did you not purchase today? (n=131) Just wanted to gather information 44 Was not sure how to choose the right product 37 Get an idea of pricing 31 Get an impression of total range offered 30 The color I wanted to buy was not available 28 Did not find what I was looking for 28 Scared to make a long lasting decision 14 Could not decide 12 Needed counseling, but no one was around 12 Source: L‘Oréal Shopper Studies, 2006
  • 58. Bringing hairdresser benefits into the shelf The Colorants Advisor Combating the main causes of non-purchase: Reducing the level of uncertainty Guidance in the selection process Increase of category awareness Focus on younger target group (Attracting new, inexperience customers) Consultation support for sales staff Enhancing the category/image of trade partner Conversion of non-buyers into buyers Sales-up-lift of the category
  • 59. How does it work? 3 key questions to minimise purchase drop outs: Question 1: Given my current hair colour, which colour would I be able to achieve? Colour recommendation Question 2: Finding your ideal coloration Question 3: How do I apply the coloration correctly? Brand recommendation Application film
  • 60. Reduce Uncertainty by giving clear advice Video demo of how to conduct the Skin Allergy test if hair is already coloured, no lighter tone than the current hair colour is possible with high percentage of grey hair, we recommend the use of a permanent coloration
  • 61. … and explaining complex products Large box -> Difficult application? Explication of key- Application movies benefits Application in only 10 minutes -> How does that work? Classified as a level 2+ product -> Explaining innovation
  • 62. No roll-out without testing Installation of terminals at retailers 6 months test Evaluation of success via: Click-Stream Analysis (via UMTS) 248 Shopper interviews at POS Sales Monitoring vs. comparable shops
  • 63. Findings: Terminal usage ø 160 users per week/store (increasing development) More than 60% of these are Terminal users vs. non terminal users (248) in % intensive users 39 41 terminal attracts first of all young 20 18 20 target groups and shoppers with 16 16 less experience in colouring at 9 8 10 home 2 0 -> recruiting new users for the -20 years 21 - 30 years 31 - 40 years 41 - 50 years 51 - 60 years 61 years + category Age of users Terminal users Non-Terminal users Source: POS interviews
  • 64. Findings: Awareness, Usability & Usefulness terminal arouses curiosity for the category nearly all users are completely 71% satisfied with the usability Usefulness of given information 48 in % of users (120) more than 70% stated that the information provided was helpful 23 when searching for the right 15 14 product very helpful helpful less helpful not a bit helpful It is seen as an additional, helpful tool in upgrading the shelf and making purchase more interesting Source: POS interviews
  • 65. Findings: Sales impact 110 106 105 104 104 104 103 100 Index 95 (Volume) 90 85 80 Total Manufacturer Manufacturer Manufacturer Manufacturer 1 2 3 4 Terminal clearly supported the sale of colorants, despite the fact that some products needed to be removed to make place for the terminal. Source: retailer scanner data
  • 66. To sum up the test results The tool achieved its objectives and to some extent even exceeded expectations: very high acceptance increase of category awareness recruiting young and unexperienced users reduction of the level of uncertainty enhancement of the shelf increase of sales in a difficult category
  • 67. How can retailers differentiate today? Competition through expertise and a great in-store experience by Looking outside one’s own territory simply following panel data can be misleading learnings from other channels help to recruit new users Listening to the shopper and develop solutions that serve relevant needs of consumers are easy to use are highly attractive for the intended target group A win/win/win - Situation
  • 68. Joint Oral Care Plan &
  • 69. CP & Sonae Agenda • Background • Oral Care joint plan • Business impact
  • 70. Sonae Distribuição May 2008 Investor Relations department Tel: + 351 22 956 19 47 E-mail: investor.relations@modelocontinente.pt www.sonaedistribuicao.com
  • 71. Sonae Distribuição Key facts No.1 retailer 3,4 Bn€ * in Portugal Turnover (215.000 articles in portfolio) (with food and non food retail)b ~32.000 710.000 employees sqm sales area (biggest private employer in Portugal) (in 646 stores) ~3.500 ~2.800.000 * suppliers sales receipts/week * not considering the hypermarkets acquired to Carrefour (Portugal) by the end of 2007 2007 figures
  • 72. Sonae Distribuição Sonae world SONAE SGPS 100% Sonae Sonae Sonae Sonae Sonaecom Distribuição Sierra Capital Indústria Food Retail Services Shopping Centres Telecommunications Wood Based Products Non Food Retail Tourism Portugal Portugal Germany Portugal Portugal Portugal Brazil Spain Italy France Spain Canada Greece Brazil France S. Africa Germany Switzerland UK Europe Portugal Germany Sonae is Spain France present in 17 America U.K. Ireland countries Brazil Canada Italy Greece U.S.A. around the Netherlands Romania Poland five continents with around Asia 40,000 China employees Oceania Africa Australia South Africa
  • 73. Sonae Distribuição Major milestones Strong expansion in Strong Portugal expansion plan (organic growth in Portugal and integration of Carrefour Consolidation Client focus hypermarkets) of commercial initiatives and Development Continuous and economic promotional into innovation success of non innovation (value proposal non food based food formats and promotional formats in New non food activity) Portugal Consolidation formats Set up of the of the Brazilian New formats New market operation Divestment of and concepts category investment in Brazilian management New market Brazil operation model investment Opening of the Logistic and Accelerated (Spain) first information expansion process in the Social hypermarket in systems responsibility & Portugal food area Sales evolution structure sustainable (joint-venture with Promodés) development 1985 … 1990 … 1995 … 2000 … 2005 … 2008 …
  • 74. Sonae Distribuição Balanced portfolio sports goods Mature markets Strong growth businesses Value creation (RoCE (1)) apparel consumer electronics hypermarkets mini-hypermarkets DIY and garden computers and supermarkets travel agencies Options for the future kidswear mobile communications health areas new businesses Business development Bubbles’ size represents relative dimension of sales (1) EBIT/Net capital employed
  • 75. Colgate-Palmolive • Started trading in 1806 in US • Selling products in 223 countries • $14 Billion Sales, 35,000 Colgate People • Worldwide Oral Care Leader
  • 76. Colgate-Palmolive • Consumer at the center of our strategy • Understanding of users & shoppers Using Shopping Buying • Understanding of customers’ goals and strategies • Drive sustainable and mutually profitable growth
  • 77. Background Consider Oral Care a key category Sonae OC : 32,8% CP/Sonae OC : 46,2% Very aggressive goals for the category Strategic relationship CATEGORY DEVELOPMENT WORKSHOP Cross-functional off-site meeting with people from both teams Jan 2006 1st Edition - Jan 2008 2nd edition
  • 78. Oral Care Development Workshop Objectives – Share Mid-term plans and initiatives – Identify and select key opportunities for mutual growth – Define strategies to address the opportunities – Shortlist tactics and agree a plan of action
  • 79. Oral Care Development Workshop Review past years activities (what worked well / things to improve) Brainstorm identification of key opportunities Breakouts sessions to address the opportunities Medium term strategies and actions + Quick Wins
  • 80. Oral Care Development Workshop Outcome: Strategic initiatives: – Develop OC in MODELO S Hypers & Supers – Education & Training – Develop Kids Segment – Develop Oral Care system – Relaunch Oral Care Fair / OHM – Shared Scorecard Action Plan signed-off by top management
  • 81. Oral Care Development Workshop Sonae shopper Oral Care involved, seeking superior Oral Care shopping experience Regards Sonae as most trusted brand among retailers Families with kids Higher penetration than average in high end consumers Multichannel profile shopper: Urban in Hypers Small town and inland in Supers
  • 82. EXECUTION Some tailor made activities implemented in Sonae’s stores Oral Care University Oral Health Month Replace toothbrush campaigns Kids Event
  • 83. Colgate Oral Care University Oral Care training for Sonae’s Store Personnel Content 1. Importance of Oral Care Category 2. The tooth anatomy 3. Oral Problems -> DVD 4. Golden rules for a proper oral hygiene 5. Oral Care Category 6. Frequently asked questions
  • 84. Colgate Oral Care University March 2007: Train the Trainer CP gave training to Sonae’s Trainers Group. April 2007: Roll-out Sonae Trainers delivered Oral Care training to all Store Personnel that work in Health & Beauty section (more than 200 people)
  • 85. Oral Health Month Secondary space dedicated to the Fair Educational content: Hygienists and Kids dental schools Partnership with Dentists and communication via Media (Colgate) and Sonae Magazine
  • 86. Oral Health Month - Results Sonae Share uplift:+3pp Colgate at Sonae stable (thus gaining Market Share) Children participation 2007: 3500, +840 vs 2006 Oral Care SOM trend Sonae - 2º half 2007 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00 Sonae H / Hipers Colgate / Sonae
  • 87. Replace Toothbrush Campaigns • Purchase frequency less than once a year • 2007 quarterly campaign to remind to change toothbrush every 3 months Campaign 26/02 - 11/03 113% 113% 114% VB VL QT Anterior Acção ESCOVAS DENTES 60 47,49 49,61 50 37,01 37,96 40 26,47 27,23 30 20 10 0 S. / H+S 06 S. / H+S 07 S. H / Hipers S. H / Hipers S. S / S. S / 06 07 Supers 06 Supers 07 Dados YTD Julho / Agosto 2006 - 2007
  • 88. Replace Toothbrush Campaigns Insight: • When asked, consumers claim they change brushes 3 times a year, but the purchase frequency remains less than once a year • When probed, consumers do not recall last time they bought their toothbrush do not perceive it is time to change • 2008 quarterly campaign linked to seasons New Season, New Toothbrush
  • 89. Kids Event Sonae Target customer: family with Kids Event focus 100% on kids Assortment, Mechanic, POP Material Timing: International Children Day (June 1st)
  • 90. Kids Event R/H Insignia Sub-categoria VB QT PASTAS DENTÍFRICAS 11,2% 25,2% ESCOVAS DENTES 14,2% 21,4% CONTINENTE COMPLEMENT HIG ORAL 83,0% 73,3% HIG ORAL INFANTIL 126,6% 92,3% CONTINENTE Total 17,4% 27,9% HIG ORAL INFANTIL 60 49,76 50,19 50 42,25 40,85 40 31,97 34,46 30 20 10 0 S. / H+S 06 S. / H+S 07 S. H / Hipers S. H / Hipers S. S / S. S / 06 07 Supers 06 Supers 07 Dados YTD Julho / Agosto 2006 - 2007
  • 91. Conclusions Strategic alignment & focus on shopper Commitment to implementation Follow-up and continuous improvement Sonae Oral care SOM Evolution in 2007 From 32% to 33% Colgate Oral Care BDI in Sonae From xxx to YYYY
  • 92. Differentiate or die: © Oxford Strategic Marketing 2008 Key Success Factors
  • 93. What have we seen? How different marketing techniques can be used to drive differentiation Brand Proposition Development Segmentation Insight Joint Strategies © Oxford Strategic Marketing 2008
  • 94. What have we seen? How differentiation can be achieved through different shopper touchpoints Environment Product © Oxford Strategic Marketing 2008 2
  • 95. What have we seen? How differentiation can be achieved through different shopper touchpoints People & Services Communication © Oxford Strategic Marketing 2008 3
  • 96. Key Learnings Retailers are using sophisticated brand management techniques and successfully linking them to operational excellence Solid strategic understanding can improve retailer- supplier collaboration as well as improve shopper experience Differentiation can take many forms – product, environment, people and communication © Oxford Strategic Marketing 2008 4
  • 97. © Oxford Strategic Marketing 2008 5

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