Bu: JP Beauchamp and Shelly Murphy
The volatile economy has left many consumers in a lurch, and as such, the CPG landscape remains mired in uncertainty. To navigate these murky waters, CPG retailers and manufacturers need sound product testing methods to assess opportunities, determine appropriate expenditures, gauge shoppers’ behaviors and attitudes and mitigate risks.
In our last post, we discussed the importance of innovation testing, such as evaluating innovative new packaging and ingredients, and this installment will focus on in-store testing, which measures shoppers’ actions and responses to specific store layouts, planograms and other in-store activities, and advertising/marketing testing, which evaluates traditional, online and integrated campaigns. By effectively analyzing consumers’ responses to these factors, CPG retailers and manufacturers can isolate the elements that affect shoppers’ behaviors and attitudes positively, and use these elements to create an enhanced product/retail experience.
To evaluate the overall success of store layouts, planograms and in-store activities such as visual merchandising, IRI recommends a test market approach. Stores that match predetermined criteria are divided into either the test category or the control group. Campaign-specific variables are then introduced, and product performance data is collected and analyzed within a given time period.
One test market approach is to create a forecast that analyzes 12 weeks of in-market data, thereby allowing clients to quickly identify missed opportunities and remedy the situation. Recently, an IRI client’s major new product introduction was slipping below goals. To quickly determine the impact of the shortfall on total year one sales, IRI conducted this forecast andwas able to pinpoint opportunities within distribution and promotion that had been overlooked. As a result of this in-store testing method, the client was able to correct its course. By changing sales force incentives and allocating additional funds for in-store merchandising, the company was able to recuperate lost sales and achieved its year one goal.
Alongside in-store testing, advertising/marketing testing is another valuable approach to achieving sales goals. To assess the ROI on advertising, a leading manufacturer of baby products looked to IRI to measure the impact of Spanish language advertising – a venture not previously explored. The goal was to quantify the sales impact and corresponding ROI to determine the right expenditure to validate this course of action.
IRI conducted a within market matched store test in which stores frequented primarily by Hispanics were exposed to the test treatment and stores whose clientele did not include a large Hispanic population were not. IRI helped the client recognize that although the test results showed Spanish Language advertising increased sales by three percent, ROI remained low. The client was thrilled to have foregone an expensive endeavor that almost certainly would have failed, and is now focused on exploring other avenues to bolster their advertising plan.
These case studies demonstrate the strategic advantages of in-store and advertising/marketing testing methods that have saved clients millions of dollars. Not only do these types of testing help CPG retailers and manufacturers mitigate risk, they also provide deeper insight into untapped market opportunities and help determine the labor and capital investment required to create successful innovations.