MARKET RESEARCH: Shelf improvement - Market research is playing a major role in category management, and that includes guiding the development of new products, writes Julian Lee

Category management, the system under which supermarkets and selected suppliers work together to boost sales of entire product categories, has become an important element in packaged-goods marketing. And as it enters a new and more mature phase, market research is poised to become the third party around the category management table.

Category management, the system under which supermarkets and

selected suppliers work together to boost sales of entire product

categories, has become an important element in packaged-goods marketing.

And as it enters a new and more mature phase, market research is poised

to become the third party around the category management table.



Sophisticated market research techniques are being used to give

marketers greater insight into consumer behaviour. In the early stages

of category management, this was not always the case.



Although they were given much of the suppliers’ own research data,

retailers often chose to rely on a combination of guesswork, habit and

instinct to determine the design and character of a particular category.

What they lacked was that vital piece of the jigsaw: customer

behaviour.



Now the demand for a consumer perspective has presented market

researchers with a golden opportunity. Agencies are reporting an upturn

in business as category managers search for a more accurate picture of

how supermarket shelves are shopped and why particular products are

bought.



Research International (RI) reports that demand has risen sharply. A

year ago the agency was conducting just one category management project

every three months. Now it has 18 on its books.



And, in the past 18 months, supermarkets have reached the conclusion

that methods such as space management, in which shelf space is allocated

in direct relation to volume sales, cannot be relied upon on their own

to improve a category’s performance.



Consumers often became confused as products were regularly delisted,

downgraded or moved at the discretion of the supermarket buyer. On top

of this, it was virtually impossible for a brand manager to be inventive

with his or her category.



Maureen Johnson, RI’s global director for retail and category

management, says: ’For the first time, market research is showing how a

consumer reacts to a category. It takes into account the way they behave

down to the very last detail. Space management didn’t illustrate that.

It was more about economics than marketing.’



Market research agencies have responded by employing a growing armoury

of sophisticated research tools and deploying them in the aisles and in

shoppers’ homes. These tools are not totally new. The Research Business

International, for example, has been promoting some of them for several

years, but they are becoming more widespread.



Category managers will no longer accept a ’reconstruction’ of what a

shopper thinks he or she buys. They want to know exactly what was bought

and the reasons why.



Watch and learn



Speaking at the Market Research Society’s recent annual conference, Phil

Ellis, category manager of butter and margarine at Van den Bergh Foods,

set out his agenda when embarking on a major category management

research project.



’Many traditional research approaches often stop short of the vital area

where sales and marketing interact: in-store at the sales fixture,’ he

says. ’There is so much to learn from observing and interviewing

shoppers while they are actually in their buying environment, exposed to

all the instore variables and trading off their rational choices against

impulse purchases.’



Accordingly, market research agencies have been observing shoppers on

video, accompanying them on shopping trips, checking the contents of

their cupboards at home, and questioning them as they enter and leave a

store.



Such techniques are giving marketers an accurate insight into consumer

behaviour for the first time since category management found its way

piecemeal into the UK in the early 90s.



The results have been twofold. Armed with such empirical data, the

manufacturer is more confident about getting the right amount of space

for the product.



The retailer, meanwhile, can attend to the detail that is so important

and implement some much needed improvements to the basics of

shopkeeping.



Why, for example, are shampoos and conditioners often placed at opposite

ends of the display? Why are large soft drink bottles placed on the top

shelf? Why is there no supplementary information about whiskies when

wine point-of-sale labels tell you everything you need to know?



Manufacturers are now using this data at the product development

stage.



Instead of coming up with a product and then negotiating with the

retailer to shoehorn it into a category, manufacturers are using

research at an earlier stage. Steven Jagger, managing director of

research agency Gfk, says that because suppliers know more about what

triggers a purchase and how a shopper reacts, they can tailor their

products accordingly.



’Manufacturers have been blinkered about where a product can go. Instead

of looking around and watching how the consumer makes a choice, they

have been thinking about how they can get a product they have developed

to fit into a particular category,’ he says.



Jagger claims research has persuaded one of his clients, a biscuit

maker, to start manufacturing for the moist cake category, which has a

higher price point, better margins and associations of higher

quality.



If, as anecdotal evidence suggests, market research is becoming more

involved in the business process of category management, then it will

come as a welcome fillip to an industry which has been waiting for an

opportunity to shape, rather than merely corroborate, a marketer’s

strategy.



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