Live Blog Day 2 from the Innovation & Marketing Summit

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July 19, 2011

By Gus Venditto

SBD Exclusive from the Innovation & Marketing Summit

July 19, 2011, 8:05 AM. Live blogging from the Innovation & Marketing Summit, second day, at the Intercontinental O'Hare Hotel, Rosemont, IL. Over 250 delegates are in attendance at the Louvre Ballroom for a full-day of presentations.

FMI Senior Vice-President Patrick Walsh opens the day with a presentation on research that explored the opinions of private brands trading partners. When asked to evaluate performance factors, the most important factor cited was "Quality" followed closely by "Food and Product Safety" and "Supply Chain Efficiency." When the paricipants were asked to evaluate overall performance in how the private brand space is executing, the data revealed gaps in potential performance and identified a lack of insightful data as a key factor. Walsh concludes that in store brands companies lag behind national brands in having consumer insight. Both manufacturers and retailers are eager for more insight into how to drive private brand growth.

8:20 AM. One survey respondent was quoted: "We do some research but we don't do enough of it and not with the breadth and depth that's necessary. If we had more insight, we could share it with our private label suppliers."

In looking over the data, Walsh asks whethere there is a new way of working together that could drive innovation. The study shows there is a clear need as the report concludes, "Manufacturers feel retailers are not willing to pay for innovation." Among the comments suppliers made, "Retailers speak about their desire for quality, but they don't use that as a key decision factor in their vendor selection as much as they probably should."

8:35 AM. After Walsh concludes, Maureen Azzatto of Store Brands Decisions leads a panel in discussing the findings. All panelists agree that the report is an accurate snapshot. Ryan Briggs of Supervalu says the report "highlighted the opportunity for retailers and manufacturers to come together." Kevin Hunt, CEO of Ralcorp, says every retailer had a strategy of "knocking off a brand" and we are starting to move beyond that. Edward Salzano of LiDestri, says he is taken by the need for more innovation and would like to see more information coming from retailers; he says that retailers have data about product performance that would be invaluable to him.

8:40 AM. The discussion moves toward food safety and the costs of certification. Kevin Hunt reveals that Ralcorp is making a significant investment in SQF Certification.

8:55 AM. Edward Salzano says there needs to be more dialog so the manufacturer is not bringing things to the retailer that won't work. Ryan Briggs counters that as a retailer, he doesn't want manufacturers to bring him product they're bringing to competitors. Kevin Hunt cites the Archer Farms line as a model because the expectations have been clearly defined.

9:10 AM. Kim Lymn of Target and Roger Zellner of Kraft present "The Global Packaging Project" What is it? "A plan to develop a common language to allow for intelligent debate on sustainable packaging."

9:15 AM. The goal is to develop "optimal packaging." Among the techniques: develop a basket of commonly used metrics to facilitate discussion about the sustainability of packaging choices. Some of the assumptions: too little packaging can create more waste due to unusable product.

10:25 AM. Erin Young of McKinsey sharing research on consumer attitudes. There is a "new normal" since the economic downturn and it is sticking. The consumer's worries about economic uncertainty have improved in recent months but not significantly. People have changed their behaviors to purchase less at the high-end. They are making more decisions by price and shopping more at discount clubs. And they say they are going to stick with these behaviors; they are happy with the changes and see no reason to go back to their old ways.

10:30 AM. Erin Young: the right organizational structure for store brands management should be focused on cross-category innovation, and rapidly expanding private brand tiers. Example of successful organization: Tesco has a category director who is responibile for buying, product development, technical and business/customer planning.

Measurement is esential. If you are not measuring performance, success will not come. KPIs (key performance indicators) need to be tailored to the organization. Foundational metrics to track: overall category profitability and private brand penetration by category and sales per private label SKU.

Highly visibile, senior-level commitment to the private label business is also essential for private label success. Example: Dave Nichol and Galen Weston of Loblaw have gone public with their support for the company's private labels.

10:50 AM. John Seal of Burke says he has observed that through the conference, store brand organizations are learning they need to do things they have never done before. And if store brands are going to be successful, you are going to have to do more things you never did before. He has seen this shift in his own work. Burke is an old-school survey-based research firm. Until three years ago, all of his work was done for consumer goods manufacturers but increasingly, he is working for retailers.

Who buys store brands? Clearly, not everyone or there wouldn't be any more national brands. The conventional wisdom is that they are price-sensitive. But research shows almost everyone is price-sensitive. The reality is that there is no single mindset among consumers. So you need to identify shopper segmentation and incorporate it into your strategy.

11:20 AM. Seal is often asked to provide segmentation research and when he asks what they plan to do with the data, he's told "we want to understand our customers." Segmentation in the service of marketing only makes sense if you are going to do something differently for each of your segments. For example, are you going to have a different price tier for each segment? Different messaging and positioning for each segment? Different product mix for each segment? If not, you are wasting your marketing dollars.

Everything on the shelf should be there for a particular shopper. That is the essence of segmentation.

11:30 AM. Segmentation can help you deicde whether you should remove national brands from your shelves. If you have a private label product that will appeal to your store's segment, then you can remove it if you have messaging that lets your segment know there is a better choice for them on the shelf.

Shopper segmentation needs to be based on consumer research. Private label brands that are not doing research now will be doing it within five years.

11:40 AM. Koen DeJong from International Private Label Consult (IPLC) with a European perspective on private labels. In 9 countries in Europe, private labels have over 35 percent of the market share.

Among the factors leading to that success is aggressive promotion and strong cooperation between retailers and suppliers. Sample Tesco promotion displays store brand product next to national brands noting price differences.

11:50 AM. Innovations being used in Germany to build loyalty: product labeling that links to a website where you can see the product's carbon footprint. Used by Hofer on milk cartons.

11: 55 AM. There is an important role for private label packaging in communication. If you use the store banner (logo) on the product, it has a number of benefits: it remains visibile in the home, reaches consumers more frequently and over-comes media fragmentation. Packaging design provides a silent salesman with a voice.

Participate in the only industry event focused entirely on store brands innovation and marketing. The 2012 edition of the Innovation & Marketing Summit will be March 12-13, 2012 in Chicago. To receive updates CLICK HERE

1:10 PM. Thom Bischok of Symphony IRI Group presented a steady stream of research findings. Here are just a small sampling....

Over 75 percent of store brands households purchase in over 30 store brands categories in a year.

Over 74 percent of shoppers rate store brands quality as good or better.

63 percent of shoppers are willing to switch if the price is 30 percent or less than national brands.

65 percent of houeholds making under $55,000/year are making changes to surive. The rest are making changes to save money.

Where will store brands grow in the coming year? Refrigerated foods are highest with 7.5 percent. Health is next 3.8 percent.

80 percent of American shoppers are "actively looking for healthier products."

Allergy medications overall are a $58 billion market category and private labels represent $11 billion.

1:30 PM. Blischok: simplify your assortments. Campbell Soup worked hard to establish an average 7-second shopper search time for its display. How many stores can say the same about their own category displays?

Last year there were 2,000 new products in the non-store brand CPG universe; only 4 made $100 million.

Summary: Discontinue products that do not meet shopper needs. The rules of the game have changed. Shopping habits have changed and they are not going to go back to the old ways.

1:50 PM. Reggie Bradford of Vitrue is explaining how to use the company's social media management platform. Example: it allows for scheduling of promotions to a Facebook fan page in advance. Also, control of spam and creation of localized content for different markets.

Advice on building a social media strategy: engage your fans in a two-way conversation. Community management is the heart of social. Share engaging content, such as polls, quizzes and multi-media (such as low-cost video).

2:10 PM. To increase Facebook engagement: use the home page. There is a 110-times greater engagement when items that appear in the newsfeed (as opposed to inside the tabs). If you use an image in your text, there is an 82 percent greater chance a user will click.

2:15 PM. Facebook is becoming the operating system of the Internet.

2:20 PM. Vitrue worked with P&G who has implemented over 100 Facebook pages that are reaching millions of fans. Tide gives Facebook fans contests and polls to engage with. Now has over 1 million fans. Frito-Lay worked with Zynga to offer in-game product placement; in the game, a Farmville user had to "like" Frito-Lay to get the game virtual currency. As a result, Frito-Lay racked up 1.5 million fans in a single day (setting a Guinness World Record).

2:30 PM. A question from the audience: how should we evaluate social media partners? Bradford recommended research from Forrester and eMarketer and Altimeter Group. To start out, get people inside the company involved in social media and build on their efforts. Consumers will interact with people they know. Another opportunity is to get involved with charitable causes.

3:10 PM. Matt Egol of Booz & Co. Sharing research on "shopper marketing." The opportunity in shopper marketing is to influence malleable brand preferences along the full path to purchase. His research shows that 41 percent of the time, items on a shopping list the shoppers brought into the store were branded and the branded item was purchased. The remainder of the time, shoppers either made up their mind in the store or changed their mind while in the store.

3:20 PM. Brand marketing (develop emotional connection consumer's motivations) vs. shopper marketing (catch consumers at moment when shopping behaviors begin).

3:30 PM. Opportunity: Serve as the "anchor tenant" for category solutions, such as a "daily flu season" with Clorox and K-C. Work with national brands to develop co-promoted events that may be available.

3:35 PM. Opportnity: leverage digital to drive traffic and add a "call to action" for in-store displays. Drive traffic with paid search, database marketing and deals embedded in ads.

3:50 PM. In the day's final session, John Failla engages a panel of several executives to share their thoughts about what they've heard over the last two days.

Maurice Markey of Sam's Club talks about the fact that quality is a big challenge for our industry; all research from our consumers tells us that this is the most important factor for them. For us, the challenge is even bigger than it is for national brands because our products cut across several categories and we will be judged by a consumer's experience in all of those categories.

Kurt Denman, OfficeMax, this experience has been therapuetic because I've learned that other organizations are facing the same challenges.

Markey: seeing those statistics about the consumer interest in store brands compared to the market share is a reminder that we have enormous potential.

Katherine Lenhoff of Loblaw, hearing about the digital and social media tools is reminder of how much we have available to use and how much we need to be experimenting.

4:10 PM. John wonders how the panelists reacted to the session on "shopper marketing." The topic is "all the rage" for CPG marketers but maybe it was too far out there for store brands people. Katherine Lenhoff says it was an interesting perspective since it lays out the process and is a reminder of something to look at. Maurice Markey says he will add this to his whiteboard of projects to look at.

4:30: PM John Failla concludes the panel by announcing that next year's Summit will take place on March 12 and 13, 2012 at the Hyatt Regency O'Hare.

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