Comparing Apples To Orangutans

Everyone knows what apples are. William Tell shot one off his son’s head. A fellow named Johnny planted their seeds across the Midwest. And, we have been told, one a day keeps the doctor away.

More than likely, however, the type of apple William Tell split with a bolt from his crossbow and the kind Johnny Appleseed planted were not the same — not to mention the wide variety of apples used to steer clear of the doctor.

Business partners can easily get sauced by not using agreed-upon definitions in the planning and execution of marketing projects. Only by using a clear set of definitions can people (and companies) work toward common objectives like avoiding the doctor’s office. Let’s start with some basics: stores, accounts, and markets.

What It Is

A store is an individual place of business a consumer can go to and buy something. Some of you call it “an account,” although if you make HBC products, you call it a “door.” I call it a store. An account is something stores report to or other accounts report to. An account can be a buying office, distribution center, corporate headquarters, or holding company, but it can’t be a store. And a market is any configuration of geography.

There are different types of stores in different trade classes. In the grocery business, everyone knows what a supermarket is — or do they? The definition created by the Food Marketing Institute reads, “a supermarket is a full-line, self-service grocery store with annual sales volume of $2 million or more.” The National Association of Convenience Stores defines convenience stores as “small-format stores (between 200 and 3,000 square feet and 500 and 1,500 SKUs) selling high convenience items … plus limited grocery items.” These definitions are real. Do you compare apples to apples? If you have made up your own, and they are not the same, then you are wrong.

An account can span across channels. Wal-Mart (which many of you may consider a trade class of its own) has conventional Wal-Mart mass merchandiser stores, Wal-Mart Supercenters, Neighborhood Store supermarkets, Sam’s Clubs and, through McLane, convenience stores and restaurants. Kroger has supermarkets, supercenters, and mass, chain drug, c-stores, and category killers. And for you retail trivia fans, J. C. Penney owns Eckerd.

What It Isn’t

The challenge gets worse when addressing markets. A DMA (Designated Marketing Area) is a geographic designation that defines each television market created by Nielsen Media Research. Each county in the U.S. is assigned to a single DMA with no overlap. An MSA (Metropolitan Statistical Area) is a classification developed by the U.S. Office of Management and Budget. MSAs capture population concentration and are often used to buy radio. ACNielsen’s ScanTrack and Information Resources, Inc.’s InfoScan are the prevailing syndicated scanner markets. And then you have your own sales markets.

Buying TV by DMA, measuring by ScanTrack, and going to market by your internal geographies is going to cause confusion. Here’s a test: What are the top three accounts in the Salt Lake City market? It depends on what you mean by market. In descending order of volume, DMA rankings are Associated Grocers, Albertson’s, and Smith’s Food and Drug. MSA is Smith’s, Albertsons, and Associated. ACN says Albertson’s, Associated, and Smith’s. And IRI says Associated, Albertson’s, and Smith’s. So what do you mean by market? And how are you doing in Salt Lake?

In light of this challenge, marketing executives have to do what they were taught way back in business school (liberal arts majors may have learned some of this from Chaucer, Locke, or Adam Smith). They need to start talking the same language. They need to mutually accept definitions and base their planning and implementation processes on those definitions.

A bold suggestion is to make sure everyone is saying the same thing when defining all points of analysis — from “store” to “account” to “market” — at the start of the business relationship. This way, trading partners will know that William Tell lined up his sights at a Golden Delicious, Johnny Appleseed planted Granny Smith, and Cortland or and even Staymen will keep you out of the waiting room.

That’s the core of the issue.

Scott Taylor is group vice president of sales and marketing for Wilton, CT-based Trade Dimensions. He can be reached at [email protected].