Data Mines More Stores and Households
Marketers in the U.S. spent an estimated $1.08 billion on promotion research in 1997, mostly on scanner data and analysis to track package goods promotions.
Worldwide revenues for 174 leading U.S. research firms rose 9 percent to $6.02 billion for 1997, according to Jack Honomichl, publisher of Inside Research, a Barrington, IL-based newsletter. U.S. assignments accounted for $3.85 billion in revenues as domestic growth outpaced international work. U.S. revenues rose 12.6 percent and “international stopped being the fastest-growing segment” of marketing research, Honomichl says.
Consolidation continues to shrink the number of second- and third-tier players in a “concentration of power,” Honomichl adds. That has little impact for brand managers, except in rare cases where a U.S.-based manager is responsible for worldwide research on his brand. The biggest news for brand managers is that there’s more sales data available outside supermarkets and mass merchandisers, and more household-level data from those traditional retailers.
Marketing research – especially promotion program measurement – plays an increasingly crucial role in package goods marketing as more companies pursue pay-for-performance deals with retailers and expand their account-specific marketing efforts. Since both strategies rely on scanner-based sales data to set promotion budgets, scan data has become de rigeur on marketers’ laptops, at headquarters, and in the field. U.K. retailer Tesco is testing software that lets marketers monitor sales constantly to gauge a promotion’s effectiveness. That could save marketers up to 30 percent in promotion costs.
Scan data is also moving beyond the supermarket. ACNielsen, Stamford, CT, partnered with Miller Brewing Co. to track sales and promotions in convenience stores. Work began in Stop-N-Go and Corner Store chains in Houston, with other chains slated to join later this year. Miller has been using pilot-test data for nearly two years. C-stores are increasingly important to snack and beverage marketers.
Market-level data gives Miller “greater insight into the specific drivers of C-store performance,” said Miller director of category management Jeff Schouten in a statement announcing the alliance. Miller uses the data to recommend product mix and promotions for retailers.
Top players scuffle Nielsen reports worldwide revenues hit $1.39 billion in 1997, up 2.4 percent. U.S. revenues rose 8.2 percent to $310 million; Nielsen credits “growth in account-level information and consumer panel services.”
Information Resources Inc., Chicago, expanded its multi-outlet panel to 55,000 consumer households from 25,000. Panel members use a hand-held scanner to track all household purchases from all retail outlets. “As package goods migrate beyond the supermarket, it makes sense to track sales in other channels,” says IRI spokesman Bob Bregenzer. The company also maintains a separate 60,000-member in-store panel, tracking purchases by households with cards scanned at the supermarket.
IRI continued its financial rebound in 1997, marking its first profitable year since 1993 with $15 million in operating profits (1996 profits totaled a scant $700,000). IRI’s worldwide revenues were $456.3 million, up 12.5 percent; U.S. revenues were $366.7 million, up 6.4 percent.
In 1996 IRI appealed to the European Commission to stop Nielsen from anti-competitive practices. As part of its January ’97 settlement with the commission, Nielsen stopped pursuing exclusionary contracts in Europe. “The commission’s decision leveled the playing field and helped our nearly 50 percent sales growth in Europe,” says IRI’s Bregenzer. IRI continues to seek up to $1 billion in damages from Nielsen in U.S. courts.
“IRI has a great case,” Honomichl said. “They may not get all the damages they’re asking for, but it would still be a symbolic victory.”
All evidence unearthed by the European Commission is admissible in U.S. court, Honomichl adds. “At best, it’s an ugly, expensive diversion for Nielsen; at worst, it’s a financial disaster.”
* Sales tracking expands beyond supermarkets and mass merchandisers.
* ACNielsen and Miller Brewing tap C-stores for sales data.
* IRI shows first profit in four years.
* M&As continue the consolidation of power among bigger research firms.
* Household-level data makes targeting easier, consumer privacy trickier.
