Stranger in a Strange Land

Given the industry-wide turnover in brand management within packaged goods companies, it’s hard to keep even a small one-to-one program in place over a long period of time. But it has been done by CheckMark Communications, the in-house marketing communications unit of St. Louis, MO-based Ralston Purina Co.

The firm used targeted marketing techniques to promote one of its former core product lines, Beechnut baby food, according to Dan Davidson, director of strategic target marketing. Baby food is a low-penetration product, since a relatively small percentage of the population buys it. But the audience is easy to identify, and there are elements within it that allow for segmentation: For instance, urban mothers will have different needs than rural mothers.

The first idea Davidson presented was changing the marketing focus from the product to the audience. Brand managers see themselves as having to sell products, not interact with customers. “Don’t define the category as baby food,” he says. “Define it as households with new infants.”

Beechnut then made further differentiation, which influenced the design of its marketing pieces. “First-time moms can’t get enough information,” Davidson says. After the first child, however, the communications can be more direct. Davidson characterizes the attitudes of experienced moms as: “I know what having kids is all about.” He adds, “They rip open the mail pieces and say, `Where are my coupons?'” To them, packaged goods marketers can send less-expensive, simplified mailing pieces.

Ralston Purina’s strategy involved having the product in front of the new mother when her need arose, providing high-level incentives to get her started, keeping her engaged through communication, and varying offers, including some that require her to save labels.

Beechnut ended up modifying its mail strategy to this market, doubling the quantity of efforts by cutting back on the cost of the package, stripping it of all but essential information, offers and response mechanisms. As the contact cycle progressed and brand affinity developed, the label-saving incentive requirements become higher. Over time, says Davidson, this strategy drove “substantial growth” in every dynamic, including total sales volume and market share. But Beechnut has been spun off from Ralston Purina, and with every new product manager comes a struggle for acceptance of direct techniques.

Much of the resistance to one-to-one or to any targeted marketing in the packaged goods industry has, in Davidson’s opinion, been the result of pre-set ideas. CheckMark once put together a highly targeted test program, with a BRC and an 800 number strewn throughout it, in 30 test markets. When the calls and cards came in, the company was able to differentiate between households based on volume. But when it came time to measure the test’s impact, the company ran into cultural differences. Packaged good companies rely on tracking services such as A.C. Nielsen, which survey a cross-section of shoppers across the country. “We had thousands of people in these markets that we were going to market to, and virtually none of them were on these panels,” says Davidson. The company ended up doing custom research to verify the positive results that would not have been caught through standard measuring methods.

Davidson advocates that packaged goods companies continue to use mass advertising, but incorporate into it methods by which consumers give key pieces of information, such as who they are, how much of the brand they use and how much of the total product category they use.

In some cases, household data from compilers, such as Little Rock, AR-based Acxiom Corp., helped a one-to-one marketer overcome a brand manager’s reluctance to target marketing, often seen as an expensive form of coupon delivery. “The only time you want to do something as expensive as mail is when you have a strategic marketing objective to do so,” such as wanting to get a trial from consumers of a specific competitor in a specific market, says Davidson.

Using such information, Davidson constructs a value matrix and looks for the “sweet spot” – high-quantity category buyers who purchase between 25% and 75% of their goods from a single manufacturer. The sweet spot consists of those consumers who will yield the greatest incremental gain per marketing dollar spent. Davidson applies a “valuing” formula that allows him to determine the depth of effort to these individuals. Where people are fanatical consumers of a single brand, packaged good manufacturers can generate a retention campaign. But where there is tremendous potential for growth, the manufacturer can craft an outreach program geared toward generating trial. “We have a catch phrase – one-to-one to your very best, segment marketing to all the rest,” he says.

Once a packaged good manufacturer has segmented these second-tier use consumers, it can tailor different messages. For these consumers, the process of soliciting individual information can be cost-prohibitive. Acxiom data can provide information on those households.

This is probably not a bad back-door entry for target marketing into packaged goods. “If you build a database you can make adjustments to things like FSI circulation for efficiency purposes, says Davidson. “This is when you begin to get a packaged goods marketer’s attention. The net output will be a more efficient cost per unit moved per FSI. Then the more strategic things, like evaluating consumers and establishing contact, can follow,” he says.