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    Published on: March 2, 2010

    IRI Spotlightby Doug Brooks, Senior Vice President, Analytics and Modeling Services, Information Resources, Inc.

    Content Guy’s Note: Today we’re introducing “Spotlight,” a new sponsored feature here on MNB in which industry thought leaders will offer extended thoughts on the critical issues that face the business.

    Marketing mix modeling (MMM) is a powerful approach for gaining industry-tailored insights that can directly lead to improved marketing ROI. The retail industry is a perfect fit for MMM, given the continuously evolving attitudes and behaviors of shoppers, the large amount of data available for analysis and the fierce competition that characterizes the market.
    MMM is a statistical analysis linking multiple variables to changes in consumer behavior and supports the development of forward looking business simulations and optimization exercises. The power of these models is derived from the statistical analysis of two years of historical data, reflecting non-linear behaviors and including inputs that represent all significant influencers on business performance.

    MMM benefits companies in the following ways:
    Provides backward visibility into the ROI for marketing tactics.
    Helps diagnose the reason for changes in business performance over time
    Forecasts future trends and predicts results of any changes made to the marketing mix as a part of response planning

    While MMM has existed for decades, it is still misunderstood and misapplied by some, with sometimes disastrous results. To be successful, marketers must realize MMM is equal part art and science. Marketers must pick a point where the data is “good enough,” realizing that improving accuracy from 95 percent to 98 percent is rarely worth the delay and expense. Marketers must recognize it is impossible for the model to explain or predict 100 percent of sales activities. The MMM model must align with the current business challenges and planning processes and should map to the analytics decision makers need—whether geographic, socio/economic, store-level, or brand-level.

    Addressing these key challenges up front will provide a strong foundation and help avoid any potential failures when building a MMM that will fit the company and its goals. The following 10 recommendations provide a valuable set of tested and successful ideas to help executives create an effective marketing mix modeling program:

    1. Choose and focus on the most actionable point(s) in the consumer funnel: Determine the greatest needs of company managers and hone in on solutions for that first.

    2. From day one, gain cross-functional buy-in: Include key managers from all relevant teams, such as market research, finance, sales, operations, marketing, and sometimes other functions.

    3. Align analytics with the latest business challenges: Ensure the analytics meet the needs of managers to address significant issues. Provide managers with reports specific to their needs.

    4. Translate, integrate, and triangulate to tell the whole story: MMM cannot be developed in a silo it must be integrated with other company strategies to create a “single point of truth.”

    5. Make it forward-looking: Rapidly fluctuating market conditions make reviewing backward-looking insights in an attempt to make predictions a thing of the past. MMMs need to be forward-looking, providing “what-if” scenarios to stay on top market changes.

    6. Incorporate and synergize digital and emerging media: Digital and social media are becoming standard parts of media research. Examine the relationships between digital and traditional media consumption to prioritize different types of media correctly. Not all media impressions are created equally.

    7. Manage expectations. Reinforce strengths, limitations and appropriate application of MMMs. It’s an ongoing process often requiring a 2-3 year investment to reach the desired maturity level.

    8. Update analytics frequently to put the right information in the hands of the right people at the right time. Timely delivery of insights is critical. Successful organizations are updating their analytics and continuously recalibrating them in response to changing market conditions.

    9. Educate, Educate, Educate. Keep cross-functional stakeholders across the company educated on progress at every phase of the project.

    10. Experiment with complementary and leading-edge technologies.Test different analytical tools and approaches, such as in-market tests, consumer funnel analysis, brand equity analysis or agent-based modeling.

    MMM is a critical exercise for gaining breakthrough insights that can directly lead to improved ROI. Managed well, MMM can provide significant competitive advantage to companies across almost every industry by offering new, predictive insights that can directly result in revenue and profit increases. Poorly managed MMM can point companies in the wrong direction with disastrous consequences. Executives eager to implement MMM should take the time to conduct an exhaustive study of successes and failures prior to undertaking a new MMM exercise. Companies with limited MMM experience should consider involving subject experts who can help the company’s cross-functional team successfully navigate the many decisions involved.

    For more information, click here.
    KC's View:

    Published on: March 2, 2010

    by Michael Sansolo

    No doubt there will be some point today or this week when you, an associate or even a family member will need a reminder as to why giving up is never a great strategy. Well, the world handed us a great lesson and it’s one we shouldn’t pass by easily.

    Pause for a second and remember Anna Friesinger-Postma. And your lesson is done.

    While the Olympics coverage always features a litany of memorial and moving stories (is there any athlete who doesn’t have one?) Postma’s was a story built on herself and her effort. But in a matter of seconds Postma demonstrated why even trying in a lost cause can matter so dearly.

    Postma was one of three German speed skaters in something called the women’s s pursuit. In that race, two teams charge around the ice to see which can finish first, but the most important rule is this: a team’s time is measured when their third and last skater crosses the finish line.

    In Germany’s semi-final against the United States it was clear that Postma was going to be that third skater. With a large lead and less than 250 meters to go, Postma suddenly stopped skating well. And as she completed the lap, her form kept going from bad to worse. The problem wasn’t with Postma, but rather with the spring in her skate. It broke, which meant she was dragging one semi-useless skate around with her.

    Entering the home stretch and with her team’s lead evaporating quickly, Postma made a last ditch choice throwing herself down the ice, which allowed her to slide across the finish line. Incredibly she beat the third American skater by six one-hundredths of a second.

    What made the story better yet, was that in the finals Postma, skating with functional equipment, helped Germany win the gold medal. It’s a race they should not have been in had Postma not fought on with her broken equipment one race earlier.

    After the race, longtime MNB reader Scott Young of Coca-Cola commented to me that Postma just provided a perfect speech…and a perfect column. Because it provided a perfect lesson.

    We always need to remind ourselves, our teams and our families that things go wrong. The unexpected happens with great frequency and it’s rarely a welcome occurrence. And when that happens we have two choices: to give up or to find a way to do whatever we can.

    Honestly, it won’t always work out like Postma’s effort did. In most cases, the skater will finish short of the line or will lose the race. But if we don’t try we never know what will happen.

    So have a discussion with someone about Anna Friesinger-Postma, or download the photo of her lying on the ice and use it as a constant reminder.

    Bad stuff happens all the time. It’s what you do next that matters so much more.

    Michael Sansolo can be reached via email at . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: March 2, 2010

    Crain’s Chicago Business reports that an alliance of 200 Chicago ministers, representing more than 100,000 churchgoers, has declared its support for the opening of new Walmarts there.

    According to the story, the group “will first demand that Mayor Richard M. Daley grant administrative approval to begin construction of a Wal-Mart at the Chatham Market shopping center, saving that project from falling into foreclosure. The group also will pressure aldermen to approve that store and others in retail-starved neighborhoods such as Englewood and Pullman.” If this doesn’t work - and the conventional wisdom is that it will not - “the ministers say they'll mount a campaign against aldermen who oppose the big retailer's expansion. Taking a page from union groups that have held Wal-Mart back, the ministers say they will support candidates in favor of the store with political advertising and urge their congregants to vote against dissenters ... The pastors are betting that community sentiment in favor of Wal-Mart has grown immensely as store closings and job losses have piled up, leaving Wal-Mart the only viable hope in many poor neighborhoods.”

    In essence, the ministers are looking to see if they can bring the same organizational skills and motivational juice as the unions that have so far managed to bring enough pressure to bear on politicians that only one Walmart has been built within the city limits.

    While Walmart has provided financial support for some community groups lobbying in its favor, the retailer says it has no connection to the ministers’ coalition.
    KC's View:
    First of all, to be fair, we have no idea whether any divine power is pro-Walmart or anti-Walmart. I’m guessing that if there is a divine power, he or she probably is concerned with more important things.

    But it is noteworthy that people who position themselves as being representative of a divine power have decided to support the Bentonville Behemoth ... and it certainly gives new texture to the ongoing Chicago debate.

    Published on: March 2, 2010

    The Retail Industry Leaders Association (RILA) is out with a new survey suggesting that “more than ever before retailers are viewing the issues of privacy and security as strategic imperatives within their organizations. Privacy not only fulfills brand-promise but also allows retailers to successfully move forward with cross-channel retailing.”

    When it comes to the attitudes toward customer concerns, 87 percent of retailers polled said they believe that recent publicized breaches have raised consumer awareness about payment data. Seventy-two percent of winning retailers shared that privacy is a concern for their customers and retail products and services require the protection of sensitive information.

    “For 47 percent of overall respondents, proactively addressing privacy and security issues enables them to move forward with an aggressive cross-channel agenda,” says Steve Rowen, co-author of the report. “Customers are researching, shopping, and returning any way they please, in any channel, in any combination of channels - in ways that were not predicted even a few short years ago. Retailers know this, and for nearly half of them, there is a strong recognition that privacy and security are a prerequisite to keeping a competitive position in the game.”

    According to RILA, “The report concludes that there is no strategic advantage to addressing the data security and privacy imperative, there is only strategic disadvantage if these challenges are not addressed. Customer data has strategic importance to the company’s ability to execute on its brand promise, and systems that create, retrieve, update, and delete that data, must comply with corporate policies regarding privacy and data security. Retailers acknowledge that the ability to ensure consumer privacy and data security is vital to the brand promise and the inability to do so would impede successful execution of a cross-channel strategy.”

    The survey was done in partnership with Retail Systems Research (RSR).
    KC's View:
    This makes sense. What seems most significant is the acknowledgement that “customers are researching, shopping, and returning any way they please, in any channel, in any combination of channels,” which is the same thing as understanding that customers want what they want, when they want it, how they want it, where they want it, at a price they think it is appropriate. Retailers have no choice but to develop approaches around this...and that includes making privacy a priority.

    Published on: March 2, 2010

    Two burger-oriented stories in the news...

    • The Chicago Tribune reports that President Barack Obama has been hosting a series of cheeseburger lunches with some of America’s highest profile CEOs, using the sessions as casual but focused sessions during which they discuss “global economic policy, corporate bonuses, climate change, high school dropout rates and more.”

    Among the retailing and CPG executives - from both sides of the political aisle - included in the five sessions that have been held since last summer have been Mike Duke, Wal-Mart Stores, Inc., Muhtar Kent, The Coca-Cola Co.; Howard Schultz, Starbucks Corp., Jeff Bezos, Inc., Irene Rosenfeld, Kraft Foods Inc., Ken Powell, General Mills, Inc., William Weldon, Johnson & Johnson, and David Mackay, Kellogg Co.

    There’s actually a pretty funny line from Valerie Jarrett, a senior Obama advisor who coordinates the sessions as part of her portfolio of reaching out to business. She notes that some guests are invited because of their reputations as business leaders with smart ideas, and others because of their interest in public policy. But some, she says, are invited "because we hear that they're grumpy about something, and we think it would be good for the president to hear firsthand what their issues are.” Jarrett does not identify who is who.

    • There is a wonderful little interview with celebrity chef Rachael Ray in Time, conducted at her annual Burger Bash hosted at the South Beach Wine and Food Festivals.

    Some excerpts:

    About the accessibility of the burger... “I don't think I have enough words to declare my love for the burger ... I think you can make anything you want into a burger. I love tuna burgers, veal burgers, beef burgers ... Accessibility is just such a great thing. If everybody that looks at your product feels that they can join in and be a part of it, that's great. That's how I look at it. So for any great chef to put his or her favorite flavors between a bun, that just makes all these great chefs at this festival accessible to everyone. It makes any type of food or flavor accessible to all of us. It levels the playing field; it makes us all the same. That's what I like about the burger.”

    On changes in attitudes... “Things are really changing. Ten years ago people wanted dishes in their arsenal that they can slap on the table in a couple of minutes; now they're not afraid to try something that has a long list of ingredients, some of which might be new to them, because they're available now on a wide basis, at a fair price, at a lot of markets all over the country — instead of just to a few people at big cities. So I think that home cooking has evolved over the last few years for sure ... The biggest difference isn't exotic stuff. It's the old-school grandmother cooking. People 10 years ago often had really minimal skills; there had been two generations of double-income earners not working from the home who where like, O.K., I'm going to try to cook a piece of boneless skinless chicken breasts, and I don't want to know from nothing else! You know? Now you can do the stuff that would take them all day on a Sunday, the more complicated sauce, the dried mushrooms versus fresh white button ones. The biggest difference is they'll put the time in. They'll try anything now, they're more confident, because we've been amateur cooks now for a generation. They're like, I can do that. I can handle that. I'm willing to try that.”

    On why food matters... “It appeals to all of your senses, it gives you instant gratification. You take a pile of raw ingredients, and you turn it into something sensual and meaningful that expresses who you are and the flavor of your life. And if you share it with other people it fills you up before you ever take a bite of it. It can connect you to your past, it can take you away to a place you've never been and dreamed of, or take you back to places you've been and want to remember. It's a wonderful vehicle of the mind, the body and the soul. It's great. I love it.”
    KC's View:
    I had an elk burger last night...which I’ve never had before. It was wonderful. And different. And perfect. (But more about that in Friday’s OffBeat...)

    We have a long-standing bias in favor of burgers here on wasn’t that long ago that members of the MNB community compiled a list of their favorite burger joints, which can be found by clicking here.

    But the big lesson here, it seems to me, is this one:

    Food matters. And it is the one great advantage that food stores ought to celebrate at every turn.

    Published on: March 2, 2010

    American Medical News has a piece in which it discusses what it calls the leveling off of growth in the retail health clinic business, noting that “from October 2006 to September 2008, the number of retail clinics -- quick-care centers in pharmacies, grocery stores or big-box stores -- grew from 200 to more than 1,000. CVS Corp., which bought retail clinic pioneer MinuteClinic, and Walgreen Corp., which bought Take Care Health Systems, were expected to expand even more. Wal-Mart Stores Inc. said it would open hundreds nationwide.

    “As of February, there were 1,197 retail clinics, an all-time high. But that was only eight more than in March 2009. CVS and Walgreen not only did not expand, they closed clinics. Wal-Mart became more circumspect on where and when to open clinics. Some hospitals and retail clinic chains dumped plans to open clinics in favor of stand-alone urgent care centers.”

    One of the problems with the model, the article says, is that clinics need to see an average of two patients per hour, which is a high number at certain times of year when people are not lining up for flu shots. In addition, there may be limits on the places such clinics can work - they may work in metropolitan areas, but need a large population base to survive.
    KC's View:
    Sure, there may be limits. But that doesn’t mean retail clinics are a bad idea. Far from it.

    Published on: March 2, 2010

    •, the pure-play, New York City-based online grocer, said yesterday that “it is making shopping on-the-go just as fast and easy with a new iPhone application - the first and only full-service app for shopping for fresh food and grocery. The app delivers virtually all of the functionality of and allows customers to create new orders as well as modify orders.  Available for free at the Apple App Store, the FreshDirect app is compatible with the iPhone and iPod touch.”
    KC's View:

    Published on: March 2, 2010

    • Safeway announced that it will “become the first U.S.-based retail grocery chain and manufacturer of private label merchandise to join The Sustainability Consortium in support of the organization's science-based work toward a more sustainable global supply chain. The company joins other retailers and consumer product manufacturers that have become members of the Consortium and its product ‘life cycle’ mission including social and environmental considerations.”

    According to the story, “Safeway is interested in aggregating the data for primary sectors such as agriculture, dairy, packaging and fishery through industrial food processing to retail delivery. This data will be leveraged in creating Safeway's company-wide supply chain policy encouraging sustainable purchasing and manufacturing practices throughout the organization's direct and indirect buying ... Safeway will play a leadership role in modeling life cycle inventories; the goal is to better understand the complete scope of industry's social and environmental footprint.”

    Reuters reports that Marks & Spencer plans to “step up its plans to go ‘green’ by opting for more sustainable ingredients and agreeing a living wage for suppliers in its bid to become the world's most sustainable retailer by 2015. M&S said in a statement Monday its new plan would extend its original green targets that were introduced in 2007 and would make the company more efficient, develop new markets and build customer loyalty ... M&S said its new commitments would include making sure all 2.7 billion food, clothing and home items carried at least one sustainable or ethical quality such as being fair-trade or free range.”
    KC's View:

    Published on: March 2, 2010

    • Ron Dennis, the president of Virginia-based Farm Fresh since 1997, announced his retirement, effective Friday.

    While the company seeks a successor, his position will be taken on an interim basis by Brian Huff, senior vice president of specialty retail for Supervalu.
    KC's View:

    Published on: March 2, 2010

    • Publix Super Markets reports that its annual sales for 2009 were up 1.6 percent to $24.3 billion, compared with $23.9 billion in 2008. Same-store sales were down 3.2 percent, while new-store sales were up 4.8 percent. The retailer’s net earnings were $1.16 million, compared with $1.09 million in 2008.
    KC's View:

    Published on: March 2, 2010

    We had a story yesterday about a new study suggesting, essentially, that people who walk all the aisles of the supermarket tend to spend everything they planned to spend when they walked in, while those who only walk some aisles tend to leave with some money in their pockets. One of the people quoted in the original New York Times story was a postdoctoral fellow at the University of Pittsburgh, and I challenged some of the assertions of the study by saying that “I hate to be the one to challenge an assertion by a postdoctoral fellow, especially since I have but a modest B.A., but...”

    Which led one MNB user to write:

    Wow, Kevin...I didn't think you'd be one to join in the anti-intellectual movement.  You make not one, but two subtly derogatory references to someone being a postdoctoral fellow.  Why not just state their opinion and comment on it?  Why suggest that because they have more formal education than most other Americans, that they're necessarily out-of-touch, or flat-out wrong?

    You’re right. That comment was needlessly snarky and inappropriate. (Thank goodness I don’t work for ESPN, or I would have been suspended...) I could have made the same point without being so catty.

    I could have done it like MNB user Nico Hogeveen, who wrote:

    Retail (and all business I would argue) is about customer/consumer loyalty, not about grabbing as much cash as possible from shoppers’ wallets in one visit. This looks like a poor research methodology both in its objective as well as in its execution (175 sample size). The academic world ... falls into this trap quite often. My other concern is why the Journal of Consumer Research will publish this new study. Unless there’s more to it than quoted, some proper vetting prior to publication is what I would have expected.

    We had a story about McDonald’s getting into the oatmeal business, and I noted that the company seems to be copying Starbucks and Jamba Juice ... and I said that of the two, I liked Jamba Juice’s oatmeal better.

    Which led MNB user Britt Hoover to write:

    You mentioned Jamba has the best oatmeal version you’ve yet tasted. Caribou has its own line of Handcrafted oatmeal. Being a sponsor on your site, it would seem that they should at least be worth a mention. Or haven’t you tried theirs yet?

    The folks at Caribou Coffee no doubt appreciate you bring this is up. I have to be honest...I don’t have a Caribou Coffee near me, and I didn’t know that they serve oatmeal. But I’ll be sure to try it next time I see one.
    KC's View: