INSIGHTS INTO THE BARRIERS AND THE OPPORTUNITIES
Opportunities in emerging markets dominate nearly every investor call we’ve heard in the last couple of years. Today, FMCG firms, such as Mondelez, Nestle, and Procter & Gamble, obtain almost half of their revenue from these countries and the overwhelming source of growth these markets represent. Unilever recently predicted that 70% of their business will occur in developing economies by 2020. Unfortunately, shopper response analytics doesn’t appear to share a corresponding sense of importance in these important emerging markets.
Managers in these areas have leveraged conjoint analysis for simple assortment and pricing questions, but the overwhelming complaint we hear is that retail tracking data is too limited for sophisticated modeling. Many have tried. Unfortunately, analytics suppliers have forced the use of econometric models for scanner data onto the traditional audit method of collecting retail sales results. A lack of weekly observations, therefore, becomes an enormous challenge, so analyses review a decade or more of past performance. To make matters worse, integration of these audit measures with other time-aligned data is not as simple as these modelers try to make it.
We would make the same mistakes if Harry Bright, the architect of Nielsen Scantrack, hadn’t explained how to truly interpret the traditional retail audit. Unlike scanner data, audit sales are based on what Nielsen calls the parallelogram.
Auditors are in stores every day of the month. Because of this, half of store audits start in a calendar month and the other half end in the calendar month. Clearly, this is not directly aligned with other data that portrays an exact calendar month.
It is only natural that shopper response assessment using time-aligned (longitudinal) variation with audit data will provide limited outcomes. This is why Middlegame uses a different approach. The audit data is extremely effective for modelling variation from a cross-section perspective. We call this the wide angle view. This overcomes the parallelogram by exploiting the relationship between SKU marketing support and SKU market share. Assortment, pricing, merchandising, and even media assessment is immediately possible. The number of SKU observations also means we don’t need to review a decade of data. Realistically, is what happened ten years ago actually relevant in today’s rapidly evolving markets?
To find out more about obtaining a complete understanding of the retail audit data that can enable you to successfully deliver shopper response analytics in emerging markets, or to see examples of this practice in action, visit our website at www.middlegame.ie. You can also learn more about how TRAC, a company that Harry Bright started with Chris Glover in the ’90s, has taken the traditional retail audit to the next level at https://www.trac-ww.co.uk/.
Middlegame is the only ROMI consultancy of its kind that offers a holistic view of the implications of resource allocation and investment in the marketplace. Our approach to scenario-planning differs from other marketing analytics providers by addressing the anticipated outcome for every SKU (your portfolio and your competitors) in every channel. Similar to the pieces in chess, each stakeholder can now evaluate the trade-offs of potential choices and collectively apply them to create win-win results