WHAT'S IN STORE? 1994-02-07

CARLENE A. THISSEN

The new Coca-Cola Research study on electronic marketing ("Measured Marketing," conducted by Brian Woolf) is oriented toward retailers and wholesalers, but was presented at the Food Marketing Institute Midwinter Executive Conference to an audience that included many of the senior executives of consumer products companies. For the first time, the benefits of electronic marketing were presented to a strictly senior executive-level audience. I think those senior executives listened, and that we will see an increase in the use of electronic marketing programs as a result.

The study is extremely positive about the use of electronic marketing, so much so that a key point of the study is that retailers should make electronic marketing the core of their marketing program, not a "clip-on" to their existing marketing strategy.

Another point was that retailers should not enter the program thinking that the sale data to manufacturers will provide a significant source of income.

In fact, very little data is currently sold by retailers to manufacturers, for a couple of reasons. One, retailers are truly sensitive to selling lists of names of consumers, and two, they don't have really good systems in place to generate usable demographic or micromarketing information.

Market research companies such as Information Resources Inc. and Nielsen haven't really attacked this area yet, probably because the programs in place are somewhat scattered and are different in terms of their systems and support mechanisms.

Currently, the trend (and I see no change in the immediate future) is that most retailers design and implement their own programs, using their scanning systems and with some support from third-party vendors. They can do this because all the current scanning systems have the capability of running electronic marketing programs, supporting both instant discounts or points as incentives, and capturing at least rudimentary customer purchase information (sales and frequency).

Even though manufacturers aren't buying much data, they are involved with a lot of program support, usually in the form of instant discounts (also known as electronic coupons or clipless coupons). Usually this manufacturer support is just an alternative use of trade dollars, but occasionally, usually only when third-party vendors are involved, manufacturer brand dollars are used to support the retailer programs.

When a significant critical mass of retailers involved in these programs is reached, mass marketing in the form of freestanding inserts and television will decrease, and the brand dollars will be shifted to the in-store (trade) budgets to support the electronic marketing programs.

What retailers definitely need right now is help in crunching, sorting and analyzing their own data, so retailers and manufacturers are getting together and making partnerships. The first partnership of this type was Kings Supermarkets in N.J. and Kraft General Foods, who got together with the assistance of DCI Cardmarketing.

Kings provided KGF with detailed, consumer-specific data (through DCI), and KGF provided Kings with demographic and purchase analyses of their own data. Basically the synergy here is that the supermarkets have data but not a lot of MBAs and vendors have analytical systems but no data.

Of course, KGF agreed not to use the Kings data to market specific consumers, and all in all they both seemed pretty happy with the deal.

Carlene A. Thissen is president of Retail Systems Consulting, Chicago.