By John Karolefski
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
H.J. Heinz is enhancing its category management process by incorporating shopper segmentation analytics. The focus remains on the category, but the goal is creating more value for the brand and the retailer.
"Segmentation, coupled with consumer insights, shopper insights, new item innovation and advanced analytics, provides a great category management base," said Chris Webb, category business planning manager for Heinz.
Heinz began this program three years ago with the Classico brand, but is working in brands across all its categories: ketchup, condiments, sauces, soups, meals, snacks and infant foods.
Heinz uses segmentation for several reasons:
- Improved portfolio management
- Better investment of limited resources
- Ability to explore alternative marketing media
- More alignment with customers.
"Demographic segmentation may not completely define consumers," Mr. Webb said recently at Nielsen's Consumer 360 conference. "Behavioral-based segmentation is an improvement, but still falls short. Consumer needs-states improve segmentation with attitudes, behaviors, brand perceptions and latent preferences for products."
The strategy that Heinz follows includes:
- Segmentation: Identify segments and develop profiles
- Targeting: Evaluate attractiveness and select target segments
- Positioning: Targeted concept development and execution, and develop the right 4Ps mix for chosen target.
"Both the retailer and category management activities really transpire in the Positioning portion," explained Mr. Webb. "Up until that point, the exercise is largely internal. In the 'P' stage, the rubber really hits the road in developing and executing strategy, buttoning up our 4Ps, and also tailoring the message for the retailer, based on fit. The retailer 'buy-in' and acceptance really enables category management to take place."
Among the leading retailers developing consumer segmentation models of their own are Kroger, Win-Dixie, Food Lion and Wal-Mart. They aim to improve the product assortment within their stores to meet the needs of consumers who are living near and shopping in their stores. Heinz is collaborating and overlapping its consumer segmentation program with retailer models at some accounts.
"We expect more development in the near term," said Mr. Webb, "and anticipate seeing further efficiencies and growth for both parties as these joint strategies translate into merchandising execution."
He said Heinz works equally with analytically-advanced retailers that already have shopper segmentations and those without.
"In those retailers with their own segmentations already, we connect heavily with their loyalty and category management teams," he said. "The discussions are usually much more robust in these situations, but a great amount of learning also takes place in those retailers without. They are also very eager to learn how our segmentation insights can help their business results."
Discussion Questions: What do you think of utilizing segmentation analytics as part of the category management process? What do you think of the opportunities? What do you think might be some challenges?