CPGmatters: Heinz Optimizes Assortments Using Virtual Shopping Platform
By John Karolefski
Through a special arrangement, what follows is an excerpt of a current article from the monthly e-zine, CPGmatters, presented here for discussion.
Heinz wanted to simplify its planogram in stores. Three kinds of packaging – traditional bottle, the Upside Down with Stay Clean Cap, and the Fridge Door Fit in multiple package sizes – often confused the consumer and resulted in increased production costs for Heinz. For solutions, the company turned to Decision Insight’s virtual shopping platform called SimuShop that enables product manufacturers to test options on the shelf.
Heinz worked with Decision Insight to find out what would happen if certain SKUs were removed from the product assortment.
Here’s how the program works: A panel of qualified consumers was selected and a scenario was set up for a shopping trip. A combination of text and video cues set the context for an online shopping experience. Video takes shoppers from the parking lot into the grocery store and into the aisles. They can click on a product for more information such as size and price and to make a purchase. Consumers could buy or not buy any product, or even walk away without any purchase (this determines the “walk-away” rate).
“Virtual shopping is very powerful,” said Barbarita Marbelt, Heinz’s consumer and customer insights manager, speaking recently at the Shopper Insights Conference in Chicago. “You are observing shopper behavior rather than asking what they would do. Asking questions is not enough. We went with virtual shopping to see differences in behavior because what people say is not what they do. That makes the methodology more reliable as well as faster and more economical than in-market testing.”
Previous research indicated that households with larger size bottles of ketchup use it for more occasions. That is key for a category with a penetration rate of 96 percent. Rather than focusing on attracting new users to grow the category, the obvious strategy for Heinz would be to get current consumers to use ketchup more often. Such thinking led to a focus on keeping the larger Fridge Fit pack in assortments.
Online testing of this strategy resulted in two conclusions:
Overall sales went down when the Upside-Down bottle was removed. There was a significant loss in buyers, volume and dollar sales.
Removing the smaller size bottles posed risks. While most buyers remained with Heinz, a small minority switched to a national competitor.
In the follow-up study, findings indicated Heinz could reduce pack types from three to two by keeping the Upside Down bottle. Plus adding a smaller sized Upside Down bottle kept more customers.
Virtual shopping also indicated that reducing the set of products made it easier for the consumer to shop the category and increased overall category sales that benefited the retailers. Along the way, Heinz was able to reduce production costs while increasing brand sales as the category grows.
The online research was later confirmed with in-store testing at Wal-Mart and a grocery outlet. “The fact that it validated the online behavior of shoppers with similar results tells me that if I have to do something quick and economical, I’m going with virtual shopping,” said Ms. Marbelt.
Discussion Question: What do you think are the advantages and disadvantages of using online virtual shopping in determining planograms? How would you rate it versus other methods of gauging actual consumer purchasing behavior at the store level?