CPGmatters: Hershey Leverages 'Need States' To Optimize C-Store Sales
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
The Hershey Company is betting that incremental candy purchases in convenience stores can be triggered by placing its products in the right place at the right time.
The world-class company is basing its strategy on the results of research conducted last summer in six C-stores operated by 7-Eleven, Chevron and Road Ranger with stores in six markets. It was part of a nationwide study of all product categories in which 350,000 shopping trips were video recorded and analyzed.
To learn the "who, when and why" of store trips, the company turned to Video Mining Corporation, which offers proprietary in-store video technology to measure and provide visibility into the shopping process at every retail touch point.
"We started looking at some of the classic things like demographics and just saw no differences between buyers and non-buyers in those kind of metrics," said Susan LaPointe, director of global innovation and shopper insights at Hershey, at a Shopper Insights conference hosted by the Institute for International Research (IIR). "We weren't quite willing to give up at that point, so we said, 'Okay, let's just take all the people who bought and all the people who didn't buy and look at every measure and see where the differences are.' When we did that, we found that day parts showed us some really different patterns of behavior."
Hershey came to understand the "path to purchase" by day part because shopper behavior changes with the hours. For example, the "need state" at 7-8 am is a daily snack; noon-1 pm, it is a meal enhancer; 3-4 pm, it is for energy; 6-7 pm, it is a snack; and 9-10 pm, it is habit or social.
Using Video Mining's technology, Hershey was able to delve into such metrics as store traffic, category traffic, engagement and conversion.
In general, Ms. LaPointe stressed the importance of keeping the shopper at the center of the process in three ways: one, understand the decision process of the various shopper segments; two, track segment composition and behavior trends, and; three, test the response of each segment to new strategies.
More specifically, she outlined the following;
Location
"You want to
be on that 'path to purchase.' It has a sense of purpose for these people,
so understand where they're going. Be there when they're on the way there
or, better yet, on the way returning because we're not a destination."
Assortment
"At each location,
assortment differs because people are looking for different things and
the brands do serve different purposes in their lives."
Promotional Partners
"If it is going
to be a candy bar with a drink or a candy bar with that meal or something,
let's run a promotion for those things."
Message Content
"Time-of-day
messaging. We know that there are people coming into the convenience
store in the morning for more than just coffee and doughnuts. You should
be telling those people to stock up on their snacks to make them feel
like this is the right thing to be doing."
Discussion Questions: What value do you place on understanding the 'need states' of consumers at the store level? Can many other categories benefit from this analysis? Would you like to see much more time-of-day messaging and overall strategies across retail?