Friday, February 27, 2015

Différence entre prix réel et prix perçu #pricing

Le pricing est un art qui devient de plus en plus prisé dans la grande distribution française. En effet, il existe depuis près de 2 ans une réelle guerre des prix qui a conduit à une déflation dans la grande distribution alimentaire. Celle-ci coûte bien évidemment très chère aux enseignes, qui travaillent sur des marges très fines (entre 2 et 4%). 

Même s'il n'existe pas de corrélation claire entre les prix pratiqués et les gains de parts de marché, force est de constaté que les acteurs les plus agressifs en prix sont les plus dynamiques en parts de marché.

C'est la raison pour laquelle ces enseignes travaillent de plus en plus leur pricing, pour gagner en compétitivité tout en gardant de la marge.

Dans ce cadre, l'étude du cabinet Simon Kucher est forte intéressante. En effet, elle montre qu'en fonction des enseignes, les clients ont une perception de leur prix qui souvent est éloignée de la réalité. Ceci peut s'expliquer selon moi de différentes façons:

  • Pour Géant Casino, c'est la résultante de plusieurs années de glissement qui donne une image prix mauvaise. Bien qu'il y ait eu depuis un an de grands efforts, l'image prix est difficile et plus longue a reconstruire.
  • Pour Auchan, je pense qu'ils travaillent a contrario très bien leur image prix, avec des partis prix fort, comme les fruits et légumes à 1 €
Je pense qu'il serait par ailleurs très intéressant de voir quels sont les ressorts de cette image prix, afin de mieux les travailler.

Thursday, February 26, 2015

Carrefour Targeting French Ecommerce Company To Boost Its Ecommerce Strategy

Carrefour's CEO has clearly set Ecommerce as one of its top priority within the next few years. Carrefour has been struggling with its Ecommerce strategy. Lars Olofsson set a partnership back in 2011 with French Emerchant Pixmania, to manage Carrefour's Ecommerce website. Obviously, this partnership was not as successful as expected. And Carrefour decided to take back its Ecommerce website. Now, some websites are chatting about Carrefour being interested by

But will this move really give a lift to Carrefour online? What is for sure, is that its French competitor Casino is far ahead now. Its Ecommerce website Cdiscount is one of the leading Emerchant in France, competing head to head with Amazon, and has also an international presence in countries like Brazil. Rueducommerce for sure owns a great experience in Ecommerce, but it is by far not even a challenger now in the Ecommerce competition. Furthermore, for a company like Carrefour, which counts for 60% of its sales abroad, Rueducommerce may help on the local market, but will be far from having an impact on the total revenues of the company. Maybe this move would be the first step towards a round of merger and purchases of local Internet retailers, in order to strengthen the Internet presence of Carrefour worldwide.

Nevertheless, the Internet strategy of Carrefour remains unknown, but I believe that Carrefour will be one of the most active brick&mortar retailer in the Ecommerce sphere in 2015.

Wednesday, February 25, 2015

How To Improve Your PowerPoint Presentations

PowerPoint presentations has become the most common way to present new concepts and projects in the office world. Even sometimes, I have seen companies using Powerpoint as a support tool to set up analysis.

There are several ways to use PowerPoint. Obviously, you may not use Steve Jobs' techniques in your everyday work, but I believe the information you will find in this video are quite interesting.

But one of the lessons also the video points out, is that it is not mandatory to use Powerpoint to introduce a project to someone. You should then use Powerpoint presentations with caution, even though you master the software.

Tuesday, February 24, 2015

Sales is what you buy. Demand is what you want. Growth comes from bringing the two together.

Interesting article as always of the Harvard Business Review. 
It reminds me of my customer decision making process, which I highly appreciated, and that gave me the love of customer relationship management. 
The article highlights two main ideas.

The difference between demand and sales
Of course, while working on category management plan or to forecast the outcomes of a new project, you need to set up some goals, backed up by data. Most of the time, you extrapolate data from sales figures. But as the article underline, sales data are slim to have the big picture. It does not take into account the impact  out of stocks, suboptimal assortment, pricing inefficiencies, difficult POS experiences, misaligned brands, and redundant innovation. The whole environment have an impact on sales.
Sales data provide you with figures that are difficult to take clearly due to all the factors that may alter one customer decision.

On the other hand demand data is also difficult to reach as we touch to the whole complexity of human emotions and complex decision making process. You need to have tools like brand mapping, that are difficult to transfert into figures. It is like working with your left and then your right brain. Easier said than done.

You need both information though to make the right answer. Same thing with the Direct Profit by Products analyze which can't be the single way to pick a product range, you need to understand all the strategical aspect of your demand, in order to make the right choice to suit your customers.

Working together with the different stakeholders
The second part of the article that I like is about integrating all marketing data. Indeed, there are three main actors that own a part of the information needed:
- Suppliers own customer data
- Retailers own shopper data
- Media own watchers data

It is the essence of category management: suppliers and retailers working together to leverage all these data in order to have the best respond to the demand. As the amount of data available is growing and becoming more precise, there is a lot of potential to unfold.

Sunday, February 22, 2015

What Is Going On In The Retail Business In France Right Now

I don't know if much International retail experts are paying a close attention to what is going on in the retail world in France, but it is fascinating. Indeed, France is as I have said several times, a land of retailing. The land where International tycoons such as Carrefour, Auchan or Casino have thriven before going abroad. A land where independant retailers are blossoming and succeeding with Intermarché & Leclerc.

Economical situation in France has been tough the past few years, but despite this economical slow down, retailers have been able to maintain every year growth, even if it was minimal. But after couple of years of growth gained by opening new stores, massive promotions and lowering prices, retailers have come to a complicated situation.

And this is the reason why they have started to restructure the market, by allying each others. Carrefour is allied with Cora, Casino with Intermarché, and Auchan with Super U. 

Hence, you have now 4 groups(with Leclerc) that accounts between 20 to 25% each of the market shares. What is unsusual in the approach, is that in other countries with high concentration of retailers, most of the time, it is based on buyouts, or mergers. But here, it is based on joint venture of the purchases.

Indeed, those alliances were made to have a higher power of negociation with suppliers, in order to maximize their purchases, and hence, earn more profitability to fight now, with 4 powers from equal sizes.

Obviously, the first annual negociations with this spectrum are going on right now, and it is tough to see how the situation will unfold. But it will be to me obviously one of the most interesting topic to follow in the world of retailing: How those alliances will last in time? Who will really win? Will there be new forces coming up from those alliances? Will it help the market to raise? Will this strategy be copied in other countries?

Friday, February 20, 2015

Should You Do One Thing At A Time?

This is a traditionnal cliché: Men are supposed not to be able to do multiple tasks at one time, but women can. Also, a lot of people believes that they are able to juggle with a lot of different tasks at a time, and are good and efficient with it.

I have two pieces you to show. First, this very interesting Ted video about multi tasking:
It gives you the results of a study made on Italian judges that are used to juggle with a massive number of cases. They have checked on a period of time of 104 weeks how the way some were using multitasking could affect their efficiency. Results are shown bellow.

Obviously, we tend most of the time to think at different things at the same time. In our nowdays world, on our computer, we always have the possibility to be distracted, or to have different tasks in front of us. Our brains are like computers, and having to think at different thinks at the same time impact our RAM, and hence, slower the whole processor. This is one of the key to the GTD idea.

But I have always been more attracted by mono tasking than by multi tasking.

What about you?

Thursday, February 19, 2015

The New Leader face of Retailing Jack Ma Talks In Davos

Jack Ma has obvioulsy become one of the hottest name in retailing last year, with its successful IPO.

Jack Ma has revolutionized the way people shop in China. But more than anything, Jack Ma is a really inspiring business leader. His vision on what a CEO should be, how he perceives ethic and responsability are just a great example of how people should conduct business.

Wednesday, February 18, 2015

Some Feedback About Costco Entering The Chinese Market

Not so long ago, the second largest retailer in the world Costco decided to enter China in a very innovative way: It set up a partnership with Chinese Ecommerce giant Alibaba, to open an Internet store.

I found this approach very interesting, and was eager to find out how this approach performed. And it seems that it is a tremendous success. Indeed, in a 3 month period, they sold for $6,4 million

Costco set up a store on Chinese e-commerce giant Alibaba's Tmall Global platform, where it is offering its Kirkland Signature products and other items. Chinese consumers can receive the goods within five to 20 days of purchase. Costco is using its base in Taiwan to support operations and leveraging its new Chinese partnership for inventory storage.

I believe what is interesting in the test is that it allowed Costco to test the market without the bargaining of investing in real estate. Still, this is only a first step. I don't believe that Costco's activities in China would be viable without settling warehouses, which is its core business. Neither do I believe that this test will allow Costco to grow enough to have enough leverage on the purchasing to secure low prices. It just allows the company to have a strong Internet presence, which the company most of the time lack (online 3% of its sells are online, which also represents a high potential of growth). 

As Costco entered late in the market, where US companies like Walmart is struggling, I really hope that this strategy will pay off. It will be interesting how the story unfold.

Monday, February 16, 2015

Some Thoughts About RadioShack Running Out Of Business

I recently learned about the end of Radioshack. Radioshack is obviously an iconic US retailer.

Those surviving stores would continue under the Sprint branding, so RadioShack would essentially "cease to exist as a stand-alone retailer," according to Bloomberg.

Radioshack business modell was shaken by different trends:
  • The rise of Internet sales for electronics
  • The fact they had too small size (per store) to propose the wide product range its competitors both online and brick & mortar could propose
  • The lack of a clear positionning.
It is sad, because, as I can see in a lot of articles, Radioshack was obviously a real cultural phenomenom in the US. 

But Radioshack loss is also another view of how fast retailing is evolving. After companies like Blockbuster, or Barnes & Noble, that used to be icons, who will be next? Sears has been going in limbo for ages, and people are questionning the future of Best Buy. It also shows out that nothing is eternal, and it is important to always keep on questionning your business modell, what your customers want, in order to always adapt.

But as Amazon's strategy is raising a lot of question, maybe soon will be the time when brick & mortar business will find the path to secure its long term existence. 

To finish, and to sum up all of it, here is a very interesting video, that shows how people did not really get well what Radioshack was still about, but how emotionnally they were linked with the brand.

Friday, February 13, 2015

Low Cost And Customer Experience: Ikea's Example

Most of the time, people perceive low cost businesses as if they did not have much added value for customers. Indeed, for most of those companies, they cut on a lot of the customer experience futile aspects in order to save big buckets. They bet that customers don't really need these extra services as long as the core service is their for unbeatable price.

But part of the pact between a low cost company and the customer, is that the extra service not available for the customer is worth a big saving on the price. 
Ikea is for sure in this kind of pact. 

And this is the reason why Ikea explains how the business modell work, why they cut some of the service for customers, and reverse it to explain the added value Ikea provides.

In this picture, you will see some signs Ikea have in its stores. Here are the questions it answers: Why do you need to figure out by yourself (how to find products for example), why do you need to transport yourself the furnitures?

By explaining the deep reasons of those low cost business components, Ikea secures the pact it has with its customers, and hence explain why they are able to be cheaper than competitions, but also how they achieve it without compromising the quality. Great example to be followed by discount chains.

Thursday, February 12, 2015

A New Article About Direct Profit by Product

Here is anew article I wanted to share with you about Direct Profit by Product. The Direct profit by product index is a method used in retailing to analyze the true profitability of one product, taken into account all the components of its margin and the cost related to its sale.

The article has been published in 1988, which proves that the idea of DPP has been there for quite a while, even though it is still not much used by retailers. This article shows the result of a study made in a supermarket chain on the mapple syrup categories. This is also the reason why the article is interesting, is that it gives a clear case study on how to use DPP.

Here are some of the highlights of the article.

There are 3 types of Direct Product Costs :
  • Warehouse costs, 
  • Transportation costs
  • Store costs

The allocation of costs is a function of several factors:
  •  Cubic volume of the unit and case
  •  Case weight
  •  Delivery schedule
  • The cost of the product
  • The inventory turn

The article also emphasize on the limits of the DPP analysis:” There are limitations to the use of DPP. Since DPP is a cost oriented approach to merchandising decision making, it does not take into account the consumer’s changing tastes or attitudes. The analysis also does not report how much shelf space should be changed. This problem is being addressed by the shelf space. One of these measures is the DPP of individual products. The integration of DPP and shelf allocation systems opens many possibilities for the effective management of grocery merchandising”.

The strategic approach of DPP
The article proposes a chart to charecterize the strategic interest of one product by its DPP.

Here is an example of how it works, and the axis of this strategy.

I also reconstructed a chart based on the same principle, with the same figures, to show how concretely we may picture the analysis. I have put the size of the circles by the size of the DPP/week.

Here are some charts showing the results of the study. It shows how to implement the technique.

I believe that this analysis may help to have a better view also about how to optimize the costs of goods sold in order to optimize profitability of product range.

Once again, DPP should not be taken solely, and you need to have a real category management strategy to properly manage your product selection.

Wednesday, February 11, 2015

Ibeacons Conference With Mowingo In Paris

I attended on December 11th a conference at l'Echangeur about Ibeacon and mobile usage in store. It was the occasion to meet with Daniel Dreymann, founder of Mowingo. The conference was organized by le Cercle du Marketing Direct and Laurence Faguer.

The company was created 4 years ago to help brands engage with customers both nationwide and locally. Mowingo has amongst its best clients Mc Donald's among others.

Mowingo has been working for some time now on Ibeacon.

Here are the main insights of this conference.

Key data in mobile usage.
  • 41% of customers use store apps while in store.
  • 59% of them do so to get coupons
  • 50% of people who uses coupons buy a brand they did not plan to buy prior to the visit.
Difference between mobile website and applications: "Mobile websites create prospects, apps create loyalty".

Retailers can leverage their store network in order to anchor their CRM locally. 

Retail applications should generate multiple and frequent interractions.
It is never good to have a sleeping app. Therefore, you should find triggers for people to use your application on a daily basis. For example, Mc Donald's application give every day and extra something if people use it as an alarm clock. It can goes from a free burger, to an mp3 song. As Mc Donald's secure the customer will have an active response of its customers, it maximizes the efficiency of the message.

Better understanding of customers
Mobile marketing tools allow corporation to better understand the customer locally via KPIs given to local managers. Local management is hence empowered with local data to make local decisions. Beacons blended with Big data potential may give a lot of power to CRM, by knowing more about the shopping experience.

What beacons really are
Beacons are bluetooth beacons, that send a signal. The same beacon may be used either on Android or Iphones. The beacon only send messages, it can't think messages through. It sends messages between 25 to 40 meters. The beacons geolocalize the shopper and hence, the shopper may have different beacons activated at the same time. Each beacons have the same ID.

The key advantages of beacons are:
  • It is sharper to locate someone than any other categories.
  • It consumes few energy for the phone, as it uses low energy bluetooth.
  • The equipment for a store is relatively cheap.

When to use beacons
Beacons don't need an application to be activated to send messages. But that does not mean a beacon should send messages at all time. It is important to understand when to use the beacon depending on the time and the target. 

The future of beacons
Obviously, the conference has raised a lot of questions about how to use it, the full potential of it, and when it will really be part of our every day life. Obviously,technologies using geolocalization through mobile phones have been existing for at least ten years. Even GMS technologies were used ten years ago in Japan to locate customers. The beacons technology is obviously the most promising one, and we live in a connected world, that knows how to use mobile technology. It should help beacons to spring up. But I'll discuss probably further about the topic soon, to give you more insights.

Tuesday, February 10, 2015

How Does Direct Profit By Product Analysis Compare To Other SKU Productivity Measures

You may have noticed that I have been discussing a lot about category management and the way to analyse product range productivity via the Direct Product Profit Index, and the Cost Of Goods Sold

I believed that those concepts were somehow new in the industry, but as I have been looking for information on the topic, I found out the issue was there for quite a while now. I actually read a great article on how the Direct Profit By Product Analysis Compare To Other Traditionnal SKU Productivity Measures. You should read carefully this article, as it gives a lot of information on that topic.

The whole Philosophy about DPP
"Some SKUs may earn high gross margins, but excessive handling and storage costs can outweigh their net contributions to overall profit. DPP reflects inter-item differences in sales, margins and costs associated with storing, transporting, shelving, and labor intensive merchandising activities (such as pricing individual items)."
That also highlights the fact you need to constantly reevaluate DPP, as some changes may occur in the cost of goods sold structure, either on the supplier or the retailer end:
- Investments in more optimized supply chain
- New ordering policies that would lower the cost of inventory for example.

Especially, what is interesting is to see how the analysis of Direct Profit By Product may influence category management decisions, upon other traditionnal way to estimate category performances.


Information that may twist the DPP analysis
DPP can not be taken solely into accounts. Hence, different components may impact its analysis, that may be set in prospective:
Profitability is linked to the pricing strategy, and if the pricing is not accurate, or may be changed, it could affect greatly the DPP of one product.
Moreover, DPP don't take into account strategical marketing assets (traffic builder products may have a low DPP, but are mandatory to sell other goods, and to keep your clientele).
DPP should also take into account operational issues that can not be perceived in its analysis, such as the minimal stock of one product.
You should also take into account lastly how promotion may impact sales and profit of one product. And this needs to be analyzed seperately.

The most important components of direct profit by products.
The results show that the best single predictor of DDP is gross margin dollards, followed by:
- Sales in dollar,
- Package unit sales
- Then, square feet of space allocation

These 4 components account for over 98% of the variability of SKU DPP. The study hence explains that, in order to keep a viable DPP and to use it properly, you should also focus on specific variables. If you have too many, the DPP index become too difficult to be used.

This is the reason why the authors discuss about an MAI (merchandise attractiveness Index) that reduces the number of variables needed. For a extensive DPP analysis you need 75 costs components, but after the weights are computed, only 2 to 4 variables must be gathered to recalculate an MAI.

I'll keep on looking for information on the topic to share with you, especially on how big data may give a lift to these analysis.

Monday, February 09, 2015

Key Factors Of Success For Pop Up Retailing

You know that one of my favorite topics is pop up retailing. I believe this trend will expand fast within the next few years. I recently read a great article about Pop up retailers, which give us good insight one the key components of a well done pop up store

Here are the main points:
  • Pop Up stores are not only about sales, but also raise customers awareness, and may have a great impact on your public relationship and social media strategy. 
  • Be creative: Customers need to be surprised by pop up stores. Most of the time, those stores trigger impulsive purchases, so you need to find a way to attract the curiosity of people.
  • Analyze the return on investment: This is something key: Pop up stores usually were not aimed to be profitable as they were considered as marketing tools to promote brands. But nowadays, if you work well on the topic, pop ups must become a way to be profitable, and actually lift up your profitability by going to high traffic locations and hence being more effective at selling. You hence must analyze your return on investment.
  • Select well the location: Obviously, you should go where people are, but also, try to settle where you will have a link with the place. For example, a dry cleaner may be down a corporate offices building. A sport store near a marathon arrival...
This is also how I got to know about Melissa Gonzalez, who seem to be one of the main expert of the pop up phenomenom. 

Friday, February 06, 2015

Finding The Balance Between Personnal and Professional Life: Obama's Example

Very interesting article about how Obama perceives the frontier between his personnal and professionnal life. Indeed, a lot of people, including myself, have hard time to find a way to balance things between professional and personal life. And as the president of the USA, the most challenging work in the world, Barrack Obama has not forgotten to spend and give time to his family. 

Therefore he consistently attend his family dinner at 6:30, allowing only twice a week to skip it. It is thanks to this lifestyle probably that Obama has been able to go through the stress of 2 mandates.

Great article that gives a lot of food for thoughts.

I am currently reading a book called "the 7 habits of highly effective people", which also discussed about how necessary and key principles are in our life, in order to perform. But I'll tell you more about this book soon.

Thursday, February 05, 2015

Big Data and Management: Why I love Basketball

For the people that knows me well, I am a basket ball fan. I have been playing the sport since I am 10. I like the fact that even though you may have great individual performances that may allow you to win any games (if you are good enough though), it is impossible to win championship without a true understanding of what a team is. 

Also, something I love about the sport is how stats matters, and how you can analyze one team performance by its datas. Here is an example of how people may use data in order to analyze what goes on court.

Actually, the best coaches are the ones that can master the stats, in order to perceive potential weaknesses of the team. But data don't pile up. It is not because you have 2 forwards that average 10 rebounds you will have 20 rebounds in the end. The real art of coaching is able to understand the issues via data, and then to translate it as a coach in words in order to manage people and give them the tools to improve and deliver results.

This is the reason why premium teams with premium casts did not win any titles. Among others:

  • 2003 Lakers: Karl Malone, O'Neal, Kobe Bryant, Gary Payton...
  • 2012 Lakers: Dwight Howard, Kobe Bryant, Steve Nash, Pau Gasol...
Chemistry has a big part, and understand how egoes and styles of play may fit in a group.

As a manager, that is what you should pay attention to:
  • Analyze data, being able to forecast how adjustment may impacts your results
  • But also be a leader, understand the human nature of a team.

Wednesday, February 04, 2015

11 Ways Retailers Get You To Spend More

Merchandising techniques are key for a retailer which seeks performance and added sales. Here is a very interesting article click to read of CNBC, giving you some tips used by retailers for you to spend more.

Just to add two things, that are linked, and define what works in retail:
- Retail is a simple trade: You don't need complex theory to make it work. Simple rules need to be apply. Actually, to simplify things is always a key for success, as actually complexification is always around the corner.
- Retail is detail: You need to pay attention to detail in execution.

Tuesday, February 03, 2015

Shapr, A New Way To See Online Communities

I recently learned about Shapr, a new social network company. Shapr on the opposite of other social media such as Facebook, Twitter or Linkedin has a different approach of what your community is about. And it is backup by scientific facts: 

As the article saysResearch by Oxford University psychologist and anthropologist Robin Dunbar revealed that our brains can only manage about 150 close, personal relationships. More than that, and those friendships are at best, superficial.

And this is a true fact: How do you want to hang out, or even to have a real connection with 500 people?

This is the reason why I targeted for example at the beginning on LinkedIn to reach 1500 people. But as the years go by, and as I meet more and more people, my network expanded over 500... Even if I refuse some contacts! Indeed, I have a principle. I don't accept invitations if you are not:
- A person I really know and appreciate in the real life, with a real vision of what the people do and is about
- A person that come from one of the schools that I studied at (and that has the same circle of interest).
- A person that does not have any linked with my activities (either Marketing, CRM and/or Retail).

But still my number of connections has blossomed.

Shapr is hence ambitionning to allow a privileged relationship with your core 50 connections. Obviously it is a great idea, but it raises some question:
  • Do the people I consider my top 50 consider me as one of their top 50? I may value people more than they do with me.
  • What kind of top of the line relationship the service may offer?
  • Is there a decent way to have a dynamic 50 short list? Meaning people can come and go without hurting anyone?
This is for this last one I believe the concept is great, and maybe should be defined by LinkedIn. Indeed, Linkedin remain the top social community for business interractions. But it could allow its members (a bit as Google + do) to create of its own a "special 50" interface.

Monday, February 02, 2015

Kroger's Customer Relationship Management

Customer Relationship Management is I believe a tool that is not well used by most of retailers. Indeed, as retailers are working with mass market products, it is difficult to leverage the potential of marketing one to one while the volume matters the most. Nevertheless, there are some retailers, like Tesco, that have been thriving thanks to their CRM programs.

Let's not forget that retailers own large data base of customer data, that give them a pretty good sight of what their clientele is about.

The quaterly mailer
It is a mail send by post, including 12 coupons. They advertize new products at the beginning of the mailer, to let the heavy sellers for the end of the mail. As the article says Eighty percent of dunnhumby’s effort is focused on what it knows about a customer and 20 percent is focused on discovery. What is interesting in this concept, is that it mixes both customer's will and retailers' strategy.

Give To The Customers The Products They Want
This is one of the key to Kroger's customer relationship management program. Most of the time, direct marketing campaigns are designed to upsell, and to propose products the customers would not get naturally (in order to maximize return on investment by solliciting added sales). But as a matter of fact, in order to have a trustworthy program, it is important to propose to customers the products they really need. It secures also for the company high transformation rates.

“We see in the next six weeks [after a mailing] 71 percent of households will redeem at least one coupon in the store, Nishat Mehta, executive vice president of global partnerships for dunnhumby, said. The coupons have generated $10 billion in revenue for Kroger."

Having a high percentage rate of redemption is important to make sure the marketing support remains efficient on the long run.

unlike other grocery stores which will offer a Pepsi coupon to a Coke buyer, dunnhumby doesn’t try to convert customers. It may offer an adjacent products, but both in the store and in its mailers, if offers coupons for  product the customers already likes.

If Pepsi sends coupons to Coke households, the redemption rate is very low,” said Mehta. “We have struggled over this with manufacturers (who pay for the coupons). They ask why they should send coupons to households that already buy their products. That has forced us to be very data-heavy and analytical, so we tracked 100,000 households we sent coupons to and looked at their purchases over the next 16 and 26 weeks.” It showed a sales lift among shoppers loyal to a brand when they had an offer from the brand.

Now, I don't think that the return on investment is high by using such techniques, but in order to gain market shares, raise sales and create customer satisfaction with a low marketing cost, I am sure it makes a lot of sense to give what customers want from you, in terms of one to one marketing technique.

Segment customers upon purchases and not on demographics
An easy and traditionnal way to segment a market is to use demographics data. But in our nowdays world, you can't get the essence of what one customer really want only by relying on his age and his social class. The FMCG world has evolved too much to rely on those. This is the reason why this CRM program tries to analyze customers' data in order to perceive better customers behaviors.

So dunnhumby creates a DNA on each customer, rather than cramming customers into segments, to see what drives their behavior — do they have kids, do they skew toward healthy or fun, do they like organic or convenience, and where are they price sensitive — across all products or only on some.

“We make decisions not based on what you bought today but what you have bought over the last two years,” Mehta said. “We can recommend a product you buy every four months. You don’t have to know, but we know.” 

Milk case study and how CRM data may Impact Merchandising
Milk, for example. dunnhumby tells its grocery store clients to organize it for customer convenience by fat content and size of package, so all the one percent half gallons are together and customers can buy on price or easily move to a different brands if their favorite is out of stock.
“It is more expensive for the retailer,” said Mehta, “but you can’t just let the manufacturer stock it the way they want. This helps a customer find the product or find an adjacent product.” That style of stocking carries throughout the store where one product can easily substitute for another.
Understanding loyalty is key to making good decisions for customers. Mehta says if a grocery  store doesn’t have his flavor of Chobani Greek yogurt it is apt to lose his total sale. Kosher butter may be a low revenue producer, but for some customers, its absence means they will take their business to another store.

This is something important I would like to link with the Direct Profit By Products strategy I have discussed in this blog. As I have said, it is important to understand beyond the direct profit of one product the marketing importance of one segment. It is by those kind of products you may make a difference and create long term loyalty to your store. Obviously, as a lot of big sellers with low margin (which secures high traffic and high volume but where you lose money), those low selling niche market products may have a cost, but also secures your marketing differenciation.