Panelists at Management Conference session agree challenge lies in gleaning useful insights
In today's retail marketplace, there's no shortage of data on consumer preference and behavior. The challenge, according to a panel of alumni experts in retail and consumer marketing, lies in how to interpret the information.
Erik Hurst, V. Duane Rath Professor of Economics, moderated the panel on the use of syndicated consumer packaged goods and retail data during the 60th Annual Chicago Booth Management Conference on May 11.
Hurst asked the panelists to provide insight into how data is accumulated and used to understand the way consumers act. "This is the direction we want to move as a school, where we take this very detailed quantitative analysis and use it for a variety of academic pursuits," he said.
James Dodge, '93, managing director at New York consumer research giant The Nielsen Company, agreed that researchers enjoy an abundance of data from credit card use, customer loyalty programs, and internet purchases. "The challenge is clarity on the issues and outcomes," Dodge said.
The panelists agreed that while retailers and consumer packaged goods manufacturers have become adept at collecting data on who is buying what, the data they compile does not provide an understanding of why a consumer makes a purchase.
"There is a difference between behavior and insight. The data is very important to identify the behavior, but I would encourage marketers to keep trying to peel the onion back and get the deeper motivation," said Howard Brandeisky, '85, vice president of global marketing and innovation at John B. Sanfilippo & Sons Inc., a nut and snack company based in Elgin, Illinois.
To gain deeper insight into a consumer's buying decisions, Brandeisky has accompanied shoppers to the grocery store to conduct "shop-along ethnographies."
"You can see in real time how a consumer's reacting to stimulus in the store. You can see what's on the list, what's not on the list. What they buy on impulse…There's nothing quite like asking them as it happens," Brandeisky said.
Yet while quantitative data is valuable, it's still difficult to predict shopper behavior.
"Consumers don't behave rationally in any type of retail setting. They are irrational by definition," said Robert Mariano, '87 (XP-56), chairman and CEO of Roundy's Inc., the Milwaukee-based parent of the Roundy's and Mariano's grocery chains.
"In the old days, when I was a storekeeper, I knew every one of my customers," Mariano continued. "Today, on a relative basis, we know very little. That's why we use that quantitative information to build a relationship. So we can be relevant."
L. Dick Buell, '78, former chairman and CEO of Catalina Marketing Inc., based in St. Petersburg, Florida, said that research his firm conducted showed that less than half of those consumers considered highly loyal to a brand remain loyal a year later.
"Loyalty is a defection dilemma. Loyalty sounds like the glass half full. In truth, it's a glass half empty," said Buell. "Loyalty is something you think you build and accumulate, but it can be fleeting."
The key to knowing the customer, according to the panelists, is gathering both quantitative and qualitative data and finding bright minds to correctly interpret the information.
"The challenge is to turn all that data into insights and into action," Brandeisky said. "The data is almost a commodity, there's so much of it. The real value-add is turning that into something insightful, something useable." —John Slania