Every spring, Kilts Center for Marketing invites alumni who are CEOS, CMOs, and other senior executives to campus to discuss trends in marketing. On April 11, 23 alumni participated in the Kilts Center Marketing Day Forum. Students and alumni who sign up attend two roundtable discussions during the lunchtime event, and the time limit keeps the conversations tightly focused. Here, three student facilitators share impressions of their sessions.
Mir Aamir, ’97, president, customer loyalty and digital technologies
Safeway Inc., Pleasanton, California
Topic: One-to-One Shopper Engagement Through Digital/Mobile Platforms
By Kelsey M. Salmen, Full-Time MBA student
Mir Aamir has overseen a variety of marketing functions in his nearly eight years at supermarket giant Safeway Inc., which operates more than 1,600 stores and reported 2012 revenues of $44.2 billion. His experience includes marketing strategy, shopper insights, pricing, and financial planning and analysis. Aamir leads Safeway's loyalty programs and oversees all digital and mobile efforts related to loyalty.
Aamir kicked off the discussion by speaking about today’s evolving consumer. He explained how this consumer demands “relevance, one-to-one connection, personalization, control, and satisfaction … all in a few swipes.” Given the vast amount of consumer data available, retailers and brands can do things that they never could have before. Mir described how mobile technology enables two-way communication between brands and consumers, and consumers have come to expect that dialogue. He also emphasized that access to data enables manufacturers to micro-segment their consumers. “We can target gluten-free households, creative bakers, and dog owners who treat their dogs like kids,” he said.
Safeway has capitalized on big data by creating Just for U, a digital customer loyalty program that uses micro-segmentation and consumers’ shopping history to create millions of personalized offers for customers. The supermarket created a user-friendly Just for U app that enables customers to choose from various deals that are customized for them. With one swipe, that deal is sent digitally to the customer’s account and the price of the item is marked down automatically at checkout.
“Paper coupon cutting and searching for deals is a thing of the past,” Aamir said, “Our view of customer loyalty is that it will always be digital.” The program, which Aamir saw from inception to launch, has seen impressive results. Nearly 5.5 million of Safeway’s customers are enrolled in the loyalty program, and these customers account for 45 percent of Safeway’s total annual sales—a staggering statistic for a program that was launched nationally only one year ago. Customers typically are not loyal to just one retailer, so a loyalty program that increases Safeway’s share of wallet is a top priority. “We have the opportunity to connect with our consumers one-to-one, which was just an ambition before,” he said. “Now we’ve cracked the code.”
Robert A. Mariano, ’87, chairman and CEO, Roundy’s Inc., Milwaukee
Topic: Innovations in Grocery Retailing
By Carolyn Braff, Full-Time MBA student
Veteran supermarket executive Bob Mariano has focused recently on Roundy’s rapidly expanding chain of Mariano’s Fresh Markets in the Chicago area. The unassuming and humble Mariano said he meets with every employee before opening a new store to ensure that the proper tone is set. As CEO of the approximately $4 billion Roundy’s chain, he said he thinks of himself as mostly a steward and a builder. And he credits Chicago Booth with giving him the analytical tools he needs to run a successful business.
Mariano was a pre-medical student at the University of Illinois at Chicago. But when he was not accepted into a medical school after college, he started work as a part-time deli clerk at the Chicago-area chain Dominick’s Finer Foods. He worked his way up from deli clerk to president and CEO and led the supermarket chain through an initial public offering in 1996. In 2002, he partnered with a private equity firm to buy Roundy’s, a wholesale and retail food business with 161 stores in three states, and is in the process of repositioning the brand.
In light of Mariano’s quantitative training at Booth, it comes as no surprise that Mariano’s Fresh Markets is striving to understand how best to use the data that the store collects through its customer loyalty cards. The card gives Mariano’s team the flexibility to conduct small experiments, observe changes in consumer behavior, and measure the results. Mariano explained that boiling down all of the information into an actionable strategy has been the hardest part of this foray into big data.
In developing the concept for Mariano’s Fresh Markets, Mariano relied heavily on research, looking at what separates consumer trips to Whole Foods, Costco, Jewel Osco, and Dominick’s, and determining which elements of the shopping experiences are best and which leave the most room for improvement. While price is important, other considerations can outweigh price, so Mariano hires employees who are genuinely nice to customers, and whom he does not have to remind to smile during the day. In Booth fashion, Mariano is analyzing non-financial metrics, such as customer satisfaction scores, to construct statistical models that can be used to predict sales and performance.
Asked about the best advice he’d ever received, Mariano said that having a healthy disrespect for the past has served him well. His second biggest piece of advice—to learn how to read a balance sheet—is one box every Booth graduate can check.
M. Carl Johnson, ’97, executive vice president, brands, Del Monte Foods Co., San Francisco
Topic: Innovating by Rethinking the Competitive Frame
By Cindy Chow, Full-Time MBA student
Carl Johnson is group executive vice president and chief growth officer of Del Monte Foods and also serves as acting general manager of Del Monte’s pet food business Before helping lead a renaissance at Del Monte over the past year and a half, he served as senior vice president and chief strategy officer at Campbell Soup Co., and prior to that spent nine years at Kraft Foods.
Johnson got the conversation started by sharing what he considers the Rosetta Stone of marketing: Where should you compete? How will you win? What is winning worth?
Consumer goods companies must understand what consumers actually do, not just what they say they do, and why they behave the way that they do, Johnson said. Using diary panel data, marketers can construct a category purchase structure that identifies the hierarchy of preferences for different product attributes. For example, do people first think of tomato soup and then decide on Campbell’s, or do they first think of Campbell’s and then decide on tomato soup? The goal is to make your brand as high in the hierarchy as possible, so that consumers prefer your brand and are indifferent to competitors.
Marketers then combine this knowledge with an understanding of usage domains, or the different occasions and needs satisfied when a consumer uses your product. This helps companies develop their base business consumer strategy, identifying opportunities for new products and designing a strategy to develop the entire category.
Campbell discovered through this exercise that Americans see soup as a main dish, often competing with frozen entrees, Johnson said. The company traditionally had thought of soup as a side dish that competed with other soups, and advertised it alongside other dishes with a tagline such as, “Have Campbell’s soup and a sandwich.”
The company, it turns out, was inadvertently advertising its competitors, Johnson said. Needless to say, it changed its marketing and repositioned its soup as a hot, nourishing, and satisfying lunch. It was a leader in soups with a 70 percent share, but had only a 3 percent share of the broader competitive set of simple meals. By changing its competitive frame, Campbell’s once again had room to grow.
Students asked about the difference between a closed and open competitive set. Soup is an open competitive set with many potential substitutes, Johnson said. On the other hand, pet food, Johnson’s current focus, is closer to a closed set because there are a limited number of alternatives. Nonetheless, there is room for innovation, and Del Monte has gone through the exercise of analyzing its category and has created a map of usage domains that is guiding the company’s marketing strategy.