10Oct2010
Virtual Shopping Wins For Nestle
When Nestlé wanted to revitalize the slow-growth U.S. ice cream category, it came up with the notion of ice cream cups.
After all, cups offer consumers convenience/ portability, portion control, and the ability to buy a variety of flavors to please the family. So early this year, it launched 15 SKUs of cups across its Edy’s/ Dreyer’s, Häagen- Dazs and Skinny Cow brands. Nestlé hoped for brisk sales and higher profits for retailers based on higher price per serving. Although both goals were ultimately realized, at the time there were concerns because there wasn’ttime for a test market.
Two key questions remained:
—How should the ice cream cups be merchandised? Together in dedicated doors as a cups destination? Or with their parent full-size offerings to create a brand family?
—How should the cups be deal priced, $10-for-10 or 99¢ each? With key sales meetings quickly coming up, there wasn’t time to test in market. So Nestlé turned to a virtual shopping platform called SimuShop from Decision Insight (www.decisioninsight.com), Kansas City, Mo. Okay, so what’s a virtual shopping platform?
Well, imagine a wii game (sort of) where shoppers get to visit a specific store and interface with different shelf sets. Facings are changed, brands are rotated in and out, pricing bounces around, etc. And imagine that the system captures shopper reactions to these variables.
That’s a simplistic explanation, but it gives you an idea of how this works. SimuShop gives you the output similar to an in-market test (purchase incidence across SKU’s, sales dollars, volume, etc.) at a fraction of the cost and in a matter of weeks.
In Nestlé’s case, the alternative arrangements were tested in two virtual retail environments: Safeway and Kroger. Category shoppers were recruited online to participate in the study. They were first shown a store circular which included the Nestlé cups to create some realworld awareness.
Next, video moved shoppers from the parking lot into the store and to 20-door, 400+ SKU the ice cream section. Once in the aisle, they shopped the category as they normally would. The shoppers could buy as much of any product as they wished, or even walk away from the aisle without purchasing anything. This approach has been validated in the marketplace, and is more affordable, quicker and more controlled than an in-market test, according to Decision Insight.
The virtual shopping results provided clear, actionable learning:
—More revenue results from grouping all of the cups behind dedicated doors (but Skinny Cow cups fare better when they remain with its brand family).
—Dedicated doors (sans Skinny Cow) drive multiple cup purchasing and incremental variety seeking.
—Shoppers buy more cups in a transaction when priced at 10 for $10 than when the price is 99¢ each
“These results clearly show the importance of placement in the aisle to drive sales, especially in large categories where it’s easy for new offerings to get lost,” says Alex Sodek, senior vp at Decision Insight.
Within weeks of receiving the virtual shopping results, the Nestlé Shopper Marketing team presented the merchandising story to key retailers in preparation for the 2010 season. Results were gratifying — in the 90% of stores that stocked cups together, first-half sales skyrocketed more than 50%. In the 85% of the stores that kept Skinny Cow as a separate brand block, the brand’s sales more than doubled.
Russ Onish, director of category leadership & shopper insights, Dreyer’s Grand Ice Cream, Nestlé USA, recalls initial skepticism about virtual shopping. ”In this situation we didn’t have the offerings or the time to do in-store work, so we decided to give virtual a try,” he says. “The solution is excellent for merchandising questions. It provided us the expertise and timeliness we needed.”
