P&G Aims To Capture Consumers At Shelf With Retail Tracking Program

Procter & Gamble is experimenting with a new, industry-wide retail tool that identifies specific consumer shopping trends to win customer sales at store shelves, according to COO Bob McDonald.

The tool, called Prism, is being used in test markets now, with an official launch in North American stores in 2008, the exec said at the Morgan Stanley Global Consumer & Retail Conference Nov. 14. The program likely will roll out to Western Europe and other regions as well.

Prism works by digitally and manually measuring in-store traffic by category, aisle, total store, time of day and day of week to enable companies to "better understand what is happening in-store, what is working and what is not," according to McDonald.

The program was developed by a consortium of 10 companies, six manufacturers and four retailers, in collaboration with the In-store Marketing Institute and The Nielsen Company.

"Seventy percent of final purchase decisions are made at the shelf, which demonstrates how important it is for manufacturers to understand this decision-making process," McDonald said. Prism is designed to "reinvent the way we think about this critical first moment of truth."

"When we couple this knowledge with our proprietary tools to measure effectiveness of our in-store programs, we're confident that we can extend our competitive advantages and ... win disproportionately at the shelf," McDonald added.

P&G further demonstrated the effectiveness of Prism with a video presentation by The Nielsen Company CEO Dave Calhoun, who noted that the technology will help build long-term equity of brands.

"For those who are in the health and beauty business where, everywhere, your products are located in all participating drug, food and mass retailing, we're literally capturing customer traffic everywhere - in the toy aisles, in the electronics section, the yogurt aisle," he said.

The model not only measures traffic but "can predict it to a level of accuracy that is astounding even in these early days," Calhoun said.

For example, "on a local level, we can now plan and anticipate the audience in the cereal aisle at 4 p.m. on a Tuesday," he said. "And on a macro level, we can look across chains and regions and understand the potential of in-store at a national level."

Additionally, the program collects "what marketing materials are present," according to the exec. "Prism is telling us not only how many shoppers are in the store or the aisle, it's also telling us what they have the opportunity to see."

Prism is based on an equation - "in-store traffic, multiplied by in-store compliance, multiplied by compression," Calhoun said.

The equation creates an "in-store metric" so that marketing planners can incorporate in-store ads into their media planning recommendation, allowing manufacturers to "treat and discuss the physical store into marketing media and be able to compare it with traditional mass media," he added.

Calhoun believes Prism will have long-term implications for marketers in terms of "thinking about the brand and the store beyond the short-term lift," he said. "We believe understanding shopper audience and marketing stimuli will begin to elevate the in-store environment as a critical factor in building the long-term equity of a brand."

"There's too much money at stake for the in-store experience to be left to intuition or the gut. Next year when the Prism metric is widely available, we'll all look back and wonder how we ... managed the marketing investment without it," he said.

P&G's participation in Prism is just one of two efforts it is undertaking to improve in-store effectiveness. The second initiative is centered on delivering "brilliant retail execution."

"Brilliant retail is all about delighting shoppers, giving them what they want, where they want and when they want it," Calhoun said.

Packaging, communication, displays and assortment "play big roles in delighting consumers in-store," he added. "We're developing new tools to measure our performance across these areas and identifying gaps in our execution."

McDonald also discussed P&G's plans for driving growth through retail channel development and supply chain efficiencies.

Specifically, the company is looking to expand its retail footprint in China, bringing its brands to an additional 35,000 towns in the region.

"This will allow us to place more P&G products in front of China's emerging middle class," the exec said. Products including Olay and Crest "have been specifically developed to delight and target our lower-income consumers," he added.

Additionally, P&G is expanding distribution of Gillette products in "high-frequency" stores.

"We have increased blades and razors distribution in China by more than 50% and Duracell distribution in Mexican high-frequency stores by more than 60%," the exec noted.

In addition to high-frequency doors, the firm is eyeing "high-quality" distribution. "We leverage our strong distributor relationships to educate storekeepers on how to make their stores easier to shop and improve the presence of P&G brands in their stores," Calhoun said.

Stores that comply with this effort are considered "golden stores," McDonald said, noting today the firm has relationships with about 1.5 million such high-value retailers.

Within five years P&G hopes to double its high frequency doors and triple the number of golden stores in its network, according to the exec.

The company also is looking to improve its performance in drug, pharmacy and perfumery stores - channels where its brands have underperformed compared with mass, club and grocery, according to McDonald.

"We're very focused on improving our performance in drug and we're reapplying some of the Gillette best practices to do it," he added.

Last year, P&G discussed plans to expand its distribution in low-income and developing markets (¹ (Also see "P&G Looks To Developing Markets, Beauty Division For Continued Growth" - HBW Insight, 1 Jan, 2007.), p. 5).

- Eileen Francis ([e-mail])