Information overload

A recent study by Temple, Barker & Sloane, Inc. (TBS), a Lexington, Mass.-based management and economic consulting firm, found that while the consumer products companies using scanner data are excited by its potential, many believe that they aren’t using the information to its fullest extent.

The study, a TBS report says, was intended to discover “how extensively firms are using scanner data, how they use various support tools, what added value they expect (or want) from the data, and how satisfied they are with scanner data.” To do this, marketing services and marketing research managers, directors, and vice presidents in 51 U.S. consumer products firms were interviewed.

“Essentially what you’re seeing in this market is a very exciting, very important resource that the big consumer packaged goods companies are still trying to get their hands around, and the data is progressing faster than the users are able to get the value from it,” says Nancy Peck-Gray, associate, Temple, Barker & Sloane’s marketing and sales management group.

“(Scanner data) is a dream for marketers. Consumer packaged goods companies know the subtle analyses they could be doing with this data. They know that if they probed and they pushed into the depths of this micro-market data, they could gain knowledge of its subtle characteristics, especially combined with panel data.”

On the other hand, PeckGray continues, it’s also a nightmare. Because of the frequency and volume of data shipments and difficulties with the analysis process, some companies indicated they didn’t have the time or the resources to get the most from the data.

“They expressed concern that there wasn’t enough time or enough staff, and frankly they hadn’t figured out how to approach a more in-depth analysis of the data.”

Many firms are also worried that their competitors are somehow using the information more effectively than they are. Awareness of these feelings was one reason why TBS performed and underwrote the study.

“The consumer packaged goods world had been consistently sending us signals that one of their main concerns was their use and application of scanner data. Our impression was that they were worried that their peers were getting more sophisticated in using the data than they were, and so we decided that in order to better serve our clients, we really needed to understand exactly what the status was of the use of scanner data.”

High interest level

The survey had an 84% response rate, which reflects the high interest level in the subject. 78% of the firms have $300 million or more in annual revenues; the smallest firm generates annual revenues of $25 million. 80% are food manufacturers, 13% are health and beauty aid firms, and seven percent manufacture other consumer products. The surveyed companies spend an average of more than a million dollars each on scanner data annually.

The study found that on average, the firms have been purchasing scanner data for almost three years. Many companies purchase scanner data from more than one of the three primary suppliers, Nielsen, IRI and SAMI. In conjunction with scanner data, most firms are also purchasing in-store display audits, pricing, local advertising, distribution, and couponing data. Approximately half also buy panel data describing purchaser demographics.

Usage

The study found that scanner data is used most frequently by the marketing, sales, and marketing research departments for:

  • basic business tracking, (watching category and company volume trends, shares, and prices),
  • tracking or testing variables (including promotions, in-store displays, feature coverage ),
  • planning (goal setting, forecasting),
  • new product/test market tracking,
  • monitoring competitors.

Sales departments use scanner data mainly for:

  • basic business tracking,
  • key account tracking,
  • broker/trade management, including preparing business presentations and tracking levels of retail support.

Though the number of users within firms varies greatly (from 5 to 900 users per company), scanner data is used or analyzed extensively by an average of 45 employees within each company. When salespeople are also involved, the average number of users per firm is 122.

Overall rating

The firms were asked to provide an overall satisfaction rating on a scale of 1 to 5—1 being dissatisfied, 5 being very satisfied. While the satisfaction levels of individual firms ranged from 1 to 5, the average rating was 3.5.

“The satisfaction scores were interesting,” Peck-Gray says. “You would think that marketers would be very excited about this product, but the 3.5 average satisfaction level is not good news. It says that there is a lot of work to be done on the user side and supplier side to take advantage of this resource.”

Although the survey found that scanner data users are satisfied with the timeliness of the data and the maintenance requirements for it, many respondents were unhappy with the depth of their companies’ applications of and experience with the data.

(A small number of respondents indicated they were satisfied with the current use of scanner data within their firms. They tended primarily to be from small firms who are less experienced with scanner data. “Importantly,” the TBS report adds, “the less satisfied scanner data users are firms with more than one year’s experience with the data.”)

The dissatisfaction stems from a combination of closely related factors. Each month brings a large quantity of new data to be analyzed. Associated with this are staff shortages (too few personnel are assigned exclusively to data analysis), inexperience with analysis (those employees who are involved need more training) and difficulties with the software used for analysis.

“My feeling is that it’s not an inadequacy on the part of these companies. It’s the fact that their standards and their understanding of what could be done with this data are high, but the personnel resources just can’t be committed to full time monitoring of the data,” Peck-Gray says.

Staff commitment

The survey found that on average each firm committed only one full-time equivalent staff person to analyzing updated scanner data each month, although this is separate from maintenance of the scanner data/system and separate from independent analysis undertaken by users throughout the firm.

“Companies probably should be budgeting to have at least one full time analyst in a particular group do in-depth analysis of this data every month, but that doesn’t seem to be the typical pattern,” Peck-Gray says.

“The typical pattern is that the top line is skimmed off the data in a report and distributed widely and everybody gets the baseline of business trends for their category and their industry and their market. But the marketers know that there’s an awful lot more that could be gotten from the data.”

More depth

To the question, “For what, if any, other routine purposes would you like your organization to use scanner data?” several firms responded that they felt they should be using the data in more depth and/or with increased sophistication.

70 percent of the firms reported using scanner data for reference purposes, while 30% indicated they used it as a broader discovery tool. As a reference tool, scanner data is used to confirm or refute suspected problems or marketplace activities. In discovery analysis, the data is more thoroughly reviewed, allowing the clients to discover important or unusual activity in the marketplace.

The latter is a time-consuming process, which Peck-Gray likens to reading a novel, that requires “starting from the beginning and letting it unfold and seeing what interesting phenomena pop out at you.”

“Asking the respondents what they thought would be an ideal ratio (between reference and discovery), interestingly, and not really surprisingly, people thought there would always be an important role for reference analysis of the data, but they felt that the ratio really should be more like 50/50.”

Increasing utility

The TBS report suggests the following ways for firms to increase their utility of the data: make sure that the data analysts are working to meet management’s needs by analyzing and providing the right information; use the data in tandem with other internal data; and become more proficient with the available data analysis software.

This point presents some difficulty, Peck-Gray says, because in some firms, those currently responsible for data analysis don’t feel comfortable with the analysis software available.

“They don’t completely understand how to use it. They spend too much time trying to get basic statistics pulled out. I think from the user’s perspective, (the firms) really should be investing in training their people to use that software.”

The most common comments made on data analysis software related to ease of use issues, with many respondents claiming that the software was overly complex. They also expressed the view that the features and capabilities of their present software package should be expanded. Many also discussed the use of “expert” tools such as automated analysis to enhance analytical capabilities.

Automated analysis

Questions on automated analysis software—which can take the place of human analysts by performing set analysis tasks—were added to the survey after field testing of the questionnaire uncovered a great deal of interest and concern about the topic. (93% of the firms expressed interest in automated analysis capabilities, and one-third have already taken steps to develop or acquire automated analysis capabilities.)

“The vast majority was interested in automated analysis programs. There are concerns about them—the thought process isn’t as insightful as an interactive analytic person—but our impression was that people were beginning to feel that having a consistent look with some depth at their data every month would be very valuable.

“When analysts look at the data, they tend to look at it a little differently every month and pick up different phenomena. The nice thing about an automated tool is that it’s consistent. It may not look at the data exactly as you would, but you know that it does it in a consistent way every month, so that you have some baseline experience that you’re working from.”

Customize offerings

On the supplier side, the report recommends that they increase responsiveness to clients and work to customize offerings to the needs of specific companies. And, just as their clients should invest in automated analysis, the suppliers should also offer it and other tools to enhance analytical capabilities.

The TBS report states, “A supplier’s quality of service has two distinct dimensions. The first is the supplier’s ability to deliver the data successfully—on time, accurately, and including appropriate analytical treatment. The second is the skill and effectiveness of individual sales/service representatives. The role of the supplier’s representative is to understand the client’s needs and communicate them to the supplier organization, to suggest relevant data and analytical solutions to the client and to satisfy the client that his needs and interests are being addressed.”

Data quality

Data quality was also an issue in the survey. Peck-Gray says that nearly 50% of the respondents brought it up on an unaided basis as an area of concern for them.

“No company should accept the data as it is. There should be some basic checking to make sure that the magnitudes are in line with your own knowledge of shipments and that there hasn’t been, for example, some major misplacement of a product into inappropriate categories which could skew the top line data dramatically and give the wrong signals.”

Quicker turnaround

In the future, Peck-Gray says, scanner data will benefit from increased specialization and quicker turnaround time, making it imperative that users work to maximize their skill at analyzing and implementing it. The consumer products companies know that scanner data is here to stay.

“They feel that it’s a very expensive resource, and they feel that it’s more or less an indispensable resource, because as long as their competitors are using it, they’re going to use it themselves.”