P.R.I.S.M.'s Promise Approaching Reality

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Data collected through the P.R.I.S.M. project may quite literally transform the retail environment, and should have a major impact on the future of marketing to consumers.

The Pioneering Research for an In-Store Metric project has achieved its primary objective to measure retail traffic at the category level. Under the direction of The Nielsen Company, the initiative now also has moved beyond traffic counts by incorporating store communication audits to derive estimates for consumer reach.

In other words, the in-store "audience" for marketing communications can now be quantified, which makes retail a measured medium similar to TV, radio, print and online. "This metric will allow everyone gathered in this room to truly begin to treat and discuss the physical store as a marketing medium," David Calhoun, The Nielsen Company's chief executive officer, told an audience of more than 1,000 gathered for a special panel discussion on P.R.I.S.M. at the In-Store Marketing Expo in Chicago on Sept. 27.

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"We've come an enormous distance in an incredibly short period of time," said Peter Hoyt, executive director of the In-Store Marketing Institute, which spearheaded the first stage of the P.R.I.S.M. project with support from a consortium of consumer product manufacturers and retailers.

Inability to measure the audience for in-store marketing activity has long been a stumbling block to treating retail as a viable medium for brand-building consumer communication. This obstacle has now been removed, members of the panel discussion said.

"Because we are getting a better read on how in-store messaging impacts consumers, we can create more effective ways to engage them in the shopping environment," said Renetta McCann, chief executive officer of Starcom MediaVest Group. "This elevates the store to the status of new media, as critical as search or mobile or gaming in the overall marketing mix."

But the P.R.I.S.M. project's impact on the retail marketplace goes much deeper, according to panel members, because the data unlocks a wealth of information that can be used to transform the way retailers and consumer product manufacturers merchandise products and communicate with shoppers.

"P.R.I.S.M. can dramatically change the way we as retailers create a more compelling in-store environment by helping us to truly anticipate the needs of our customer," explained Steve Bratspies, senior vice president of marketing for Wal-Mart Stores Inc. "We'll begin designing stores that are more intuitive for our shoppers. Stores that are easier to navigate. Stores with products displayed in a customer-friendly manner. Ultimately, we'll be able to deliver the information that customers need to make the best purchase decisions and make the in-store experience one of the most powerful marketing media."

"With P.R.I.S.M., we are going to be able to measure reach by category by retailer," said Bob McDonald, chief operating officer of Procter & Gamble. "By taking this data [and] aligning it against the cost of specific physical in-store executions, we are going to be able to establish CPM -- the cost per thousand to reach those shoppers in a particular category and by store. This will lay the foundations for precisely measuring return on investment for specific executions or displays by category, by retailer. You are even going to be able to establish ROI by geography -- what works better in Florida than in Illinois -- or even ROI by seasonality."

Initial Findings
Data collected by Nielsen In-Store during the second phase of field research conducted this summer quantifies some facts that marketers have believed -- anecdotally, at least -- for several years.

"The retail audience is enormous," said Calhoun. "It is the largest audience available today. Right now millions of shoppers are in store. But P.R.I.S.M. lets us know about more than just the total audience size for a retailer. It tells us where in the store the shoppers are and how that changes by time of day and day of week."

"In some food stores, the heaviest traffic flow is not through the carbonated beverage and snack aisles -- which might be the conventional wisdom based on sales rates -- but through the yogurt and eggs section of the store."

"Everyone knows that Wal-Mart's footprint across North America is dramatic. Every day, more than 20 million customers walk through our doors. As a result, our stores are an incredibly powerful media vehicle," said Bratspies, during his presentation. "But in reality, the store itself has never been truly considered and leveraged among the ranks of the top marketing and media tools, even though its potential reach and effectiveness equal if not surpass other traditional media vehicles."

Secondly, there are significant numbers of shoppers who browse aisles but don't buy anything. "Until now, we have known a lot about the people who made purchases," said Calhoun. "However, now we have information about the shoppers who visited a category or aisle but who did not buy. ... No purchase data or loyalty data can provide this insight."

Closure rates vary significantly by category, by channel and even by retailers within a channel. Calhoun noted that the salty snack aisle has a closure rate of 66% in supermarkets but 17% in drugstores (where closure rates for food categories are lower in general).

"So, what does this mean? It means that what you can measure, you can manage," Calhoun said. "It means we can look at closure rates over time in any given store and see whether they are improving. You'll be able to compare with other stores and other channels to understand how your performance measures up."

Thirdly, specific demographic groups have identifiable shopping habits. "We now have a better view of family dynamics while shopping. For instance, 13% of shopping trips include kids," explained Calhoun. The presence of children "clearly increases the number of sections of the store that are visited" and, as one example of the impact, makes parents two-and-a-half times more likely to purchase snack bars and fruit snacks.

"Our focus around shopper-segmented merchandising -- having the right brands, right packages and messages for the store's shopper base -- will be greatly enhanced with P.R.I.S.M," said Sandy Douglas, president and chief operating officer of the Coca-Cola Co.'s North America Group. "It will allow the Coca-Cola system to continue to drive shopper insights down to store-level execution."

Finally, shoppers are exposed to a vast array of marketing messages within the store. "We know that the average number of marketing stimuli in a grocery store is about 3,500 and larger store formats, such as mass merchandisers, have over 5,000 stimuli. A typical drugstore has roughly 2,300 marketing stimuli," cited Calhoun. "These numbers clearly show the strong interest that retailers and manufacturers have in placing more focus on retail marketing and point-of-purchase advertising."

"The richness of P.R.I.S.M. data will complement our organizational expertise to help us better understand what is working and what isn't -- by store, by department, by aisle, by the day and even by day part," said Bratspies. "We all know that there are activities and programs in store -- like displays, signing and other marketing materials -- that are not adding value to our customers. P.R.I.S.M. is going to help us understand what's working and what's not."

Project Update
Calhoun recounted the progress that Nielsen In-Store has made since taking the reins of the P.R.I.S.M. project in late 2006, launching a national lead market study to refine the measurement metrics and preparing for ultimate syndication of the data.

To count traffic, Nielsen installed infrared sensor technology in numerous locations throughout test stores. The electronic counts were verified by live personnel. "We can understand the shopper audience for every single department or section of the store.

"By the end of the U.S. pilot in December of this year, we will have studied more than 160 stores representing more than 60% of all commodity volume (or ACV) of products in the food, drug and mass retail categories," Calhoun said. That figure is well above Nielsen In-Store's initial goals, and stems from the broad level of retail support the project has garnered. The study has gone beyond packaged goods categories to include toys, consumer electronics and other general merchandise, he noted.

Members of the In-Store Metrics Consortium have worked with Nielsen to review traffic counts and develop projection models to predict the audience for all stores similar in format to those tracked, he said. "On a local level, we can now plan and anticipate the audience in the cereal aisle at 4 p.m. on a Tuesday and, on a macro level, we can look across chains and regions to understand the potential of in-store at a national level."

Consortium members were also instrumental in creating "a scalable pilot program that captures and catalogs on average 8,000 unique impressions from a participating store. Our teams discreetly study each store, gathering information on every piece of marketing present" to determine the reach of specific campaigns and materials.

"This in-store compliance data -- what's actually in the store -- is one of the areas that will be revolutionary for the industry," Calhoun said. "In the short term, the in-store data will provide an understanding of the ROI of current investments. Over time, P.R.I.S.M. can help determine how, where and when marketing resources should be deployed."

The Future of Marketing?
"There is a lot of speculation about what else will change" with accessibility to data from the P.R.IS.M. project, acknowledged P&G's McDonald. "Will we move marketing dollars out of TV or print and into the store?

"One thing is clear," McDonald concluded. "We are going to have data to make the right choices -- whatever they might be."

Published: September 2007

Source: In-Store Marketing Institute