CHICAGO -- A model category management study sponsored by Nabisco Foods Group and conducted by Cornell University researchers has yielded important results relating micromarketing with sales and profit improvements.
Presented at the Food Marketing Institute's national convention here, "STARS: Segment Targeting at Retail Stores" indicated that altering shelf sets to meet local market characteristics can stimulate growth in the declining margarine category.
The study focused on physical merchandising of the margarine category at 96 supermarkets in six regional supermarket chains over the course of 13 weeks. Eighteen of those stores served as a control set.
"Our motivation as we got started with this project was to find the answer to merchandising effectiveness for sales growth in this category and along the way to advance the process [of category management]," said Chris Fink, director of category management at Nabisco Foods, Parsippany, N.J.
Participating retailers included Dominick's Finer Foods, Northlake, Ill.; H-E-B Grocery Co., San Antonio; Lucky Stores northern California division, San Leandro, Calif.; P&C Food Markets, Syracuse, N.Y.; Publix Super Markets, Lakeland, Fla., and Vons Cos., Arcadia, Calif.
Using Spectra Marketing's Brand Opportunity Indices, each store cluster was classified as having a dominant audience of either "premium" consumers who purchased margarine priced above $1 per pound or "value" consumers who purchased margarine that cost less than $1 per pound. A third cluster of stores was identified as having "dual" shoppers, who purchase both premium and value margarine, the latter frequently in stick form for baking. Dual stores tended to show higher than average sales of stick margarine.
Taking three variables from a best practices survey of 30 leading retailers, the study altered the positioning of the dominant brand group, the space allocated to the dominant brand group relative to its sales volume and the placement of stick margarine vs. tub varieties.
Every possible combination of variables was then tested in stores clustered into either value or premium groups, and the impact of each arrangement on sales volume was measured.
The results showed that premium stores could maximize category sales growth by devoting shelf space to premium margarine that was proportionately greater than unit share, by placing premium margarines to the side of the margarine set furthest from butter and by situating stick margarine on the cases' shelves. This improved product arrangement resulted in sales dollar volume increases 5.7% greater than those in control stores.
Value stores registered the greatest improvements when value margarines were given space equal to unit share and located on the side of the margarine set furthest from butter, and stick forms were placed on case shelving. Sales volume rose by 2.2% in stores employing this layout.
The optimum product arrangement in stores identified as dual was premium margarine furthest away from butter and stick products located in the well. Facings of premium products were also greater than unit sales share. Sales volume increases were comparable with other premium stores.
Beyond improving margarine sales, the projects' conductors hoped that the study would encourage similar initiatives to stimulate sales growth in other categories.
"This project involves at least as much a process as it does particular details about the margarine category," said Ed McLaughlin, professor of food industry management at Cornell.