Alliance defines shoppers’ habits
As a rule, consumer products makers are a secretive lot, reluctant to share information that could give potential competitors an edge.
“Generally, in the [consumer packaged goods] industry, a lot of companies tend to view everyone as the competition,” said David Newman, a vice president at PepsiCo Inc.
But a rare alliance among five of the largest U.S. makers of cereal, soft drinks, diapers and other products -- faced with the increasingly difficult task of finding a common way of talking to retailers about how their customers shop -- has banded together to develop a new tool to do just that.
PepsiCo, Kimberly-Clark Corp., General Mills Inc., Clorox Co. and Campbell Soup Co.’s Pepperidge Farm unit have worked for about 18 months with consulting firm Cannondale Associates to develop the software tool, which they have dubbed the iCube.
The iCube uses data from retailers’ frequent-shopper cards and consumer panel data compiled by another party to form a model that lets manufacturers communicate with retailers that each has its own language when it comes to talking about customers.
“We were struggling with the fact that we had a system that Safeway wanted us to use, something different that Kroger wanted us to use and something completely different that Ahold wanted us to use,” said Chana Weaver, a director of category management for General Mills.
For example, different retailers might look at families on a budget differently, defining that family using different words and income levels. And they expect manufacturers to know their terms, instead of using an industry standard.
“The retailers, for all they care, will say, ‘I’m French, you’re German, so we can’t talk. Go out and learn French,’ ” said Ken Harris, a principal at Cannondale.
The iCube program essentially works as a translator, defining customers in a common language such as “traditional families,” “green enthusiasts” and “boomer sophisticates,” Harris said.
“It creates a common language, so that the retailer, at least with the people who are part of the iCube initiative, can speak a common language,” said Newman, PepsiCo vice president of insights, capabilities and training.
Newman approached Cannondale about two years ago to try to come up with a better way for looking at customer behavior data.
Cannondale, which serves as a consultant to retailers and manufacturers, brought together a group of manufacturers to develop what became the iCube that could, most importantly, work together. While the five founding companies compete in some areas, they are not archrivals, like Coca-Cola Co. would be with Pepsi.
Plenty of data were available, in part because of the growing use of shopper loyalty cards by retailers over the last several years. But walls between retailers kept that data from being used efficiently by manufacturers.
“It gives them a view beyond their four walls,” Weaver said. “Today, they can go very deep into what shoppers are doing in their stores.”
Consumer products manufacturers have become a bit more willing to work with one another in recent years, but usually in one-on-one partnerships.
“There are other examples like this, but very few,” said Ramin Eivaz, vice president of insights, strategy and growth for Kimberly-Clark’s North Atlantic consumer products business. “As an industry, we tend not to move quickly as a group and that’s one of these reasons why you don’t see these kinds of things more often.”
In recent months, the manufacturers who developed the iCube have taken it out on a test drive, using it to help retailers “peek over the wall” at what shoppers buy, how much and when at their competitors’ stores.
Harris and the manufacturers stress that specific loyalty card data from one retailer is not shared. But information from iCube helps design different programs and promotions to better serve the types of shoppers they all want to attract.
