Follow the (Marketing) Leader: NielsenIQ Shares How Small Brands are Tapping Into Big Brand Data Strategy

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By: Wise Marketer Staff |

Posted on December 30, 2021

Data-driven marketing is one of the most important and effective strategies that marketers should be using today to stay competitive in their category. Personalized ads and close customer relationships are built from analyzing sales data and getting to know your customer base. However, good quality data tools and sources haven’t always been accessible to smaller brands. Fortunately, that’s changing, and businesses of all sizes are now using sales data to improve their promotion strategies, loyalty programs, and more.   

We interviewed Kelsey Michel, VP of Product at NielsenIQ, to discuss how smaller and emerging brands can get started with data-driven marketing, how to make the best use of sales data, and what they can learn from established category leaders.

Wise Marketer (WM): As you know, data-driven marketing is one of our favorite topics here at WM. So your recent LinkedIn article, "Follow the (market) leader: Dominant brands succeed by putting data first, and you can too," certainly caught our eye. 

You touched upon some great data-driven strategies for smaller and emerging CPGs. I think our readers would be interested in a deeper dive on the marketing component. A "follow the (marketing) leader" approach, if you will. 

Kelsey Michel (KM): Smaller and emerging brands are often just getting started in the promotional space. The investment can be heavy, especially when you factor in discounting and in-store display costs. Being smart about where you start is key here. You want to pay attention to what marketing leaders are doing, but don’t start too big in terms of scope or spend.

Pick a very targeted promotion to start and use key learnings from that to then expand. And then as you learn, and see what's working, use the data to understand the incremental sales, not just the sales from the week of your marketing activities.

You need to factor in timing as well. For instance, if you happen to have a good promotion during what is also a peak sales period — like the holidays, for example. Knowing which of those sales are expected and which are truly incremental from the promotions will tell you which promotions to replicate in the future.

WM: What are some examples of data-driven marketing applications that are regularly implemented by category leaders and only recently accessible to smaller brands? What have the roadblocks been? Aside from price, of course.

Kelsey: The first place that larger brands start is identifying incremental sales. You have your base sales, which are your expected sales, and then incremental sales, which is the sales above what was expected — your lift. The second key measure is efficiency. For every dollar spent on a given promotion, what is your net return in terms of incremental sales? These are the benchmark measures that category leaders utilize.

Established brands also look at how individual promotional factors feed in to the above equation. They often evaluate the “lift” factor for things like display promotions vs. pricing vs. other tactics they are testing. For example, am I seeing a 15% return from the display tactic plus another 5% from a particular price threshold when I combine the two? You can then make smarter planning decisions by using the tactic(s) that will return incremental sales.

These measures have always been around for anyone that had the resources to invest in them. As you alluded to, the primary roadblock for SMBs until recently was cost. Implementing this type of measurement and analysis was often well out of reach for brands with small of nonexistent data budgets. Now there are new tools emerging players can use to access not only the data, but the analysis to go with it, including smaller subscriptions to platforms like NielsenIQ’s Byzzer.

Beyond price considerations, the primary roadblock to data-driven marketing for these SMBs is understanding what to do with the data, and how to use it even if they have it. Smaller brands don’t have dedicated revenue management teams like the category leaders often do, so we are just now seeing a real shift in what smaller brands can do with the data by shifting to action recommendations as the delivery instead of data. They no longer have to guess how to interpret the data. It’s been a real game changer for these emerging brands.

WM: In your article you note that smaller brands are often more nimble and able to test marketing tactics with faster pivots and marketplace response, but that there is also risk in acting (or reacting) without reliable intelligence. Can you expand upon that balance and advice for CPGs that want to leverage this agility while minimizing risk?

Kelsey: I can’t emphasize this enough, start small. Use data to know what works and try new initiatives on just a few products or with one retailer. Or, try playing with either a display opportunity or price promotion. This allows you to mitigate risk and explore with different options to see what works for a particular market or retail setting, and what does not.

Pick a calendar week and a particular product that you think will resonate based on what you have seen with similar products in the market, and use these general principles of the category to guide you when promoting the product for the first time.

And don’t forget to talk to your retail partners. See what programs they might be running that you can be included in. They want be first to market with stand-out products. This builds their brand with customers and provides them with added value. So, make sure they know about unique or exclusive products that could be particularly well-received by their customer base. Both you and your retail partners are looking for a positive return, and they can benefit from these decisions as well. Don’t forget, if you look good, they look good!

WM: How are CPGs of all sizes using retail data to create smarter promotions and loyalty program offerings?

Kelsey: Being able to navigate supply chain issues and swap out promotional product categories is one big way that CPGs are using retail data to be smarter and respond to market changes in real time.

Take a category that was in the news a lot at the beginning of the pandemic: toilet paper. Chances are we all experienced limits on toilet paper purchases during 2020. As a result, promotions were pulled back, dropping from 35% of all category sales two years ago to only 17% of sales this year.

However, other subcategories in health and household cleaning products didn’t see as significant of a drop. Take wellness supplements, for example. Promoted sales represented 28% of category sales, only down two percentage points. In addition, supplement sales are up by 11% vs. last year and up by 29% vs. two years ago as consumers have increased focus on health.

With access to data like this, retailers can quickly switch out promotional plans based on sales spikes or supply chain hits. Your brand knowing this real-time sales intelligence has had a significant impact in the ability to advocate for your brand and run more effective promotions as opposed to just recycling the same ones every year.

WM: A lot has been made of how inflationary pricing and demand are overwhelming supply due to ongoing supply chain issues. However, it seemed like there are still some very compelling promotions running this season. Do you foresee brands scaling back their promotions in 2022 if inflation and supply challenges continue?

Kelsey: Overall, I would say that most promotions will be back to pre-pandemic levels over the next year or so, but strategy will be different. I expect smarter, more targeted promotions as brands have more access to real-time consumer insights and spending patterns. And I expect to also see compelling and creative promotions next year as well as brands explore new opportunities to change their approach.

At the beginning of the pandemic, we saw promotions pulled back across the board, but the value of promotions hasn’t changed. CPG manufacturers know that promotions are effective sales drivers, even, and especially, in times of rising consumer prices and supply chain challenges.

NielsenIQ research on the topic shows that 40% of all CPG items have had significant variation in price sensitivity since the start of the pandemic. And 46% of shoppers say they buy products based solely on promotions, irrespective of brand, while 42% say that the lowest price drives them. But we’ve found that most regions aren't seeing increased (promoted) price elasticity in the immediate wake of the pandemic.

However, it's critical for brands to know which promotions are most efficient, and how to deploy them to maximum effect. Expect brands to look for tools that help them promote more precisely while still offering perceived value to customers. They should also use retail data to keep closer tabs on their own performance within the context of their competitors’ performance

Across the board, look for brands of all sizes to get much smarter about the promotions they run, moving away from some of the standard seasonal promotions. Instead, promotions will be more customized to an opportunity spotted among a consumer segment or in a particular region.

WM: Are you seeing more shared data between CPGs and their retail partners as they attempt to navigate these challenges together? Are there ways that CPGs can help retail partners that they may not be considering, and vice-versa?

Kelsey: Absolutely, we are seeing a lot more of this collaboration occurring from the data perspective. Shared data among retailers and manufacturers has become a lifeline for both in many instances over the past two years. The higher the return at the retailer, the better for the brand, and vice versa.

Retailers are using their own shopper data for loyalty programs and sharing it with brand partners, but they’re relying more heavily on CPG data as they move away from recycling the same promotions seasonally. Retailers have realized that they need to get smarter about their own promotions, and they’re now working more closely with CPGs to figure out promotion alternatives as work-arounds to things like supply chain issues. Using shared data, retailers and CPGs can more easily work together to temporarily redirect customers to products they know will be available on the shelf.

In turn, CPGs can help their retail partners (and themselves) by focusing on production of fewer product selections for a limited time, ensuring that they can reliably deliver a core product offering and do it well. This not only contributes to brand loyalty, but also helps brands keep their space on the retailer’s shelf. After all, retailers want to avoid the out-of-stock issue too; it’s hard on their staff and makes forecasting difficult, not to mention the impact on customer experience.

These actions work to boost consumer confidence in your combined ability to deliver products and avoid out-of-stocks all together. The more rapport you build with your retail category managers through both communication and consistency, the more you will instill trust and exchange of ideas, resulting in a win-win situation.

WM: For both retailers and CPGs, what are some of the most compelling use cases for data-driven marketing and promotions that you saw in 2021?

Kelsey: One of the more intriguing things we saw coming out of this year was the ability to quickly switch between marketing and promotions, and swap out product categories based on retail data.

For example, retailers swapped out the paper products that were planned for discount for another popular item that showed as well stocked with ample assortment. These swaps varied from retailer to retailer, but real-time data dictated a lot of these decisions throughout the year and most recently with supply shortages.

Among CPGs, some companies have become adept at using data as a guide for reducing lines to fewer products in order to ensure continuous supply.

WM: What should marketers be thinking about and looking for in 2022? Any predictions that NielsenIQ would like to share?

Kelsey: First and foremost, consumers are savvier now than ever before in terms of what they put on their bodies and in their bodies. They want to be informed and have increased awareness on a variety of factors, whether it is organic ingredients, locally-sourced, sustainable, or other social or environmental issues that are important to them.

We see brands increasing communications and labeling around these claims, and this information will become a more significant part of their promotional strategy as well.

On a more tactical front, product availability driven by supply chain issues and inflationary price pressures will continue to be challenges for retailers in the first half of 2022 and will probably continue to dominate headlines. Accurate, up-to-the-moment retail sales data will help brands better anticipate pricing, demand, and supply chain issues. With the right data, a brand is better positioned to advocate for their promotions and shelf space.

Beyond these macroeconomic challenges, retailers will have to grapple with how to maintain and improve brick-and-mortar sales and inventory management as consumers who grew accustomed to online shopping, delivery, and click-and-collect over the past 18 months continue to utilize these fulfillment methods. Access to omnichannel sales and shopper data will help retailers navigate this phenomenon.