Shopper Marketing Case Studies: Quaker Revamps the Hot Cereal Category

One of the most impressive shopper marketing programs of 2010 was also one of the quietest.PepsiCo's Quaker Oats division initiated a category reset for hot cereal last year that should be considered a textbook example of shopper marketing for the way in which it:began with the goal of better understanding shopping behavior.used research to identify key shopper needs and wants.leveraged a partnership with a key retailer to conduct the research.generated significant sales lifts for Quaker's own products while delivering growth for the category and the overall breakfast aisle.identified other key insights that can be employed in future programs.Quaker undertook the project in 2009 with the help of research firm SmartRevenue, Stamford, CT, to gain deeper insight into the motivations of hot-cereal shoppers in supermarkets. For Quaker, "the shelf is crucial" because its products typically are "only there in the breakfast aisle" without secondary support elsewhere in the store, according to Vince Salyards, director of category and customer insights for Quaker Foods & Snacks.The extensive research had two primary components. The first was a "Shopper Discovery" project conducted in 45 stores in conjunction with a national retailer. (Although Quaker did not disclose its partner, the Institute has since identified it as Kroger.)Representatives from SmartRevenue made detailed observations of 1,145 shoppers in the breakfast aisle, then followed up with 15-minute intercept interviews. They also counted overall aisle traffic for nearly 60 hours, and conducted 511 exit interviews of non-category shoppers "to get the whole perspective" of the store, Salyards said.The resulting data led to a wealth of insights, beginning with the fact that 41% of all shoppers visit the breakfast aisle -- the fifth highest percentage for all supermarket categories and the highest among center-store destinations. (The top four -- dairy, produce, meat and frozen foods -- are perimeter departments.)However, 62% of aisle visitors are simply passing through to another destination -- often the aisle's more popular ready-to-eat (RTE) cereal section. "So many people focus on RTE that we kind of get lost," Salyards noted. Of all the visitors, only 18% make a hot-cereal purchase.Among those buyers, 54% don't purchase anything if they can't find exactly what they want, and 20% will head to another store to get it. And, even though 52% of specific purchase decisions are made at the shelf, about 90% of category shoppers inevitably select the same SKUs -- leading Quaker to conclude that "even the category shoppers were bored" with the shelf set, Salyards said.While Quaker ultimately hoped to attract new shoppers to the category, its main goal was to improve engagement with the faithful. "It's such a habit-driven category," Salyards explained. "Some people weren't even aware of the other options that were there -- like new health and wellness products."In a closer analysis of non-buying category browsers, Quaker and SmartRevenue found three types: "Undersolds" who didn't like the prices or sizes, "Unsatisfieds" who found the category too difficult to shop, and "Uninspireds" who didn't find a product "interesting" enough to spark a purchase.Quaker therefore set about creating a solution that would improve shoppability, especially for the growing number of healthy choices in which many shoppers had expressed an interest. Thus, the new shelf set:organized the category into three main sections: "Simple Nutrition," "Quick & Delicious" (for instant offerings) and "Enhanced Nutrition," clarifying the choices overall and making healthy options easier to locate.moved Quaker's flagship oatmeal product (and its iconic cylindrical packaging) from a horizontal setup (often along the bottom shelf) to a vertical one. While a great benefit for Quaker, the brand block also helps shoppers more easily identify the category.added a seventh shelf to the gondola, providing more space to address shopper requests for greater variety.moved snacks/bars and other non-hot items out of the planogram entirely -- again on the recommendation of shoppers. Quaker devised a 4-foot "on the go" section for these products within the aisle, thereby opening up even more space for hot SKUs.created signage that would further "educate, communicate and inspire." After developing the concepts, Quaker and SmartRevenue took them to PepsiCo's S.M.A.R.T. Learning Center in Dallas for testing in a simulated shopping environment (incorporating such advanced research techniques as video monitoring and neurological measurement). Results from the tests were "so strong that they pretty much guaranteed success in-store," Salyards said. Sales of "on the go" products also increased when the items were given their own section.The strong results convinced the partner to undertake the reset in about 2,000 stores, where early results showed category sales lifts of 5% to 7%. Quaker gave Kroger "some time to roll it out" before the packaged goods maker began speaking with other retailers about making similar alterations, Salyards said. (It has since been implemented by four other accounts.)"We saw direct applicability with our retailer partner, but also an opportunity for applying it more broadly," said Salyards. Although the concept will be tweaked and adjusted for other chains, "We won't need to go to that depth [of research] with other supermarkets. If you have knowledge of each retailer's shopper, you can make the jump. Every solution isn't going to look exactly the same, but they all will have the same general palette."Kroger has not been implementing any sign package as part of the reset. Although signage might help create some "retail theater" and improve the shopping process, Salyards understands the need for retailers to keep the store environments "very simple."Moreover, the signage "wasn't a big driver" of incremental sales, he said. "It was more about the organization -- organizing in a way that made a difference for the shopper."Among the "ancillary" learnings from the study: hot cereal is a year-round purchase for more consumers than has been assumed historically, which has led Quaker to adjust its promotional calendar accordingly.

Shopper Marketing Case Studies: Quaker Revamps the Hot Cereal Category

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