INFO-DRIVEN MARKETING;BEHIND ALL THE HYPE LIES A HIDDEN, CRUCIAL ASSET;SAAVY USE OF DATA CAN HELP MARKETERS LARGE AND SMALL

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Graded on a scale of 1 to 10, most of you flunk.

That useful piece of information comes from Chicago-based market researcher Information Resources Inc. If 10 is a perfect score for how package-goods marketers use information, IRI gives the industry a failing grade of 3.

Even research executives at top marketers, surveyed by IRI, give their companies a barely passing grade of 5.5. "Client companies have not kept up with state-of-the-art" data management, contended George Garrick, CEO of IRI North America.

But some marketers and retailers do get it; the spread between the best and worst users of information has never been greater. Meanwhile, the information arsenal is spreading beyond supermarkets and scanner data. Marketers of every product and service are going to have to play the data game.

Will the brand manager be displaced by an all-powerful PC making the optimal marketing decisions? No way, said Bob Herbold, Microsoft Corp.'s chief operating officer and a 26-year veteran of advertising, research and management at Procter & Gamble Co.

Far from automating the marketing process, Mr. Herbold contended, information and technology increase the burden on managers by putting them on the line for more decisions on products, messages and media.

He sees the next 25 years bringing greater information advances than the past 25, with access to the online world changing the marketing decision-making process even more than scanner data has. "It's not daunting," Mr. Herbold said. "I would say exciting."

Welcome to the world of "information-driven marketing." Information is a problem or a solution, an expense or an asset. It's less glamorous than cool TV ads or clever new products but crucial to winning in the marketplace.

This "revolution," to be sure, has been promoted with a degree of hype lifted straight from the most extravagant of consumer marketing blitzes. The trendy, data-driven Efficient Consumer Response (ECR) concept, for example, proposes to cut $30 billion of fat from retailing and marketing by streamlining promotion and distribution. Jenny Craig would be impressed.

Behind the hype is a stubborn reality: Smart marketers and retailers are using information technology today to drive down costs, drive up sales and profits, and clobber their competitors.

Companies acclaimed for information acumen range from giants-P&G and Wal-Mart-to smaller marketers such as Ocean Spray, Dreyer's Grand Ice Cream, candy seller Storck USA and specialty food marketer Estee Corp.

"We can sit here and be skeptical and say it sounds like a panacea," said Narendra Mulani, president of IRI Logistics. "Well, that `panacea' is working [and] you don't have to be P&G to take advantage of this."

Smaller companies may even have an advantage because of agility. "I wouldn't be surprised if, up to a point, the larger companies are actually below average in terms of how they're using information," Mr. Garrick said, "just because of bureaucracy, politics and resistance to change."

Information is the hidden asset. At Frito-Lay, information is behind every step of product development, ad testing, quality control and distribution. But what consumers see are Wavy Lay's, on-target ads and ubiquitous product.

"We are an information-driven company," said Karen Snepp, Frito-Lay VP-customer and consumer insights. Linking consumer research with market information "has really been key."

The critical change is in marketers' ability to handle information. Advances in technology make it dramatically cheaper and easier to capture, store, process and access information generated from each buyer/seller interaction. In addition, the sophisticated application of information technology to logistics and distribution management has sparked enormous improvements in those disciplines.

The upshot is a quantum leap in marketers' abilities to get the right product to the right customer at the right place, time and price.

The change is startling. A decade ago, Anheuser-Busch received computer printouts of share data by city every four weeks. A-B managers now dial directly into IRI's mainframe to check weekly sales of Bud 12-packs at the local store level and do many types of analysis, including correlating data to income, ethnicity and dozens of other variables.

In the '80s, "you spent the majority of your time trying to get the data to analyze," said Joe Patti, the beer marketer's senior director of retail planning and category management. "Today, you spend the majority of your time analyzing what this information means and how you can help retail customers achieve their goals. It's a whole new and exciting era."

Across the company, executives are plugging into information. "The power," Mr. Patti said, "is in everybody using this."

The marketing information revolution involves more than just automating existing processes and increasing their efficiency. That's just the first step. Truly revolutionary changes come when the information is used to rethink the marketing process. This Advertising Age series will detail how the sophisticated use of information is:

Transforming where and how marketers deliver their products.

Fundamentally altering how marketers understand and address their customers.

Spawning the successful introduction of new products that would not have been viable in a less densely marketed, information-intensive environment.

Opening opportunities for entirely new approaches to pricing tactics and strategies.

One problem with information-driven marketing is that it is easy to drown in data. Part of the blame rests with the information producers. "We need to move up the value chain," said John Lewis, exec VP-marketing at market researcher A.C. Nielsen, Schaumburg, Ill. "Customers want to buy business outcomes; they don't want to buy data."

For example, what companies really want is not data but insights about how to run better promotions, how to implement category management techniques and how to become "category captains" that take over management of a portion of shelf space in a store.

Another barrier to information-driven marketing is generational. IRI's Mr. Garrick said senior management today is populated by people who predate the information age and who are more comfortable with traditional marketing and sales tools.

Success in the new era demands new definitions, new models and new understandings-and perhaps elimination of some marketing roles and creation of new ones. For example, sales executives are big users of data, yet many companies persist in leaving research as part of marketing.

"The term `market research' is passe. A better term is `business information," argued Mr. Garrick, who also urged creation of a separate information department to keep out politics and effectively distribute information services.

The inefficient use of information assets is a problem across the business community. Even the high tech sector has its difficulties. David Rines, an analyst at Framingham, Mass.-based International Data Corp. specializing in personal computer distribution, said his clients are effectively using about half the research data he sells them. When clients call with questions, the answer is often in reports already sent.

A lot of information is wasted. "The last thing clients need is more information," conceded IRI's Mr. Garrick. "What they need is a better way of using it."

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