Coke Studies Shoppers

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When Wal-Mart "has a problem, [you want to be] No. 1 on its speed dial," said an executive close to Coca-Cola Co.

True, the chain that Sam built is known as much for treating vendors fairly and equally as it is for everyday low pricing. But brand marketers such as Coca-Cola, with so much of their sales invested with one retailer, are still trying to outdo each other to facilitate Wal-Mart's movement toward "category solutions."

Wal-Mart is Coca-Cola's largest customer of canned and bottled beverages and accounts for roughly 8% of the company's domestic beverage sales, according to an industry analyst estimate. (By comparison, Wal-Mart accounts for 10% of PepsiCo's domestic beverage sales). Since about 70% of Coca-Cola's sales are outside the U.S., there's also plenty of room for growth as Wal-Mart expands.

No wonder then, that Coca-Cola is conducting a value-added study of Wal-Mart customers. "With Wal-Mart and all of our customers, we are committed to finding new and innovative ways to meet the needs of our mutual consumers," said a Coca-Cola spokeswoman. "An ongoing focus on consumer insights is a priority for both Wal-Mart and Coca-Cola."

"It's more about building and understanding how you can win with Wal-Mart," said a consultant close to Wal-Mart who asked not to be identified. "You have to work within the Wal-Mart framework first, then prove to them you can bring solutions that will drive incremental revenue throughout the store."

With that in mind, Coca-Cola recently embarked on a three-phase study focusing on developing a picture of the Wal-Mart shopper.

The marketer tapped WPP Group's Fusion 5, Westport, Conn., for the assignment. The unit has a longstanding relationship with the soft-drink giant handling strategic assignments, while WPP sibling Ben Marketing, Roswell, Ga., handles promotions, said a Coca-Cola spokeswoman. Both agencies referred calls to Coca-Cola.

Phase One of the study included stakeholder interviews with about 40 bottlers and executive management from Coke and Wal-Mart, and extensive research with moms and teens that frequent Wal-Mart stores and Supercenters. Research ultimately is aimed at better understanding shopping habits so the chain can create more targeted marketing efforts.

Through WPP's Lightspeed Research, Coca-Cola gathered insights from an online panel of 1,800 shoppers about where they like to shop, why they like to shop and how they would improve the shopping experience. Then researchers followed consumers on shopping trips and inspected their kitchens.

The second phase focused on developing innovative ideas. Executives brainstormed with teens and moms on how to market to them based on the research. A third phase, still pending, includes taking those findings and devising strategies based on them.

Meanwhile, a separate merchandising initiative is under way to better understand how to display Coca-Cola products at Wal-Mart and other retailers. "For Coke, being in Wal-Mart is not easy," said a beverage industry executive. "They are poorly merchandised and tucked away. [Wal-Mart] doesn't do [sweepstakes and promotional] programs, they just lower the price," said the executive. "This [merchandising initiative] is relatively breakthrough for Wal-Mart."

"They're focused on EDLP [everyday low pricing] and everything they do is grounded in merchandising EDLP," said the executive close to the Wal-Mart team. "Whether it's marketing or it all goes back to selling merchandise, if the marketing initiative is not grounded in EDLP and helping to sell merchandise, it's not the Wal-Mart way."

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