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MARCH 2020

Path Purchase

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E N D - TO - E N D S T R AT E G I E S F O R D R I V I N G C O N S U M E R D E M A N D

INSIDE CBD IN CPG:

WHERE THINGS STAND

BRANDS AS INVESTMENT FIRMS:

A NEW SEARCH FOR GROWTH

VOICE COMMERCE:

FUTURE STILL UNCLEAR?

STORE SPOTLIGHT: TOTAL WINE & MORE

Hall of Fame

Steve McGowan

Helping Mondelez win big with shoppers and retailers

POWERED BY


“A BEAUTIFUL NEW APPROACH TO MARKETING.” — COLORFUL ENGINEERING

Welcome to the future of marketing. A more vibrant, integrated world that touches people’s lives in new, imaginative and effective ways, accelerating commerce through ingenuity, artistry, vision and passion.

This is Colorful Engineering.


Contents E N D -TO - E N D ST R AT E G I E S F O R D R I V I N G C O NS U M E R D E M A N D

24

CBD: What’s It All Mean?

Despite growing consumer demand, a lack of clear regulation is keeping traditional players out of the market.

12

SPECIAL REPORTS

Hall of Fame Q&A Steve McGowan’s work helping Mondelēz International win with shoppers, retailers and industry awards programs has earned an induction into the Path to Purchase Institute Hall of Fame.

18

30

Searching for growth, CPG companies are increasingly relying on venture capital arms and incubator groups.

As voice assistants and enabled devices proliferate, they face lingering skepticism about their ability to drive sales.

Building Brands in a New Way

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Voice Commerce in 2020


VO LU M E 33 | ISS U E 3

March 2020

DEPARTMENTS 6 10

NEWS

Editor’s Note:

Fame & Good Fortune

P2PI Member Spotlight:

Numerator

36

Activation Gallery:

OTC Drugs

40

P2P Toolkit

44

Store Spotlight:

Total Wine & More

8

8 Emerge at Target

Target is stocking a new, exclusive line of textured hair care products from Unilever that target Gen Z multicultural women.

48

Solution Provider News

50

Personnel Appointments/ Editorial Index

51

Retail Intel:

Coca-Cola Energy Launches in U.S.

8 Hint Exclusive

at Amazon

36

Hint expanded further into the personal care category by launching an aluminum-free deodorant solely on Amazon.

9 SmileDirectClub Expands

SmileDirectClub launched its inaugural retail product line, a new oral-care collection selling exclusively through Walmart.

9

Path to Purchase IQ (USPS 4568, ISSN 2688-4984 ) is published 12 times a year, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: $125 for U.S. addresses; $190 for Canadian addresses; $275 for all other addresses. Single copies (pre- paid only): $20 in the U.S. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2020 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Path to Purchase IQ, PO Box 3200, Northbrook IL 60065-3200.

March 2020

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REGISTER TODAY!

FREE

WEBIN

AR

A UNIQUE WEBINAR SERIES THAT EXAMINES TODAY’S TOP RETAILERS Join us as we present uncensored, up-to-the-date briefings on the retailers you care about most. Each month we tackle a different retailer covering its recent go-to-market activities and showcasing its current marketing and merchandising programs. All webinars are complimentary to you from the Path to Purchase Institute. Sign up for all of them today! Visit p2pi.org/events for more information & to register.

FULL SCHEDULE OF RETAILERS:

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• Walmart .............On Demand • Walgreens .........On Demand • Kroger ...................... March 24 • Albertsons ................ April 21

• Home Depot & Lowe’s...................... May 19 • Retail Roundup ......... June 16

Produced by:


Editor’s Note

Editor-in-Chief Peter Breen, pbreen@ensembleiq.com

Fame & Good Fortune PETER BREEN, EDITOR-IN-CHIEF

As you already saw on the cover, this month begins our annual coverage of Path to Purchase Institute’s Hall of Fame program. It’s a special time on the editorial calendar because it allows us to recognize some of the key people who are helping to define and shape our industry. And there has been plenty of “designing” and “shaping” taking place within this industry over the years. When we launched the Hall of Fame in 1994, it was fully focused on the world of P-O-P, recognizing the merchandisers and marketing services professionals working down in the retail trenches to drive sales through in-store marketing. That, of course, was fitting for a magazine that was then called P-O-P Times, nearly a decade before we launched the Institute. Since then, as we’ve mirrored the industry’s evolution, the roles of our Hall of Fame inductees have evolved as well, as both the scope and importance of marketing to shoppers has grown to address the unprecedented changes in consumer buying behavior which have occurred. Consider our three Class of 2020 inductees: • Steve McGowan, RVP of shopper marketing & strategic partnerships for Mondelez International, whose profile begins on page 12. • Jennifer Reiner, senior director of omnichannel marketing & e-commerce for Del Monte Foods, who will be profiled in our April issue. • Alex Gourlay, co-chief operating officer at Walgreens Boots Alliance, who’ll get the recognition he deserves in May. Three very different people with varied responsibilities in their organizations, although with two common characteristics that made them worthy of recognition: their success in spearheading best-inclass shopper engagement within their companies, and their willingness to share their perspectives with the industry at large.

Executive Editor Tim Binder, tbinder@ensembleiq.com Managing Editor Charlie Menchaca, cmenchaca@ensembleiq.com Associate Director/Content Patrycja Malinowska, pmalinowska@ensembleiq.com Associate Editor/Content Cyndi Loza, cloza@ensembleiq.com

Those impressively varied titles illustrate exactly how far we’ve come in the last 27 years. Think about it: The internet was barely being discussed as a concept in 1994, let alone as a critical aspect of business-toconsumer commerce. And that’s part of what makes our annual Hall of Fame coverage so special because, as we salute the accomplishments of three specific individuals and their own organizations, we’re also able to recognize the amazing strides we continue to make as an industry. So here’s a most well-deserved toast to Steve McGowan, Jennifer Reiner and Alex Gourlay for the ways in which their personal success exemplifies the triumphs of our industry. But while we’re at it, let’s raise another glass for the rest of us, too.

Associate Editor/Content Jacqueline Barba, jbarba@ensembleiq.com

A NEW DIGITAL PATH

Associate Brand Director Arlene Schusteff, 773.992.4414, aschusteff@ensembleiq.com

Speaking of continued designing and shaping, you might notice a new URL at the bottom of our pages this month: I invite you to visit PathtoPurchaseIQ.com, the new home for our magazine. This website will be your destination to find all the informative content from each month’s edition in digital form, along with related news from the Path to Purchase Institute and its community of thought leaders, solution providers and other key industry players. With the launch, consumergoods.com will revert back to being the home base of Consumer Goods Technology. Our sister publication will continue to focus on the full information technology suite driving change within consumer goods organizations, from the IT professional’s perspective. That will allow Path to Purchase IQ to do what it has done best for all these years: Help consumer goods professionals understand how best to engage with shoppers and influence product purchase throughout the retail ecosystem. So reset your bookmarks accordingly.

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Editor Emeritus Bill Schober, bschober@ensembleiq.com Director – Production Ed Ward, eward@ensembleiq.com Creative Director Colette Magliaro, cmagliaro@ensembleiq.com Art Director Michael Escobedo, mescobedo@ensembleiq.com CONTRIBUTING WRITERS Erika Flynn, Ed Finkel, Michael Applebaum, Chris Gelbach, Dawn Klingensmith, Neal Lorenzi, April Miller

SALES & P2PI MEMBER DEVELOPMENT Managing Director Tanner Van Dusen, 312.518.5000, tvandusen@ensembleiq.com Vice President of Sales Karen Fenske, 773.992.4413, kfenske@ensembleiq.com Associate Brand Director Steven Fryman, 773.992.4483, sfryman@ensembleiq.com

Senior Director/Member Development Patrick Hare, phare@ensembleiq.com Director/Member/New Business Development Todd Turner, tturner@ensembleiq.com Manager, New Member Development Katrina Lopez, klopez@ensembleiq.com

ENSEMBLEIQ LEADERSHIP TEAM

Chief Executive Officer Jennifer Litterick Chief Financial Officer Jane Volland Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several Senior Vice President, Content Joe Territo

EDITORIAL AND EXECUTIVE OFFICES 8550 W. Bryn Mawr Ave., Suite 200 Chicago, IL 60631-3731 Phone: 773.992.4450 | Fax: 773.992.4455


i3 starts a fresh and necessary conversation about the evolving challenges of commerce. We will drill down on the broader demands of our industry and attendees will leave with solutionoriented strategies that apply to their own business. — Tanner Van Dusen Chief Innovation Officer, EnsembleIQ Managing Director, Path to Purchase Institute

ner,

eral

A 3 - D AY E X P E R I E N C E P O W E R E D B Y T H E PAT H T O P U R C H A S E I N S T I T U T E JOIN US AS WE EXPLORE THE CHANGING WORLD OF COMMERCE AND PROVIDE THE BEST INSIGHTS, TOOLS, AND RELATIONSHIPS TO HELP YOUR BUSINESS COMPETE IN THE PATH TO PURCHASE.

For full event details, visit experiencei3.com


Retail Collaboration

Unilever Launches Textured Hair Brand at Target BY C Y N D I L O Z A

Target is stocking a new, exclusive line of textured hair care products targeting Gen Z multicultural women from Unilever’s Sundial Brands subsidiary. Emerge products recently rolled out to Target stores and Target.com, encompassing six moisture-rich SKUs to cleanse, hydrate, treat and style curly or coily textured hair. Priced at $6.99, Emerge items are infused with pequi oil and almond milk, and formulated without sulfates, parabens, phthalates, silicones, mineral oil, petrolatum or dyes. In stores, the SKUs get the spotlight on shelf trays positioned on endcaps that sort the items by those intended to

“cleanse & hydrate,” treat and style. A banner ad and promotional page within Target.com supported the activity. Unilever tapped Sundial’s knowledge of Gen Z and multicultural beauty to launch the line. “Gen Z women want to style their hair boldly and change up their look often without worrying about frizz or flyaways,”

Nicola Chung, Sundial Brands senior director of innovation and Emerge lead, said in a media release. “Our formulas are powered by nature and inspired by our consumers to allow them to style their hair as creatively as they would like without the added stress whether they are hitting the stage or the classroom.” To spread brand awareness, Emerge assembled an “Emerge Creative Collective” comprising influencers “with diverse hair types, styles and creative passions,” according to the brand. The influencers include professional ballet dancer Erica Lall, LGBTQIA activist Jessica Zyrie and musician Tonina Saputo. “We’re committed to reaching 100,000 young women nationwide by 2025 to help them emerge their true, authentic and creative selves,” said Unilever executive Soumya Donkada. “Our partners will enable us to help young women gain access to networks, experiences and resources they need to succeed in their creative endeavors no matter how they define creativity.” IQ

Emerging Brands

Hint Tackles Pits with Amazon BY PAT RYCJA M A L I N OWS K A

Hint, a San Francisco-based company that last year made the Path to Purchase Institute’s list of Standout Small Brands, has expanded further into the personal care category with Amazon as its exclusive retail partner. Known for its flagship unsweetened flavored water, the healthy lifestyle brand also encompasses unsweetened sparkling water, caffeinated water, and water in kidfriendly boxes. In 2017, Hint entered the health and beauty market with non-toxic sunscreen, and has now added aluminumfree deodorant. In a post published to LinkedIn on Jan. 22, Hint founder and chief executive officer Kara Goldin introduced the new

lemon- and eucalyptus-scented product as a healthier, natural deodorant that actually works. “Although research is inconclusive, there’s a possible connection between heavy aluminum use and developing Alzheimer’s disease,” Goldin wrote, differentiating her product from many other aluminum-free deodorants on the market that use coconut (Goldin is allergic) or baking soda (a possible irritant) as ingredients, and that she found were too thick and chalky when applied. While Goldin quoted a couple of positive tester reviews of the deodorant in her post, pre-populating the item’s Amazon product page with reviews wasn’t part of the strategy. The SKU didn’t get help from paid search and at launch wasn’t eligible for free Prime shipping (the latter later changed). So just

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how will the new deodorant, even one with strong brand equity, stand out on Amazon among similar products from more established competitors – many of which show up in ads above the A+ content on Hint deodorant’s product page? In Hint’s case, perhaps the answer is the brand’s booming direct-to-consumer business, which represents 45% of the company’s overall sales. While a 2.5-ounce stick of Hint deodorant is priced $10.99 on Amazon (plus shipping), consumers can get the same SKU for a dollar less via Hint’s website if they sign up for an auto-delivery subscription. IQ


New Product Launches

SmileDirectClub Expands Via Walmart BY PAT RYC J A M A L I N O W S K A

SmileDirectClub in January launched its inaugural retail product line, selling the new oral-care collection exclusively through Walmart. Positioned as affordable yet premium, the initial lineup included an electric toothbrush (priced at about $25) and brush replacement heads plus a whitening kit with LED lighting (about $40). The products are stocked on Walmart. com and across some 3,800 stores on dedicated endcap displays as well as grouped on four-ways. The endcap display utilizes a blue background, making the white of the product packaging pop. It also employs large-size, 3-D versions of the brand’s electric toothbrush and teeth tray, the latter outfitted with flashing LED lights that serve to illustrate the depicted product promise: “Whiter teeth at the speed of bright.” A circular feature in the retailer’s Jan. 30 tab supported the launch.

“Today, we are proud to partner with Walmart, and look forward to disrupting the oral care aisle and category with an easy-touse system of affordable, premium solution-oriented products for maintaining a better smile,” said Amy Keith, vice president of retail for SmileDirectClub, in a media release. A subsequent rollout in February added several additional products to Walmart’s offering: toothpaste, a water flosser and an ultrasonic UV cleaner that sanitizes aligners and retainers. “SmileDirectClub’s debut of oral care products in mass retail extends our mission to be the consumer’s first resource for safe, affordable, and convenient oral care solutions,” said Josh Chapman, SmileDirectClub chief global brand

officer. “Partnering with Walmart to introduce our products reinforces our shared commitment to providing premium-quality products at a price worth smiling about.” The dental aligners the company is known for selling for a fraction of the cost of traditional braces or Alight Technology’s Invisalign services are not included in Walmart’s lineup – at least not yet. SmileDirectClub does have multi-year, non-exclusive agreements to open up to 1,500 shops in CVS Pharmacy and Walgreens stores to hawk those products. The shops would certainly fit Walmart’s strategy as the retailer makes a broader strategic push into health, including the recent launches of several other brands in the category and the opening of standalone health clinics. SmileDirectClub, which has yet to post a profit and whose initial public offering last summer was dubbed one of the worst of 2019, will also bolster its directto-consumer business with the addition of a club-edition electric toothbrush that includes a second, aligner-cleaning brush head and will offer a subscription service delivering a brush head and battery refill every three months for $5. IQ

Institute Advisory Board Vanessa Bueno Principal Savvy Design

Carlos Garcia Industry Manager, CPG-Retail Facebook

Heather Campain Customer Leader, Omnichannel Strategy & Activation Johnson & Johnson

Byron Gilstrap Global Lead, Retail E-commerce Platforms Capability Kellogg’s

April Carlisle Vice President, Shopper Marketing Coca-Cola Co.

Howard Klein Group Management Director FCB/Red

Heidi Froseth Omnicommerce Industry Leader & Consultant

Kelly Marsh Director, Coffee Experiences, Industry Affairs and Capabilities Nestle Starbucks Coffee

Tracy Galindo Multicultural & Specialty Marketing Jewel-Osco (Albertsons Companies)

March 2020

Brian Messerschmitt Vice President, Shopper & National Marketing Albertsons Companies Laura Moser Director, Business Leadership & Client Development HMT Associates Alicia Mosley Shopper Marketing Director Tyson Foods Jay Picconatto Marketing Director, Shopper Marketing General Mills

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Rob Rivenburgh CEO North America The Mars Agency Dan Sabanosh Director, Shopper Marketing Great Northern In-Store Jon Schultz Managing Director TPN Retail Mark Williamson Head of Retail Partnerships Peapod Digital Labs Jason Young Chief Media Officer Quotient


Member Spotlight

Numerator

A Q&A with Numerator CMO Kelly Dotson

Much of the martech revolution has yet to truly hit market research, so we love being a disruptor in this regard.

niche brands) is changing every area of the business. And technology is (finally) advancing this industry, which has been slow to embrace change. Much of the martech revolution has yet to truly hit market research, so we love being a disruptor in this regard. We’re also fascinated by some of the headlines about consumer privacy as we have always had a very upfront and transparent interaction with our consumers when there is a data exchange. We actually go beyond that and insist that our approach is equitable, so consumers share in the value of it, and that it be easy to use so they will want to engage.

What are your predictions for the future of marketing, and how will you help your clients navigate it?

Your website – Numerator.com – says “We connect you with omnichannel consumers.” Can you explain what that means? DOTSON: Consumer buying has radically changed. By summer 2019, traditional retail channels (brickand-mortar grocery, drug and mass stores) had dropped to just 54% of consumer buying. That means almost half of consumer buying is in nontraditional channels. In other words, your consumers are making purchases all over the place. The same is true for advertising, promotions and pricing – they are very dynamic and touch consumers everywhere. Brands and retailers need to understand that omnichannel dynamic – and we make that possible through our modern

consumer panel that captures what, why and how consumers buy.

How does your company plan to use its P2PI membership resources? DOTSON: Numerator is a learning organization – it’s part of our DNA. We most look forward to immersion in P2PI’s perspective on the industry and to understand what’s top of mind for leaders in the industry. It’s also motivating to our teams to have access to fresh information and people.

What are the latest disruptors most affecting your industry now? DOTSON: The fragmentation of both marketing and consumer behavior is the underlying disruption. The ubiquity of access (to media, advertising, retail channels,

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DOTSON: We predict market research data will become more democratized and more real-time. The paradigm of centralized research centers that provide periodic updates will be supplemented with broader access to datasets with more hands-on keyboards. We believe that some of the actions that market research informs will become automated. We already are closing the gap between causal influences (advertising, media spend, promotions, pricing) and the impact on consumer behavior. The next step will be automating that understanding to drive action. IQ

NOT A PATH TO PURCHASE INSTITUTE MEMBER? Join the 400+ companies who rely on the Path to Purchase Institute every day for strategies and best practices on succeeding in today’s chaotic consumer goods environment. For more information, contact Katrina Lopez at klopez@ensembleiq.com.


. ile

W e

t help bu ’ n ts ca l m l a

Congratulations

Steve McGowan

on your 2020 induction into the Path to Purchase Institute Hall of Fame!

From your agency partners at

© Mondelēz International group


Photos by Steve Hockstein March 2020

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HALL OF FAME Q&A Steve McGowan, Mondelez International

HALL OF FAME Q&A

Steve McGowan

RVP, Shopper Marketing and Strategic Partnerships, Mondelez International In recognition of the shopper marketing success he has guided at Mondelēz International, as well as for the ongoing commitment he has made to helping advance industry knowledge through thought leadership at various public events, Steve McGowan has been selected as a 2020 inductee into the Path to Purchase Institute Hall of Fame. A 17-year veteran of Mondelēz and its predecessor companies (Kraft Foods and Cadbury), McGowan is responsible for leading the consumer packaged goods leader’s shopper omnicommerce marketing function in the U.S. He also guides strategic partnerships with manufacturers, vendors and other entities Tell us about your background. McGowan: I grew up on Long Island. I was one of five kids, three boys and two girls. My dad was a lawyer with his own civil practice and my mom was a homemaker. In high school, I mowed lawns and worked at a car dealership, where I washed the cars that came in for service. It taught me the important lesson of doing the extra things to make the customer feel special to ensure the repeat visit.

So then off to college presumably? McGowan: I picked Carnegie Mellon University for its business and engineering schools. Each was ranked in the top 10 at the time. It was an amazing academic school that didn’t have a great athletic department. They built a new football stadium to attract more attendance to the games. To entice students, the school offered free floppy disks to any who attended. Unfortunately, this was our claim to fame that got written about by Sports Illustrated.

You went in thinking engineering, majored in managerial economics and industrial management, but in

across the company’s portfolio, and plays an instrumental role in the development of strategies, plans and post-analytics for both shopper and strategic partnerships solutions. Under his guidance, Mondelēz has won 12 Shopper Marketing Effie Awards in the last four years, showcasing the exemplary work that he and his team are doing to drive best-in-class shopper engagement. He will be inducted into the Hall of Fame on May 6 in Chicago as part of the Path to Purchase Institute’s new i3 event. In January, Bill Schober and Peter Breen interviewed McGowan at Mondelēz’s offices in East Hanover, New Jersey.

your junior year, something changed. What happened? McGowan: I took a new products class and immediately knew it was what I wanted to do. It had analytics, but there was also insight, strategy, vision and creativity. I decided I had to figure out a way to pursue my career passion. I knew that to get into brand management I would also need a master’s degree. Carnegie Mellon is a very technically driven school where students work primarily on individual projects, but Wake Forest University, where I earned my MBA, was the opposite. The education was focused around group projects and collaboration. It was a great dichotomy of education philosophy.

You earned an MBA and joined Applied Information for Marketing (AIM). McGowan: The executive team all worked at IRI or Nielsen previously. The company built and sold a piece of software to CPGs that basically lined up shipment data versus consumption data, week by week, brand by brand. It was an impressive piece of software for 1993 and our clients were companies like Heinz, Kraft, Unilever and Church & Dwight.

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I, of course, had no prior experience in this field. But with the training of my manager, I really learned how to interpret consumption data and programming results. I could see how certain merchandising only drove forward buying of product, while others truly drove incremental consumption. It was a great foundation of business analytics for my future roles.

From AIM you went to Weight Watchers. You weren’t weighing people, were you? McGowan: Ha. Not exactly. Heinz had bought the brand from Kraft a year earlier, and for various reasons, it was headquartered in Hamden, Connecticut. That’s where I signed on as an assistant brand manager. Weight Watchers was a great business, and believe it or not, Heinz owned both pieces of it: the packaged goods (my end) and what they call “The Classrooms.” The consumer products were tailored to meet the needs of the brand’s members as well as its consumers. The two unique sides of the business model worked well together. I was able to leverage the


HALL OF FAME Q&A Steve McGowan, Mondelez International

From left to right: Michael Tilley, U.S. lead, shopper marketing strategy & strategic partnerships; Michelle Squillante, shopper marketing operations manager; Shebanie Gabriele, senior financial manager; Mindy Stone, customer director, shopper marketing; McGowan; Yolanda Angulo, customer director, shopper marketing; Beth Froncek, customer director, shopper marketing; Cathy Petrous, shopper marketing manager; Jerry Dyrsten, shopper marketing operations manager.

business analytics skills that I picked up at AIM, but the other aspects of brand management were new to me. Therefore, strategic brand equity exposure and understanding were my biggest takeaways. Although I will add this: I learned a little bit about big corporate politics there as well. As you recall, my prior job was at a 35-person startup. So, big corporate politics were new to me and I learned that it can be a rough sport. But most importantly, I learned the most valuable lessons of my career as well: the importance of loyalty, collaboration, trust and building strong relationships. I strive to work and lead with these in mind each and every day.

Eventually, Heinz moved Weight Watchers and you back to Pittsburgh, where you were promoted into additional roles.

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McGowan: Yes, I stayed within the frozen division of Heinz for eight-plus years. I was promoted into different roles across different brands where I worked for the same VP (John Carroll) for six years. It was a great run. I got to launch a new brand, recommend a divestiture of a brand and lead Smart Ones to three consecutive years of double-digit topline and bottom-line growth. Overall, Heinz was a wonderful learning environment with great brands and fantastic people.

Do those old brand loyalties stay with you afterward? McGowan: Oh yeah. My family grew up on Smart Ones frozen entrees, Ore-Ida potatoes. And my four daughters still enjoy Bagel Bites as a Saturday snack. You also learn interesting things


HALL OF FAME Q&A Steve McGowan, Mondelez International about your brands from different people along the way. The importance of margins, sales, packaging graphics and consumer relations and consumer and shopper insights. We did not have robust A&C budgets, making us very judicious with the support we received to ensure it was leveraged to the maximum. This was another great lesson for me, to learn how to maximize a small marketing budget.

Why did you move to Cadbury PLC? McGowan: Family reasons. We loved Pittsburgh but had three kids under 4 years old and wanted them close to their grandparents. Being seven hours away was difficult for us, and we decided to get back to the East Coast. It was a tough decision. The brand I ran before I left Heinz, Smart Ones, was a large highprofile brand. When I moved to Cadbury, I was given the brand responsibilities of Sour Patch Kids and Swedish Fish candies. Interestingly, the sales of the candy brands were much lower than the brand I left due to the average price points. However, the learning I gained from moving into the candy category with large competitors, with channels and customers that I was not accustomed to, helped round me out as a marketer and increased my understanding of the overall food category. Even so, it was all about seizing opportunities because candy was a lower priority in the portfolio due to margin and growth trajectory. Therefore, I went to work on my first commercial for Sour Patch Kids with my manager, Sydney Taylor, and we landed on the positioning of “Sour. Sweet. Gone.” I’m proud to say that, 15 years later, we are still using the same tagline and strategic positioning. It was so simple yet so strategic that it really conveyed the brand’s essence. The Sour Patch Kids brand and business has grown significantly since I first joined.

You said in our pre-interview that this job was a turning point in your career. Why?

McGowan: I say this because of a few factors. The first is that I was learning the new candy category and helped pave our strategic path forward. The second is that it re-enforced my belief that you must be willing to raise your hand, go outside your comfort zone and take on special projects. For example, I volunteered on a project designed to generate $20 million worth of ideas, by 20 team members, in 20 days. We were able to find the $20 million with the help and support of our sponsor, Bill Higgins. The first thing we did was analyze our 150 SKUs, and then cut 38% of them. Well, productivity and margins increased immediately. The whole project focused on getting back to basics: SKU reduction, growth and distribution ideas, prioritizing and focusing on certain channels and customers. A second project was with McKinsey, where we redefined how to go to market. My focus was the commercial planning process. I mapped the process from end to end across functions. The key deliverables were what was our category growth plan, and how did our innovation, activation and thought leadership support this plan. We laid out who was responsible and when things were due. This all linked to our customer lead times so that we could provide customers with the right information, at the right time, to have the right conversation. A great insight I learned on these projects was that, when you sit with cross-functional partners or McKinsey employees, you get exposed to new ways of thinking that help broaden your understanding. I have recommended to my mentees as well as my four daughters: You don’t get something for which you don’t ask. You have to be willing to raise your hand, step out of your comfort zone, and do the work to get new experiences, opportunities and chances in life.

And this earned you a promotion? McGowan: Brad Irwin, our president, called me into his office, said the McKinsey work was terrific but we now needed to bring it to life. He offered me the “Director strip,” but it was a sales role in category development and planning. He said I would set up the department and it would be the liaison

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between marketing and sales. He told me to think about the offer. That brings me to another great lesson of my career, the importance of having internal and external mentors. Obviously, internal mentors understand the dynamics of the building/corporation. It is the external mentors who help you understand market dynamics and the bigger picture. For me, I called both former bosses as well as external recruiters about the role. All of my conversations led me to taking the position.

Placing you between marketing and sales, it would seem like this job was a precursor to your later shopper marketing role. Was that the case? McGowan: Absolutely. You know, I would have stayed in that job for 20 years. The environment at Cadbury was very collaborative. We were just over $1 billion in sales competing with Hershey, Nestle and Mars/Wrigley. We had to think smarter, focus on thought leadership and always go to a customer with a strategic plan that would help drive its overall category. We could never fall back on our size because we were too small. Of course, now that I’d been promoted, it meant that I also “owned” the McKinsey project and I had to deliver. The SVP of sales, Jay Joyce, made sure I was held accountable. At our first sales meeting, he got up on stage in front of the entire sales organization, 300 people, and said, “Steve McGowan, we thank you. We are better than we were. However, there were nine mistakes in the sales materials. This is a vast improvement but we can get better.” And he was right. At the end of the day there shouldn’t be any mistakes. I appreciated that he was holding me accountable just like everybody else – most importantly raising the bar for the entire organization.

Now that you were positioned between sales and marketing, what did you learn from that perspective? McGowan: My job for the last 15 years has been “in the middle,” making sure


HALL OF FAME Q&A Steve McGowan, Mondelez International

Steve McGowan Title: RVP, Shopper Marketing and Strategic Partnerships Company: Mondelez International Career path: Applied Information for Marketing (AIM): Client Service Manager (1993-1995); Weight Watchers: Associate/ Assistant Brand Manager (1995-1998); Heinz Frozen Foods: Senior Brand Manager; Brand Manager (1998-2003); Cadbury: Director, Category Development & Planning; Senior Brand Manager (2003-2010); Kraft Foods Group: Director of Shopper Marketing (2010-2012); Mondelez International: RVP, Shopper Marketing & Strategic Partnership; RVP, Shopper & Consumer Activation; Head of Shopper Marketing; Director, Shopper Marketing; Director, Strategy & Customer Development (2012- present) Industry activities: Active member of P2PI/ANA; Member of Shopper Marketing & Digital/Mobile committees with ANA; Member of Brand Innovators and serves on advisory committee. In past four years, his team has won 15 ANA Reggies, one Super Reggie and 12 Shopper Marketing Effies among other various awards. The team also was awarded three Mondelez Marketing Excellence awards in 2019. In the past five years, McGowan has presented and spoken at 20 different conferences and events. Education: Wake Forest University, Babcock Graduate School of Management: MBA Marketing and Finance; Carnegie Mellon University: Bachelor’s, Economics & Industrial Management

everything works cohesively between the two disparate groups. The job really taught me a lot about sales. I knew traditional marketing, but I didn’t know the various nuisances of calling on a customer and having that responsibility. Sales is much more decisive and fast-paced, whereas marketing is more creative and has more iterations. In my experience, indecision does not work well in sales or with customers. They are on tight deadlines, need an answer or will need to move on. With sales, I pull from the principle learnings that I acquired at Carnegie Mellon around being pragmatic, fast-paced and analytically focused. However, I also draw upon the collaboration, teamwork and relationship-building skills that I gained at Wake Forest. Quite honestly, I have leveraged both sets of these attributes in every role that I have had in my career.

So, your first direct experience as a shopper marketer came at Kraft? McGowan: Yes. Kraft bought Cadbury in 2010. We didn’t do a great deal of shopper marketing at Cadbury since the largest part of our portfolio was at the front end [of the store] where such programs are very difficult to execute. When Kraft came in, I was given an opportunity to create a smallformat shopper marketing team focusing on drug, value and convenience across all Kraft Foods divisions and reporting to Mary Sagripanti and Laura McCorvie. It was a tremendous learning experience as it was my first true shopper marketing role and I was learning from veterans in the industry. But then two years later Kraft split, and I wanted to stay on the East Coast. I landed a job on the Mondelēz International side through the help of Craig Simon and Jay Joyce. In my new role, I was responsible for shopper marketing, shopper insights, category management and strategy for the Target business, where I reported to Cory O’Neal. The job was incredible because we were the category captain and had a strong shopper team and a lot of customer-facing opportunities. We grew the business, were rated highly by our customer and completed the first-ever CPG-partnered marketing mix analysis with

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Target. After two years I was promoted into this position, to lead the entire U.S. shopper team.

You’ve been in the role five years. Still enjoying it? McGowan: Absolutely. I have the pleasure of working on fantastic brands, at a terrific company, with a wonderful team. My role continually evolves and I am challenged everyday both analytically as well as creatively. I have a very supportive manager, Anthony Rasetta, as well as a strategic, dedicated and supportive leadership team.

Let’s talk about your role in bringing ROI into shopper marketing evaluation at Mondelēz. McGowan: It is a regression-based model we developed with Kantar Analytics and Geometry Global that isolates the impact of shopper marketing activity and helps assign the value to the specific tactics during a program. It enables us to determine that a display is worth X, digital is worth Y, and so on. We started this model in 2014, and it gets better and more evolved each year. As with all models, it’s not 100% perfect, but with each year we improve and I personally like to look at the trends across customers, brands, programs and tactics for key learnings to apply to future programming. The results have been great; since 2014, Mondelēz International shopper marketing has driven up ROI substantially.

In terms of measuring the ROI, do you stick to basics or do you go for some intangible things like return on retail relationship? McGowan: Generally we stick to ROI. We do look at other areas, including return on relationship, and will footnote it. However, when we are evaluating the allocation of dollars across the marketing mix, we need to be able to speak ROI from a media, consumer promotion or shopper marketing perspective so it’s all on a level playing field.


HALL OF FAME Q&A Steve McGowan, Mondelez International Sales and ROI are the ultimate metrics, but are there other measures that you value? McGowan: We look at all marketing metrics, including foot traffic, CTR, dwell time, ROAS. In addition, we monitor external surveys and ratings, including The Advantage Rankings report. This survey goes out to retailers and asks them to rate manufacturers on things like customer service, innovation, account relationships, trade support and shopper marketing. When I took over the role in 2014, we were ranked No. 9. Over the past three years, we have been ranked in the top tier.

The role of shopper marketing inside Mondelēz has evolved to the point where you believe it now has the proverbial “seat at the table.” How was that achieved? McGowan: Honestly, it’s persistence. It was a lot of showing up, proving ROI, showcasing the work and educating about what’s going on in the marketplace – most importantly, educating and showcasing how shopper marketing can help bring our brand equities to life at retail. However, it is a constant education given the rotation of marketing personnel and the ever-changing marketplace dynamics. This can vary brand to brand. But the important aspect is the need to consistently communicate the true benefits and how the programming will change shopper behavior.

Would you say that overall, the perception of shopper marketing is getting better? McGowan: Yes. I think from our brand partners to our field sales team, the organization sees the true value and benefit. The ability to bring our brand strategies to life at retail in conjunction with our sales partners’ programming has been substantiated as great in returning strong ROI. We also focus constantly on improving our perception from an external perspective as well. We value feedback

We are constantly trying to raise the bar by working collaboratively with our retail and brand partners.

from our vendor, agency and retail partners and constantly try to put programming in place that will grow the category, is innovative and aligned.

You are also known to rely heavily on “test and learns.” How do you use them? McGowan: When I started in the role, we didn’t do too many. I believe that digital transformation and rapid technology changes have made it necessary to focus here. In 2019, we executed 20 different test and-learns. The idea is to collaborate with a retailer, try something new, learn from it, further iterate and then look to scale up. One of the test-andlearns we put into market involved – no, it isn’t always rocket science! – putting monitors up on our displays. However, we wanted to put monitors in-store and dynamically change the content in real time to see what would have the greatest impact. The “conversion content” we tested included things like videos with a recipe, longer and shorter spots, focus on ingredients or the final beauty shot. One of the big learnings for us, aside from operational challenges, was that the content-creation workload for retail engagement and shopper enjoyment was enormous. We have directed a lot of these learnings into related areas we’re exploring, including digital shelves.

You’ve also adopted a “digital first” mindset. How is that put into practice? McGowan: As the world and technology have evolved, we are focused on staying current. In 2015, we put into place a requirement that all

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creative concepts from our agencies would have a digital component to them. The field customer director could ultimately reject the tactic, but they had to at least see what it could be. Fast forward to the last few years, and we’ve been much more focused on including digital tactics on all programming for customers. We do this because the ROI work that we’ve done has proven out that, when you link a digital component to an in-store component, the ROI is that much higher. We’ve tested against digital-only and against in-store only, and it’s not even close.

Let’s talk a little about your team, which has a very low turnover rate within Mondelēz. McGowan: Yes, we’ve been blessed to have a very low turnover rate over the past several years. The clear benefits of low turnover have been the strong continuity and in-depth shopper and retailer knowledge. We have a small but mighty, tight-knit team, always trying to “punch above our weight class,” so to speak. To thrive in this ever-changing and dynamic landscape, the organizational alignment to support the team and efforts have been a key to our collective success. We are constantly trying to raise the bar by working collaboratively with our retail and brand partners. Fundamentally, our belief is to bring strong, forwardthinking and category-growing programs that will delight shoppers and help drive sustainable, profitable growth. IQ


A NEW WAY TO BUILD BRANDS Searching for growth, CPG companies are increasingly relying on venture capital arms and incubator groups to find the Next Big Thing BY M I C H A E L A P P L E B A U M

Lab, accelerator, incubator, springboard, greenhouse, venture capital arm ‌ The names and exact roles or functions of these efforts may be different, but the underlying idea is essentially the same. In response to changing consumer and shopper behavior, many consumer product manufacturers have launched initiatives through which they invest in, acquire or mentor emerging businesses that offer either new consumer products or technologies that can improve consumer engagement. Increasingly, this a critical path to growth for CPG companies, many of which have struggled in recent years to keep pace with shifting consumer trends and business models, including direct-to-consumer sales. Nearly all major CPGs now operate some form of in-house investment vehicle or incubator group, with the largest concentration found in food and beverage, health and personal care. In December 2019, PepsiCo launched its second North American Greenhouse accelerator program, which invests in startups working in plant-based solutions, natural ingredients, energy and mood management and sustainability. Often, these groups are charged with identifying new business opportunities in adjacent categories to the company’s core business units. And they run the gamut in terms of the size and scope of businesses they seek to mentor. The Chobani Incubator, for example, typically works with $3 million-$5 million businesses

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A NEW WAY TO BUILD BRANDS in non-dairy product categories that do not compete directly with yogurt. “We’re excited about categories that already exist, but we’re looking mostly to support companies that produce better-for-you versions of everyday food items like biscuits and soda,” says Zoe Feldman, senior director of new ventures at Chobani and director of the Chobani Incubator. On the opposite end of the spectrum, Procter & Gamble’s P&G Ventures describes itself as a startup studio that partners with entrepreneurs and investors to build billion-dollar brands for the parent company in household categories such as insect control and non-toxic home and garden, as well as personal care categories including products for such personal care needs as chronic skin conditions, menopause, sleep and personal performance. “We firmly believe that the next billion-dollar brands will come from a combination of internal and external innovation,” says Betsy Bluestone, commercial discovery leader at P&G Ventures. “Sometimes that means partnering with a startup that’s already in-market. For example, the technology for [insect spray brand] Zevo comes

from a lab that developed the invention for those products, while we did the packaging, branding and marketing. It depends who the partner is and what their expertise is. Each one of our projects is specific to the business we’re building or accelerating and what they need.”

TWO DIVERGENT PATHS The incubator model is not an entirely new idea. More internally focused types of accelerators, such as innovation labs and centers of excellence, have existed inside CPGs for decades. This latest iteration is different, however, in that the groups typically function independently and under an entirely different culture and organizational approach, one that often includes non-traditional partners in outside disciplines, such as design thinking. “The idea began to scale up about five years ago when CPG companies realized they couldn’t acquire the latest innovation or technology by staying within their own four walls. They wanted to create a group away from the distraction of the day-today business,” says E.J. Kenney, senior vice president of the consumer products industry business unit at SAP. The concept has since split into two divergent paths, says Kenney. “One started

out with companies working with startups to get into complementary technologies, markets or brands, and then they’d bring those ideas for innovation back into the core business,” he explains. “Some found that as they went through this process, they started identifying businesses to invest in and it migrated into more of an investment capital arm. So that was another direction. What started off as building synergies and capabilities became a revenue stream that could flow back into the main business.” Not all incubators are focused on building new brands or generating incremental revenue. Chobani, for example, views the role of its incubator as serving a broader social mission to encourage the production of more good-tasting, natural and accessible foods. “We are the only CPG company with an incubator or accelerator model that does not take equity or invest in any of the businesses we partner with,” says Feldman. “We don’t ask for any intellectual property in return for our services and expertise. It’s an equal exchange of ideas and opportunities.” As a private company, Chobani has the luxury of maintaining such an altruistic

CPG Company Incubators/ Accelerators/Venture Capital Arms Campbell Soup Co.: Acre Venture Partners Coca-Cola Co.: Venture and Emerging Brands (VEB) General Mills: 301 INC Johnson & Johnson: JLABS Kraft-Heinz: Springboard incubator Mars Inc.: Seeds of Change PespiCo: Nutrition Greenhouse Procter & Gamble: P&G Ventures Tyson Foods: Tyson Ventures Unilever: Unilever Ventures and The Unilever Foundry The Zevo line was invented outside of P&G, but the CPG giant has brought it to market

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A NEW WAY TO BUILD BRANDS approach. “Once you become a publicly traded business, that becomes a bit of a stickier wicket,” acknowledges Feldman. “Our founder [Hamdi Ulukaya] has a lot of strong personal values and a social mission that he adheres to, and we make sure that’s part of our ROI. We don’t look at KPIs in the same way that others in the industry do.” Even for large public companies, the funding of incubators and investment arms typically represents a tiny fraction of overall spending. Experts say this shields the groups from Wall Street’s expectations and allows companies more time and space to develop new products. “Big consumer goods companies will spend 1% to 3% of gross sales on technology, and I doubt they’re spending anything like that on these accelerators or incubators,” notes Kenney.

COMMON CHALLENGES Despite their relatively small size, incubator groups and investment vehicles can create big logistical challenges for CPG companies. “There is a lot of complexity to setting one of these things up. What a venture capital firm does is fundamentally different from what a large-scale corporation does,” says Jeff Wray, global consumer industry market leader, transaction advisory services, at Ernst & Young. As part of its ongoing research, EY has examined the operating structure of several of these groups at large CPGs and found that the way they were managed depended on two things: how much money was invested over time; and how close the mentored companies were to the core business. “Depending on where you fall in between these two dimensions will determine how you manage the investment and your relationship to that investment,” explains Wray. “Something that is one or two clicks away from your core business, or [where] you poured in a small amount of funding, tends to be an early-stage way to explore adjacencies and you pretty much let

that run independently, checking in with management teams episodically. Over time, as that business grows, then the strategic [issue] becomes how you fold those practices into your core business.” Different companies take varied approaches to integration. The Chobani Incubator, for example, is considered a part of the marketing function that operates under the demand team led by company president, Peter McGuinness. “We are very much steeped in Chobani culture,” notes Feldman. “I rely on all my colleagues across all functions and levels to help out with the incubator program when it’s in session. I’m definitely embedded in the business.” P&G Ventures has two office locations at the company’s Cincinnati headquarters, including one for its commercial team downtown at the general offices, where the c-suite sits. “Leigh Radford [VP/ general manager] wanted our team to be

accountable and gave us line of sight to the CEO and board of directors,” says Lauren Thaman, vice president of communications at P&G Ventures. “Like every P&G employee, we share our learning across the organization. “Take DTC. There are other businesses doing DTC within P&G. For example, when Native [deodorant] came in [as an acquisition in 2017], we spent a lot of time understanding their learning so we could apply it back to us.” Increasingly, those are the kinds of investments worth making. “We’re shifting away from an age of resources into an age of ideas,” says SAP’s Kenney. “Taking new or creative approaches from outside companies, whether they come from Silicon Valley or Tel Aviv, has to ultimately flow back into the business if we are going to see the next wave of innovation in CPG.”

“We’re excited about categories that already exist, but we’re looking mostly to support companies that produce better-for-you versions of everyday food items like biscuits and soda.” Zoe Feldman, Chobani

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A NEW WAY TO BUILD BRANDS

More About P&G Ventures

Betsy Bluestone, commercial discovery leader, and Lauren Thaman, vice president of communication, explain more about at P&G Ventures. How does P&G Ventures work to advance innovation for Procter & Gamble? Bluestone: Every P&G employee is responsible for innovation in whatever work they do, and every one of our business units has a process and a team that is dedicated to upstream innovation. P&G Ventures exists to create new businesses in new categories for the company. For example, we wouldn’t work in beauty and skin care – we obviously have Betsy Bluestone Lauren Thaman Olay, SK-II, First Aid Beauty – but we would work in medicated skin care, market later this year. We have three other and we [introduced] a brand in medicated businesses in the public domain, and those skin care a couple years ago to help treat products are all available for purchase direct eczema and psoriasis. to consumer. For [insect spray] Zevo, we have Thaman: We see a tremendous amount been incubating that DTC as well as with The of innovation in the marketplace and pass Home Depot and Target. leads on technologies back and forth [with the company]. They are focused on How strictly do you evaluate the innovation in, say, fabric care, where we performance of new products? might work on personal performance or Bluestone: Using lean principles allows active aging and other things that are not us to move much more quickly and less specific to our core business units. expensively. We have specific gates along the journey to in-market that the brands need to meet. It’s kind of like ‘Do not pass What is your general approach to go’ until you’ve achieved these milestones. bringing products to market? I’d say there is the appropriate amount of Thaman: Every one of our products rigor that allows us to move quickly and less goes through discover/create/build/scale expensively but still ultimately to have the phases. At the build phase, we make the proof and confidence we need to move to decision as to whether it stays within P&G the next phase of development. Ventures or does it go into a business unit or does it go into a launch pad like the partnership we have with [the thirdWhat is the rationale for focusing party] M13 Launchpad. All businesses primarily on DTC? we work with – if they are successful Bluestone: The idea in starting every one – are expected to roll over into a [P&G] of these businesses direct-to-consumer is business unit. the amount you can learn without having Bluestone: We have a skincare product massive excess inventory at your retailers. called Opte [which uses inkjet technology We’re amassing awareness and believers in to even out skin tone] that goes into the brand before we ever get to that point.

How do you identify the categories it wants to explore? Bluestone: We always start with who will be consuming and how they will consume. In which markets do we see the biggest growth, then what are the pain points [and] grappling with those that have not been solved to the consumer’s satisfaction. If you take a look at a topic like sleep – there’s falling asleep, staying asleep, waking up feeling rested – all these different jobs to be done in that space and understanding why consumers are struggling within each area. Thaman: We’re also excited about the work we’re doing in active aging. There are multiple factors that affect one’s ability to age in place. We’re looking at all of those things that happen – whether it’s incontinence, hydration, mobility – to cause cognitive decline.

p u r e h t o e s e h t s s i m t ’ n Do u P o t h t a P only in

March 2020

How would you say P&G Ventures is unique in its field? Thaman: I sat at a roundtable last year with 60-70 other companies that are working in venture areas. The difference with us is our accountability to the board. Bluestone: One of the things we’re focused on as an organization is making sure we’re seeing diversity in deal flow. Less than 3% of all venture funding goes to female founders, and we have been very deliberate in partnering with all types of VCs, specifically those whose thesis is to invest in female founders. That’s something entirely authentic to P&G and its commitment to gender equality. IQ

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CBD: WHAT’S IT ALL MEAN, ANYWAY? Despite growing consumer demand, a lack of clear regulation is keeping traditional players out of the market BY J AC Q U E L I N E B A R B A , PAT H T O P U R C H A S E I N S T I T U T E

Cannabidiol, better known as CBD, has become more mainstream in the past couple of years, swiftly catching the attention of consumers, small brands, and even some traditional consumer packaged goods companies and retailers. It shouldn’t come as a surprise that CBD has exploded in popularity. More and more consumers are turning to natural alternatives for medicines and opioids, as well as for regular products and foods. Plant-based items are trending. Organic tampons are hitting the shelves. Natural, aluminum-free deodorant is hot. Not to mention, a movement to destigmatize medicinal and recreational cannabis continues to gain momentum as national

acceptance widens and more states move toward legalization. “I think one of the biggest trends that’s actually driving CBD forward is health and wellness,” says Katie Gilsenan, consumer insights manager for the trends and insights team at London-based market research company GlobalWebIndex. “Health nowadays for consumers has become more than just going to the gym. It’s more holistic and includes different wellness activities like meditation and yoga.” Many have turned to CBD for the perceived health and wellness benefits it delivers. Consumers may use topicals like oils and lotions for external pain, skin care or other

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ailments. Others take ingestibles like supplements, edibles or infusedbeverages for reducing anxiety, improving sleep or a growing number of uses. It’s important to note, though, that there is currently no scientific evidence that backs up these health claims and, under current law, it is illegal to market CBD as a treatment for any condition/ disease or as a dietary supplement. It’s also illegal to put CBD in any foods for people or animals. So far there is only one CBD product approved by the Food and Drug Administration: Epidiolex, which is used to treat very specific childhood epilepsy disorders. CBD is often associated with anxiety, the most common mental illness in the U.S., which affects 40 million adults every year, according to the Anxiety and Depression Association of America. In a May 2019 GlobalWebIndex survey of U.S. internet users who have tried CBD, 84% said they feel that it’s effective in alleviating symptoms of mental health conditions like anxiety, and approximately 85% believe that it’s effective in alleviating symptoms of physical pain, according to Gilsenan. So while consumer demand is undoubtedly there, CBD remains a complex issue. There is a vast amount of unverified claims, misinformation and a lack of solid data on how safe and effective CBD is. Plus, the FDA has yet to put forth


a clear regulatory framework that would bring more clarity to the market and open the doors for larger, national brands and product manufacturers to have a slice of the CBD-infused pie while it’s hot. But before getting into all that, it’s important to know what CBD is and where it came from.

THE BACKGROUND CBD is one of the best-known cannabinoids among the more than 100 found in the cannabis plant, along with THC (tetrahydrocannabinol). Hemp-derived CBD, the topic of discussion, is the non-psychoactive compound of the plant. (See Glossary on page 28 for an explanation of terms.) Hemp-derived CBD became federally legal in 2018 with the passage of the Farm Bill, which protected hemp farmers, removed hemp from the definition of marijuana, and most importantly reclassified it as an agricultural commodity – a far stretch from its previous Schedule I controlled substance classification, where it was accompanied by the likes of MDMA (i.e., ecstasy), heroin and fentanyl, to name a few. Marijuana also still remains on that list. The Farm Bill propelled the hemp-derived CBD market onto its current path, which is expected to lead the U.S. market to $23.7 billion in sales by 2023, according to estimates from Brightfield Group, a consumer insights and market intelligence firm for the CBD and cannabis industries. However, such projections rely on a couple of things – primarily, the FDA. It’s more a matter of when, not if, the FDA will create a regulatory framework for CBD. At the same time, CBD products are being sold everywhere, often violating current laws. The FDA can’t police every brand on the market, although it did release a consumer update and sent warning letters last November to 15 companies selling CBD products in violation of the Federal Food, Drug & Cosmetic Act (FDCA). On one hand, the FDA provides fair warnings based on what it knows and doesn’t know. On the other, research cited on the FDA’s website states that negative effects that have been recorded are based on mostly animal studies, not humans. Federal grant work and research are being conducted to determine if CBD can legitimately curb anxiety and be used as an alternative to opioids; other organizations, including The World Health Organization, have said CBD is “generally well tolerated” and has a good safety profile. Some lawmakers are attempting to make an exception for hemp-derived CBD, like House Agriculture Committee

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CBD: WHAT’S IT ALL MEAN, ANYWAY? Chairman Collin Peterson (Democrat, Minnesota), whose new, bipartisan bill HB 5587 would amend the FDCA and explicitly define hemp-derived CBD as a dietary supplement. For now, there’s a chance that products purchased online or over the counter (depending on who made it) may not carry the amount of CBD stated on the label – or any CBD at all. Given the current state of regulation, they may even contain questionable or harmful ingredients. And, not surprisingly, consumers tend to be confused about the regulatory landscape. Only 30% of respondents in GlobalWebIndex’s survey consider themselves knowledgeable about how the FDA regulates CBD products, according to Gilsenan. “It’s really important that any brand operating in this space is transparent and self-regulates to some degree,” Gilsenan says. “Consumers need to know what ingredients are used and that there are no harmful chemicals or toxic residues included.”

Of the following, which are the MOST and LEAST valuable topics of interest for your organization in the coming year? MOST All-inclusive marketing

5.7% 7.6%

(pride/lifestyles)

9.4% 11.3%

Artificial intelligence

3.8%

Augmented reality/VR CBD

Emerging brands

26.4% 17.0%

5.7% 1.9% 7.6%

Ethnic marketing

0.0%

7.6%

5.7% 7.6%

Plant-based products

5.7% 3.8%

Influencer marketing

7.6% 7.6%

Subscription services Sustainability

11.3%

3.8%

MARKETING CBD

3.8% 3.8%

Transparency

5.7% 3.8%

Voice-enabled commerce Other

11.3% 7.6%

(cannabidiol)

Health & wellness

LEAST

0.0% 0%

7.6% 5%

10%

WHO’S CASHING IN? As some worry that potentially dangerous actors, or “snake oil” CBD products, are proliferating in the industry, there are many responsible brands that are selfregulating and taking safety measures. Most traditional packaged brands are treading lightly around CBD given the level of regulatory uncertainty, though most analysts believe they are looking into things behind the scenes. “It’s mainly the smaller, independent, more niche brands that are operating and kind of owning this space instead of the large well-known players,” Gilsenan says. They have less to lose, less scrutiny hanging over them, she notes. In Path to Purchase IQ’s latest Trends Report, 26.4% of the consumer goods marketing professionals surveyed identified CBD as the “least valuable” topic of interest to their organization in 2020 among 13 identified topics, while only 7.6% viewed it as “most valuable.” (See chart at left.) For the same reasons as traditional brands, top retailers are also approaching CBD with caution. Retailers such as CVS Pharmacy, Albertsons Cos., 7-Eleven, Southeastern Grocers, Petco, Sephora, Ulta, Kroger and Walmart are only stocking topicals. However, edibles or CBD-infused beverages, still illegal, can be found in some stores, mostly small, independent retailers. For the time being, traditional brands and retailers can closely watch what these small players are doing. One hemp and CBD company taking consumer safety and transparency seriously since its inception in 2012 is Colorado-based Bluebird Botanicals. The Certified B Corp. was the third company to start selling CBD products in the U.S. and the first to sell them globally. Bluebird avoids making unverified health claims and invests heavily in sourcing, gaining third-party authentication when possible, and making that information accessible to consumers through a database of ingredient information for each item.

15%

20%

25%

Source: Path to Purchase Trends Report 2020

March 2020

30%

While transparency can play a key role, marketing in this space brings its own challenges, requiring brands to get creative. Virginia Lee, CBD research manager at Brightfield Group, offered up a number of CBD brands doing interesting things, including: • HempFusion in November launched a month-long North American campaign including ads in more than 50 major airports and a smart CBD vending machine dispensing the company’s Stress product at Hartsfield-Jackson Atlanta airport (the busiest

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CBD: WHAT’S IT ALL MEAN, ANYWAY? in North America) to target “the busy and affluent traveler” during the holiday season. • Green Growth Brands operates roughly 200 kiosks for offering trials of its Seventh Sense Botanical Therapy brand at “class A, high volume” shopping malls that offer trials, and has sent direct mail pieces containing topical samples. • Recess, a CBD-infused sparkling water brand, staged an “Instagrammable” pop-up shop in New York City with experiential marketing, musicians, wellness discussions and activities to reach busy New Yorkers. • Feals and CBDMD have used radio and podcast ads. Marketing in this space is still very new and, like CBD itself, poses a lot of hurdles, particularly online and through social media. It’s tougher for startups to invest the time, money and energy in the necessary quality assurance that moreestablished players such as Bluebird Botanicals can. Who might have such resources when the FDA and government agencies get their act together on regulations and laws? The big, traditional CPG companies. In fact, some big-name brands have publicly played with the idea of incorporating CBD into their businesses. Mondelez International CEO Dirk Van de Put told CNBC in a May 2019 interview that the manufacturer is considering

reportedly told reporters in January at the trade group’s annual conference in Arizona that the “tremendous consumer demand” for CBD might push companies in dairy to roll out CBD-infused food and beverages with or without the regulatory framework. “[The] industry is moving and saying, ‘Look, we’re going to be careful with the claims we make, and yes we’re going to take some risk,’” he said. Elsewhere, Campbell Soup Co.’s Bolthouse Farms is planning to release two CBD-infused ready-to-drink lines in California this year. PepsiCo has also reportedly expressed interest in CBD partnerships or equity stakes, as well as in cannabis, which has actually garnered more support from big companies than CBD. For instance, alcohol giant Constellation Brands has made three investments into Canadian-based cannabis company Canopy Growth (which has recently hit hard times despite a number of celebrity investors) since 2017, and now has a 37% equity stake in the company. Other big names that have been making moves into cannabis include booze makers Molson Coors, Heineken and Diageo. Coca-Cola, on the other hand, is staying on the sidelines, revealing that it has looked at the cannabis industry and currently has no intention of seeking a partner or creating its own items. So while it’s unclear what exactly the future holds, it is clear that CBD products will be part of it. IQ

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HempFusion in November launched a campaign with ads in more than 50 major airports and a smart CBD vending machine dispensing HempFusion’s Stress product at Hartsfield-Jackson Atlanta airport.

adding CBD-infused snacks to its product line. “Yes, we’re getting ready, but we obviously want to stay within what is legal and play it the right way,” Van de Put said. Particularly eager is Unilever’s Ben & Jerry’s, which actually announced last May its commitment to including CBD in its ice cream innovations and will release CBD-infused products once the FDA acts. The company even noted that Ben & Jerry’s had its eye on sustainably sourced CBD from Vermont. Among less patient participants, Michael Dykes, the president and CEO of the International Dairy Foods Association,

CBD: a non-psychoactive, naturally occurring compound found in the flower of the cannabis sativa L. plant. Hemp: type of cannabis plant (defined as cannabis sativa L.) that contains less than 0.3% THC, meaning no intoxicating properties, and is high in CBD. Legal at the federal level. Marijuana: type of cannabis plant (defined as cannabis sativa and cannabis indica) that usually contains more than 10% THC, is low in CBD and produces a “high.” Deemed a Schedule 1 controlled drug and illegal at the federal level.

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VOICE COMMERCE IN 2020 As voice assistants and enabled devices proliferate, they face lingering skepticism about their ability to drive sales BY C H A R L I E M E N C H AC A , M A N AG I N G E D I T I O R

OUR VIRTUAL ROUNDTABLE

Ella Duda

International Strategy Director, Sixieme Son (audio branding agency)

Jim Morgan

Bree Glaeser

Director, E-Commerce & Voice Practice, The Mars Agency

Head of E-Commerce, Vita Coco

Alister Greenwood

Head of Global E-Commerce Insights & Analytics, Mondelez International

David Zimmerman

Internet Marketing Consultant, Reliable Acorn

March 2020

It’s hard to go anywhere these days without hearing a digital assistant or seeing a smart speaker. About 60 million U.S. adults, or 24% of those 18 and older, own a smart speaker, according to the latest Smart Audio Report survey completed in January by NPR and Edison Research. That’s up from 7% in 2017. Yet questions remain about the actual growth and potential uses for voice commerce. In Path to Purchase IQ’s Trends Report (published in January), only 5.7% of the consumer product marketing executives surveyed said voice-enabled commerce would be the most valuable topic of interest for their organization in the coming year from a list of 13 topics (see page 26). In our virtual roundtable discussion, experts share what’s working now in the space and what questions still remain about its future role in marketing. How does your organization decide which skills/actions to develop for digital assistants? GREENWOOD: Like all activation utilizing new capabilities, the skills/actions have to be aligned to brand plans as part of our integrated marketing campaigns. For instance, the “What’s new with Oreo?” skill we launched in 2019 was part of our Mystery Oreo flavor challenge.

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Have you seen an increase in consumers using voice-enabled technology to order products in recent years? GREENWOOD: There has been an increase in interaction and usage of smart speakers for “voice ordering” over the last year, but not to the levels expected, causing some agencies to lower their forecast for growth and adoption of voice commerce. ZIMMERMAN: Good digital marketing is always measurable. It’s what makes digital marketing more effective than traditional marketing. Without the data showing us how our content is actually being found using voice-enabled devices, we can only speculate about success. What challenges still remain for brands to further adopt voice commerce? ZIMMERMAN: I have three voice-enabled smart speakers in my home. I have one on my phone, too. However, I’m not convinced the average person is embracing the convenience of this technology yet. Brands that hope to use this channel might find their audience limited. MORGAN: Without any detail to show what percentage of our sales is currently coming from voice, it’s hard to understand the size of the prize/potential opportunity. Without that, it’s

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VOICE COMMERCE IN 2020

See more information about various voice-related brand activations in the P2P Toolkit on page 40.

hard to justify prioritizing time, funds and other organizational resources to develop this area further, especially with so many other potential e-commerce and omnirelated areas to explore – and more are popping up every day. GLAESER: They are not wrong [in thinking] that use of skills and actions is minimal in the CPG category and the ROI is not immediate. But virtual assistants should absolutely be included as part of a three-to-five-year omnichannel e-commerce strategy. And if you want to get it right, start now. DUDA: One of the biggest challenges is to stand out and be identified when visual is not an option. If brands don’t put the work in to develop a proprietary vocal and sonic identity, they will easily

Mondelez International released a skill for the Amazon Alexa voice assistant as part of the Mystery Oreo flavor challenge.

be misunderstood and ultimately lost in the screenless internet. Another challenge is being accessible when the interaction is dominated by “Hey Google,” “Alexa” and “Siri.” Most of the time we make a purchase without a direct interaction with the vendor. How are brands going to emerge if consumers do not choose to go directly to the vendor (i.e., “Alexa, take me to H&M”)? And then once they successfully get around the branded voice assistants, how do they keep consumers coming back? They must think about the intention of the sonic and vocal experience.

is the number-one use case for the assistant, so this represents a massively underleveraged opportunity for 99% of brands, especially if they have any connection to household activities. Remember that on Amazon you are marketing to a flywheel algorithm, and the sooner you start winning, the stronger you become.

What can brands do to instill trust, so that these consumers can feel more comfortable using voice-enabled technology to shop? What would you say is the DUDA: Think hard and opportunity cost of not strategically about the pursuing voice shopping for voice that is chosen. Where brands? voice-enabled technology is GLAESER: The potential impact concerned, the sound is not of ignoring this channel today is a part of the message – it is the two-fold: one, you are neglecting your message. This may seem like a nobrand’s “sound and feel,” and two, brainer, but brands that choose Tide created you are not teaching the artificial premium content on low-cost options (chatbots, intelligence to choose you. In my Alexa and became synthetic voices), or that partner a dominant source with an agency that does not first point, not controlling how of information for your brand presents to consumers have a deep process for the category consumers through voice can have deleterious who ask a question voice selection, will end up with effects on sales performance in about laundry care, cold, impersonal or cookieThe Mars Agency’s cutter voices that do not instill the channel in both the short- and Glaeser said. long-term. You may find yourself trust nor bring any value to playing catch-up to update your the brand. Also, work on the content to be voice-shopper messaging of the answers friendly in a few years’ time. Many brands are to FAQs and common e-commerce still playing catch-up on the fundamentals interactions. The more content and the deeper the brand goes into the shopper of product detail pages on Amazon experience, the more authentic and and other e-commerce retailers, which trustworthy the experience will be. tangibly affects their sales compared to Basically, the less foreign the interaction competitors who invested more attention feels, the more comfortable consumers earlier. The same thing will happen in the will be using voice-activation technology voice channel. to shop. To my second point, many brands ZIMMERMAN: Many podcasts are being overlook the impact that building a skill consumed over voice devices. Building or action can have on search. Just look your brand by supporting podcasts at Tide, which has created premium will not only find it in front of voicelaundry-care content on Alexa and enabled devices but build a trustworthy therefore become a dominant default brand in the consumers’ eyes (if only source of information for category by repetition). You have the added consumers who ask a question about advantage of being present on the same laundry care. (In a quick and anecdotal test device that you hope customers will use I did, Tide won 30% of my laundry queries to reach you. to Alexa). “Asking a question” of Alexa

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VOICE COMMERCE IN 2020 GLAESER: Brands should be partnering with retailers to enhance the voice shopping experience. It makes sense for retailers to build voice applications (think Walmart and Kroger on Google, and even Amazon via Alexa natively), and for brands to contribute content and offers. Together the two parties can optimize the shopping experience and make it feel more like the other e-commerce channels [shoppers are] used to. They can also cofund advertising that educates consumers on the benefits of this new behavior. How will voice commerce continue to evolve in the near future? ZIMMERMAN: The next step for voiceenabled commerce could be called “interruptive.” It might be when a device volunteers to a user some information they’ve not yet asked for. When your device notices it’s been a month since you last ordered cat litter, it could recommend that you place another order after it detects that you’re home for the day. This makes virtual assistants more proactive, which could be really helpful. Of course, this brings with it an entire new dimension of privacy problems. However, if we’ve learned anything about voice devices, it’s that people are willing to sacrifice privacy for convenience. IQ

For additional coverage of voice-related activity involving brands and retailers, visit P2PI.org.

Experimenting with Voice GSK Consumer Healthcare has started a journey to understand voice and AI technology in the hopes of unlocking the future of these tools across OTC. “This was not a straightforward task, but a complex business question that could not be tackled with traditional research approaches,” Litthya Burgin, GSK shopper insights manager and project lead, says of the endeavor. Several teams across GSK have partnered to develop an experimental approach to test these tools in the company’s Shopper Science Lab. The teams were able to construct realworld settings to assess shopper engagement in various settings such as home, store, online and pharmacy. Amanda Bowles GSK has explored and invested in specific AI technology devices in which shoppers can interact within the retail environment to get help on a variety of questions from shelf navigation to broader healthcare needs. To test shopper reaction to this type of technology, GSK replicated the store environment with changing conditions, and leveraged sentiment tracking using facial and galvanic skin response biometrics, among other experiments. This is quite a challenge, particularly for healthcare, considering that voice assistants have been “called out” in the Litthya Burgin public domain for some time. Sometimes the assistants are prone to error/misunderstanding, and concerns remain about what is being heard and the handling of personal information. Yet the promise of how these devices could change lives is hard to resist. GSK is pushing forward with the hope that a voice-assisted AI tool in-store and digitally could help ease shopper frustrations and anxiety. This is taking place against what marketers consider to be a backdrop of rising healthcare costs, a growing culture of self-diagnosing illness that sometimes is wrong, a complex OTC Deb Monahan environment adding to “choice paralysis,” and a lack of informed and available staff in stores. GSK observed a shift from thoughtful, rationalized consideration of the concept to the emergence of “future possibility” as shoppers interacted with the tools. To ensure that the insights could be fully experienced to spark discussion among internal stakeholders, GSK also created an interactive debrief utilizing a highly visual, story-led narrative to replicate the shopper journey together with the insights. “We are only scratching the surface, but this project helped us take the first step [toward] bridging the availability of new, ‘cool’ technology and its short-term/long-term potential in OTC,” says Amanda Bowles, Shopper Science Lab director. Deb Monahan, GSK’s director of shopper insights, agrees. “This project is a great example of internal and external collaboration, as well as a smart application of innovative research techniques that will guide our strategy moving forward,” Monahan says. Given the expected rise of voice search in e-commerce, GSK team members plan to continue exploring in this area. — Charlie Menchaca

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ActivationGallery

OTC Drugs Throughout the year, and especially during the winter cold and flu season, displays promoting and stocking over-the-counter (or non-prescription drugs) are prevalent in mass, drug, club and grocery stores. While retailers frequently merchandise multiple and various products and brands together on themed floorstands and endcaps, many brands get individual attention with displays of their own. Path to Purchase Institute editors have singled out the following displays that have caught their attention in recent months. Institute members can see more than 7,000 images of OTC activations in the image vault at P2PI.org.

Johnson & Johnson brought its national “Start Healthy” purchase incentive to Walgreens and Albertsons Cos. chains including Jewel-Osco to kick off the New Year. Shoppers who purchased $30 worth of participating J&J products in one transaction from Dec. 29, 2019, through Feb. 1 earned a $10 Visa Rewards gift card, redeemable by submitting their receipt on a Fandango promotional site.

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RB’s Mucinex secured an endcap at Walmart with shelf trays stocking its Nightshift syrup under a “Goodnight zombie. Good morning human” message. The PDQs carried both “cold & flu” and “sinus” formulas.

Procter & Gamble’s Vicks deployed a shelf sign in CVS Pharmacy’s OTC aisle that assists sick shoppers who are “not sure what to take” for a particular symptom. Positioned right next to multiple Vicks SKUs on the shelf, the sign invited shoppers to text “VICKS” to a dedicated number that would lead them to an online quiz that determines appropriate Vicks SKUs to treat the symptoms they’re experiencing. Some CVS stores promoted the quiz on the header of a multibrand “Cold & Flu Center” endcap.


Target exclusively stocked a limitededition SKU from GlaxoSmithKline’s Tums during the holiday season. The items enjoyed secondary merchandising space on shelf trays positioned on endcaps in the health care department.

Pfizer’s Advil tied into football season at Walmart with the brand’s own gravity-fed shelf trays carrying a “Game On, Pain Off” message.

BJ’s Wholesale Club spotlighted select OTC and health SKUs as well as personal care brands for its routine “That’s the Beauty of Bulk” program. Pfizer’s Advil was among participating brands, identifiable by an accountspecific “unbeatable strength + speed” pallet partially depicting BJ’s bulkpurchase program and a “Welcome to the year of you” message.

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GSK’s Tums leveraged the football season at Walmart with “Tackle Heartburn Fast” shelf trays positioned on a dedicated endcap.


B

ActivationGallery Nature’s Bounty deployed aisle violators in Walmart’s pharmacy department with an incentive for the new year: a $10 digital reward with purchase of $30 worth of Pure Protein, Body Fortress, MET-RX and other brands in one transaction throughout January.

Nature’s Bounty and Pharmavite’s Nature Made are key players as part of an in-line section at Walgreens dedicated to vitamins and supplements. The displays trumpet Walgreens’ ongoing BOGO offers on the items.

7-Eleven recently marketed OTC medications under a new own brand, 24/7 Life by 7-Eleven, with a dedicated floorstand. The convenience chain launched a line of electronic accessories and rebranded various other SKUs under 24/7 Life by 7-Eleven as the retailer continues to grow and elevate its privatelabel assortment. Many of the products were previously sold as part of store brand 7-Select.

Brandable’s Grow Girl commands a bright pink sidekick at Walmart for its hair growth supplements. The merchandiser also invites shoppers to “check out our full line up” including hair shine supplements as well as hair regrowth conditioner, scalp detox and treatment.

March 2020

Johnson & Johnson’s Tylenol and Mondelez International’s Halls united to roll out an account-specific power wing at Family Dollar, touting the combined power (or “punch”) of both SKUs against the common cold.

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Technology Innovation

P2P Toolkit

A roundup of technology-driven tools that drive consumer understanding, engagement and conversion on every step of the path to purchase. BY B I L L S C H O B E R

While nowhere near as surreal as, say, an Oscar Mayer Weinermobile, it’s nonetheless astonishing that TheRealCannaBus, “the world’s first and only mobile cannabis dispensary,” is out there right now rolling toward a trade show near you. But the purpose of the CannaBus and its operators, Bowling Green, Kentucky-based Enlighten Wellness, is about as far from tripping-the-light fantastic as you can get: “We offer retailers ... the chance to experience hands-on interaction with Enlighten’s cutting-edge retail technology [and have brand partners, including apparel marketer Vans, retail software maker Blaze, and Live Nation] seen by top executives in the cannabis space.” With any luck, you already dropped out and tuned into the CannaBus last month at CES. Otherwise, see it in March at South by Southwest.

Bill Schober is Editor Emeritus of Path to Purchase IQ. He’s been associated with the Institute since 1994, covering all aspects of consumer marketing with a special emphasis on the shopping experience. He welcomes any questions, comments, requests or pitches about P2P Toolkit, and can be reached at bschober@ensembleiq.com.

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H-E-B has launched a mobile app, “My H-E-B,” that boasts dozens of new and improved features. Customers can now order groceries for curbside pickup or home delivery, reorder previous orders and shop past purchases. Shopping can be done by browsing departments, scanning product bar codes or choosing items from curated collections. In-store shoppers (there are 200-plus locations across Texas) can see product availability, find where it is in the store, and scan a single bar code at checkout to redeem all clipped coupons instantly. H-E-B’s digital team, split between Austin and company headquarters in San Antonio, worked with Apple and Salesforce on the app.


P2P Toolkit

SPOTLIGHT: Voice Commerce If you’re the type who instinctively rebuffs approaches by salespeople, you’ll probably resist interacting, out loud, in public, with a machine, too. The Mars Agency seems to understand this intuitively with its voice commerce installations by focusing on markets where the device actually serves an essential function. Both of their most notable installations – the “Liv at Estee Lauder” experience in New York City and the SmartAisle systems in California BevMo liquor stores – contain a breadth and depth of information that only the rarest of store clerks can match. A SmartAisle device once helped me zero in on and confidently purchase an offbeat whiskey for a particularly persnickety person. Rule No. 1: Make the interaction worth our while. Similarly, Ombori, a Swedish agency, approaches voice commerce as an element within a broader, multi-media “guided selling” experience. The key is enabling the user to select and control the interactions. Sometimes it’s faster to answer questions vocally, and sometimes it is more efficient to tap the screen – it’s the mix that matters. This winter, the company began testing these Virtual Assistants at various airports around the globe. Another nice wrinkle: Shoppers scan their boarding passes for flight info, the weather at their destination and how many more minutes they can shop. Rule No. 2: Always follow rule No. 1.

Prepare to take a step into one possible future for voice commerce. AlterEgo is a university-based research project at Massachusetts Institute of Technology (MIT). The AlterEgo system is a wearable interface that enables a user to silently converse with a computing device, AI assistant, IoT applications or even other people without any voice or any discernible movements. A user’s internal speech is characterized by neuromuscular signals in internal speech articulators that are captured by the AlterEgo system to reconstruct this speech. The wearable system reads electrical impulses from the surface of the skin in the lower face and neck that occur when a user is internally vocalizing words or phrases – without actual speech, voice, or discernible movements. The device cannot read a person’s mind, but it can read signals from facial and vocal cord muscles when a person intentionally, deliberately and silently voices words. While MIT has a working prototype that, after training with user-specific example data, demonstrates over 90% accuracy on an application-specific vocabulary, it is also quick to point out that “any hopes for commercialization are premature.”

The Voice Commerce (VC) marketplace is noisy, with a debate over what to call it: Some use VC, but many prefer “conversational commerce,” and some go with c-commerce while others dabble with VoiceTech or AI/Voice. There are a lot of loud claims being made on the voice end, too: The Harvard Business Review (HBR) calls voice assistants the fastest growing consumer technology since the smartphone, with global estimates as high as 8 billion users, and a U.S. base around 110 million monthly users. Google Home alone claims 500 million users. That’s why, as a product feature at least, “voice” seems to be popping up just about everywhere lately. Here are a few from this winter: • Reverie Connect now offers a voice-commanded adjustable bed; • Kohler’s Moxie is a showerhead/smart speaker with a built-in Alexa voice assistant that’s powered, in case you were worried, via cordless charging; and • Epson printers now feature “voice-activated hands-free printing” using Alexa, Siri and Google Assistant (slightly ironic, considering the whole digital revolution was premised on being paper-free). Some voice-tech deployments may strike you as a bit of a stretch, however, one of the oddest being McDonald’s Apply Thru, the “world’s first voiceinitiated application process,” accessible via Google Assistant or Alexa.

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P2P Toolkit

SPOTLIGHT: Voice Commerce It’s a safe bet that most shoppers are most comfortable conducting voice commerce from the privacy of their mobile phones. Sephora, which was one of the first to team up with Google Assistant several years ago, is often cited as a model worth emulating because its technology is so easy to use – put a thumb on the button, ask questions in plain language to sort through their deep roster of offerings, and see instant results. Sometimes, however, voice commerce seems more like a solution in search of a problem. Sony Pictures promoted the Christmas release of “Jumanji: The Next Level” by asking fans to visit ExploreJumangi.com on their phones or pads, touting it as one of the “first voice-activated AR experiences on the web.” The app, built by Trigger and powered by AWS and 8th Wall, exhorted users to say “show me Jumanji” to access special content like detailed animation and videos shot especially for the app. That’s fine, and it worked (sort of) for me, but soon, as the app asked me to say, “buy tickets” over and over, I realized the game was primarily just a “Be sure to drink your Ovaltine”-style commercial.

The words “conversational commerce” may very well become the umbrella term for a widening array of evolving, voice-triggered commercial applications. Take, for example, Theatro’s AI-powered Intelligent Assistant that began implementation last summer across a good number of Walgreens’ 9,000-plus stores. The idea is to give every worker access to a conversational interface using their own, idiosyncratic everyday language. In the example illustrated, this employee – on her first day on the job – is already able to ask the system’s “Intelligent Assistant” to look up the availability of a certain SKU. Some brands are positioning the whole enterprise around conversational communication with customers. Beverage-maker Iris Nova uses a proprietary tech platform that offers a “frictionless ordering and customer service experience;” the company then blends these natural conversations (collected as text messages) and the consumption data in order to formulate and deliver innovative products. The company claims that it can create a beverage concept, from ideation to production, in 30 days. Iris Nova operates a related property, The Drug Store, which is a conceptual retail experience and testing space. The front section of each Drug Store is a retail experience – a cashierless walk-in “vending machine” – that utilizes Iris Nova’s proprietary SMS technology and conversational commerce platform. The cashierless shop is said to be the “first text-to-order retail store in the world.” The store is completely unstaffed and based on the honor system, where the only point of sale is the customer’s cell phone. The back of each space is a cocktail bar that’s used to test new beverage concepts before they are produced in bottled format on a national scale. New iterations of The Drug Store are scheduled to open in Chicago in early 2020 and in Los Angeles sometime this summer.

On the “commerce” end of VC, the signals are even noisier. Alibaba says 1 million orders were placed and paid for on its AliGenie voice assistant on Nov. 11, 2019, “Singles Day,” which is significant but requires context: That’s out of 600 million-plus shoppers who spent an astonishing $32 billion during this one-day shopping binge. And although Amazon doesn’t share numbers, HBR poked into some data that suggests that only 2% of Amazon Echo owners have ever tried voice shopping. Meanwhile, there’s the possibility of a “format war,” an infra-industry squabble over technical standards that, in the past, helped kill off innovations like Quadraphonic, Betamax and LaserDiscs. A whole host of groups and conferences are popping up in this space, but two seem especially active. On one side is Project Voice, claiming to be the “No. 1 event for voice tech and AI in America.” In January, the group named Blutag as its “Retail Voice Developer of the Year” at a gala sponsored by Google. Blutag is a turnkey SaaS solution that enables companies like Bloomingdales, Vinebox and FreshDirect to deliver voice apps without coding. On the other side is the Open Voice Network (OVN), a coalition of companies that is standing up against what it considers a duopoly, Google and Amazon. OVN says that unless challenged, the two will remain “gatekeepers” and inevitably will restrict access to all “datarich artificial intelligence-enabled voice assistance (AI-voice) communication.” Supported by the Linux Foundation, OVN wants consumerfacing enterprises, technology companies, marketing firms and university researchers to join with it to open up the AI-voice marketplace so it is standards-based, interoperable, accessible and data-protected.

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StoreSpotlight

Total Wine & More BY PAT RYC J A M A L I N O W S K A

One way brands can gain the spotlight among the vast selection of SKUs available in stores is with endcap signage kits. When Anheuser-Busch’s Natural Light launched its hard seltzer line, for example, the brand secured a dedicated endcap and outfitted it with giant 3-D cans popping out of the header. Other permanent endcap spotlights include top-20 wines and beers of the month.

Headquartered in North Bethesda, Maryland, Total Wine & More is the largest independently owned retailer of wine, beer and spirits in the U.S., operating 205 liquor stores across 24 states. Locations typically comprise 20,000 to 50,000 square feet, stocking more than 8,000 wines, 3,000 spirits and 2,500 beers as well as more than 300 fine cigars. The family-owned company is known for investing time in training employees and focusing on educating shoppers, with tastings and other educational events a part of the business model. Some 60 locations are even equipped with high-tech wine education center classrooms that serve as community meeting spaces, offer wine tastings and stream the live virtual tastings the company pioneered, in which well-known winemakers lead a tasting from their vineyards. The company has also embraced e-commerce, offering same-day delivery services in select areas through its website and mobile application. The Path to Purchase Institute has popped into several stores in Minnesota, Florida and Maryland over the past few months to get a feel for how they handle merchandising and what brands are doing to stand out on the shelf.

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Cause activity has its place in the store. MillerCoors’ Coors Light used an ice fishing-themed pole topper to invite Minnesota shoppers to tag the brand with #Beersaveslakes on social media to trigger a $1 donation to nonprofit Conservation Minnesota.

The wider aisles offer secondary merchandising opportunities in the form of a bevy of case stacks, where brands vie for shoppers’ eyeballs and dollars with creative headers and props. Seasonality plays a huge role here, with some examples from the recent holidays including an ugly sweaterthemed stack from MillerCoors’ Miller Lite and a Heineken Christmas tree stack.

Rebates and giveaways are plentiful and often incorporate scannable codes to facilitate entry and redemption. MillerCoors’ Keystone Light gave Minnesotan ice fishermen a chance to win an Ascent IceArmor floating suit by Clam Outdoors. Shoppers could enter by registering in the store, scanning a depicted Snapchat Snapcode or via a promotional website.

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StoreSpotlight

For its countertop display, Coravin opted for a video unit to help educate shoppers on the benefits of its patented wine preservation system that lets wine drinkers pour any wine in any amount without removing the cork.

Stores make room for custom displays such as this elaborate setup for the new Drinkworks Home Bar by Keurig, an advanced home bar system backed by Anheuser-Busch and Keurig Dr Pepper that can whip up a craft cocktail in seconds from a pod. The display transports shoppers right into a home kitchen environment with a marble-like countertop, tile backsplash and wooden shelving.

Beyond alcoholic beverages and cigars, stores also stock non-alcoholic drinks and beverage accessories. Intelligent Beverages’ anti-hangover drink Resqwater commands its own upfront rolling racks, for example, while Cortec Group Management Services’ Yeti earns a dedicated endcap.

More Online

To see an extensive gallery of images from our visits to Total Wine & More, see the image vault at P2PI.org.

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Ascend


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Solution Provider News

Great Northern Corp. Launches ISTA 6 Test Lab Great Northern Corp. added an ISTA 6 test lab to its Appleton, Wisconsin location. The state-of-the-art lab, operated by in-house certified ISTA (International Safe Transit Association) technicians, allows customers to test the integrity of their existing packages as well as predetermine if new packages are optimally designed for e-commerce and other applications. The test lab services Great Northern customers from all locations and business units. The lab exposes packages and loaded pallets to automated tests that simulate anticipated conditions and potential hazards that could be encountered throughout the supply chain and distribution channels. A series of ISTA 6 standard tests will simulate drop, impact, compression and vibration. The rigorous testing will challenge package integrity, structure, and its ability to withstand potential impacts and motions. Great Northern offers a full range of 100% recyclable package protection, which complies with Amazon’s Certified Frustration-Free Packaging program.

Aki Technologies Buys Eyeview’s Video Tech Aki Technologies acquired the intellectual property of video marketing company

Eyeview. Aki is integrating Eyeview’s technology into its moment marketing solution to help brands meet the demand for more personalized, relevant advertising with incremental sales results. Today’s brand marketers recognize that personalization is the best way to build meaningful connections with busy, oversaturated consumers. One-third of retailers surveyed by Adobe in 2018 said “targeting and personalization” are among their top tactical priorities for the year ahead. The patented technology developed by Eyeview seeks to solve the complexity of personalized creative development in video, to increase brand affinity, drive foot traffic to retail locations and deliver incremental sales. Eyeview’s advanced software around personalization aims to help Aki advertisers deliver video creative that caters more precisely to the customer’s preferences, dynamically responding to immediate context, ad receptivity in the moment and CRM insights. While the transaction is a technology asset purchase, Aki hired key former Eyeview staff in engineering, data science, sales and product management.

Kroger and Ocado to Open Fulfillment Center in Maryland Kroger and Ocado plan to open a customer fulfillment center, or CFC, in Frederick, Maryland. The CFC model – an automated warehouse facility with digital and robotic capabilities – will be used to serve several markets, including Washington, D.C., Baltimore and Philadelphia. The center

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is expected to become operational approximately two years after the site breaks ground on a to-be-determined date. The warehouse will be a key component of the seamless fulfillment ecosystem that Kroger is developing for customers across the U.S., Ocado Solutions CEO Luke Jensen said. Upon completion, 400 jobs will be created with up to 100 more added later as the service area of the facility expands.

Flooid and TransactionTree Continue Partnership Flooid (formerly PCMS) has renewed its partnership with TransactionTree, a provider of digital receipt solutions for the retail industry. Flooid’s scalable basket and promotions technology works across verticals and channels and links seamlessly with TransactionTree e-receipts. The e-receipts are less cumbersome, more cost-effective and more sustainable than the printed equivalent. Together, the two companies work to help retailers save customers time while personalizing engagement and capturing added value at every transaction. Flooid and TransactionTree have worked together on a variety of projects, including deploying TransactionTree’s integrated and unified retail marketing platform at a number of customers. Demand for the solutions offered by the Flooid/TransactionTree partnership continue to grow as customers increasingly adopt digital and paperless tools. Both companies have committed to working even more closely together.


Publix Deepens Relationship with Instacart Publix deepened its relationship with Instacart by becoming the first retailer to trial the delivery service’s new offering, Instacart Meals. The grocery meals product fuels ordering, delivery and pickup of made-to-order food. The new Instacart Meals is designed to make it easy for customers to order specialty counter items alongside their groceries and household essentials, all to be delivered or picked up from the store. As a first step, Instacart and Publix have teamed up on a new digital deli counter that includes Publix subs. Made-to-order food counters are among the fastest growing aisles in the grocery store — these items represent up to 15% of sales for Instacart grocery partners and have among the highest margins of anything sold in-store, said Nilam Ganenthiranm, Instacart president. Instacart partners with more than 350 national, regional and local retailers to offer delivery from more than 25,000 stores across more than 5,500 cities in the U.S. and Canada. Participating retailers include Albertsons Cos., Aldi, Costco, Kroger, Publix, Sam’s Club and Walmart Canada.

IRI Teams with Oracle to Improve Cloud Data Innovative Routines International’s IRI Voracity data management platform now runs on the Oracle Cloud Infrastructure (OCI). Voracity in OCI will enable modern

PaaS and SaaS options for small business and enterprise customers seeking faster, more affordable and highly secure cloud execution of extract, transform and load jobs. This is in addition to data masking and synthesis, data quality and migration, and data wrangling for analytics. OCI is a cloud built to run critical enterprise applications at quality performance, security and cost. Oracle’s Generation 2 Cloud is the sole delivery platform for the self-driving Oracle Autonomous Database. Oracle Cloud provides a comprehensive cloud computing portfolio, from application development and business analytics to data management, integration, security, AI and blockchain. Voracity is a data management software stack built on Eclipse and powered by the IRI CoSort data manipulation program.

NKU Students to Learn from Kroger and 84.51 at Innovation Lab In continuation of their partnership, Northern Kentucky University (NKU) and Kroger unveiled the Kroger Technology and Digital Innovation Lab. University students will gain hands-on learning experience alongside associates from Kroger’s research and development group and 84.51. Teams will focus on initiatives that directly impact Kroger customers across the nation, including nutrition as well as health and wellness. The innovation lab comes less than one year after the opening of the Zero Hunger, Zero Waste FUEL NKU student food pantry. The lab and pantry are examples of Kroger’s commitment to developing future talent in the region. The partnership provides Kroger associates the opportunity to work with NKU faculty and students on projects

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aimed at solving real, innovative business challenges, said Yael Cosset, senior vice president and chief information officer of Kroger technology and digital.

PDI Acquires SwiftIQ PDI, a global provider of enterprise management software for the convenience retail and petroleum wholesale industries, acquired SwiftIQ, a provider of analytics cloud and vendor collaboration software and services. The addition of SwiftIQ’s analytics cloud with built-in machine learning strengthens PDI’s data and insights capabilities. PDI provides CPG brands and convenience retailers the ability to measure ROI and gain actionable insights to run programs and promotions effectively. PDI states that competitive pressure, tight margins, limited visibility, and changes in customer behavior make managing and measuring ROI for sales, loyalty programs, and promotions a challenge for convenience retailers and CPG brands. SwiftIQ offers industryspecific business intelligence tools, expertise and the ability to unify disparate data sets. The software quickly mines billions of records, applies machine learning, and generates automated insights to help brands and retailers make decisions with confidence. IQ

Send your solution provider news – new products, projects, programs and technologies – to Charlie Menchaca at cmenchaca@ensembleiq.com.


Personnel Appointments BRAND MARKETERS Newell Brands, Atlanta Michael McDermott was named business unit CEO for Newell’s commercial business, which includes the Rubbermaid Commercial Products, MAPA, Quickie and Spontex businesses. McDermott recently served as Bass Pro Shops president, omnichannel retail. He held several leadership positions over a span of five years at Lowe’s and spent 20 years in various roles at General Electric. RETAILERS Albertsons Cos., Boise, Idaho Alice Chan was appointed vice president of own brands sales and marketing. She came from PepsiCo’s Frito-Lay division, where she spent 16 years. She most recently served as a senior director of customer account sales, building the sales strategy for key Frito-Lay national selling initiatives. Chan is responsible for developing and executing strategic goto-market initiatives and plans. Lowe’s, Mooresville, North Carolina Marisa Thalberg was named executive vice president, chief brand and marketing officer. She will report to CEO Marvin Ellison. Thalberg joins the company from

RICHARD ASHWORTH

ALICE CHAN

Taco Bell, where she served as global chief brand officer. She also founded Executive Moms, an organization for working mothers. Walgreens, Deerfield, Illinois Walgreens Boots Alliance promoted longtime Walgreens executive Richard Ashworth to president of Walgreens. Ashworth oversees strategy development for the chain, and also has full responsibility for its leadership, development and management. He will report to Alex Gourlay, Walgreens Boots Alliance co-chief operating officer. SOLUTION PROVIDERS Catalina, St. Petersburg, Florida Karl Rosen, former senior director, ad innovation and programmatic solutions at Turner, was named Catalina group director, East Coast digital sales.  He reports to West Naze, who joined Catalina in 2019 as SVP, U.S. digital sales. Adam Van Beck was promoted to

TRACY FALOON

MARISA THALBERG

vice president of U.S. brand development, reporting to Marsha McGraw, SVP of U.S. CPG sales. Nick Breisch was promoted to group director of brand development, reporting to Van Beck. Kevin Pike was promoted to group director of brand development, reporting to Jim Presley, vice president of brand development. TPN, Dallas Tracy Faloon, former chief of client integration and senior VP of retail strategy, was promoted to an expanded role of chief client experience officer. She is responsible for establishing TPN’s footprint on a global scale and expanding its retail and shopper practice. Sarah Cunningham, former TPN senior VP of client service and VP of account services, was named chief growth officer. In the role, Cunningham focuses on internal and external growth. IQ

Editorial Index 7-Eleven ...........................................................................38 AB InBev.................................................................... 44, 46 Ahold Delhaize ..............................................................51 Aki Technologies ...........................................................48 Albertsons Cos...............................................................36 Alibaba .............................................................................42 AlterEgo ...........................................................................41 Amazon.com .......................................................8, 31, 51 BevMo...............................................................................41 BJ’s Wholesale Club......................................................37 Bluebird Botanicals ......................................................26 Brendable’s......................................................................38 Brightfield Group..........................................................26 Chobani............................................................................20 Clam Outdoors ..............................................................45 Coca Cola Co., The ........................................................51 Coravin .............................................................................46 CVS Pharmacy......................................................... 36, 51 Enlighten Wellness .......................................................40 Ernst & Young.................................................................21 Estee Lauder ...................................................................41 Family Dollar ..................................................................38 Flooid ................................................................................48 GlaxoSmithKline .................................................... 34, 37

GlobalWebIndex ...........................................................24 Great Northern .............................................................48 H-E-B .................................................................................40 Heineken .........................................................................45 Hint .......................................................................................8 Instacart ...........................................................................49 Intelligent Beverages ..................................................46 IRI........................................................................................49 Iris Nova ...........................................................................42 Johnson & Johnson .............................................. 36, 38 Keurig Dr Pepper ..........................................................46 Kroger ................................................................. 37, 48, 49 Mars Agency, The .........................................................30 Meijer ................................................................................51 MillerCoors......................................................................45 Mondelez International................................ 12, 30, 38 Nature’s Bounty .............................................................38 Numerator.......................................................................10 Ocado ...............................................................................48 Ombori .............................................................................41 Open Voice Network ...................................................42 Oracle................................................................................49 PDI......................................................................................49 Pfizer .................................................................................37

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PepsiCo ............................................................................18 Pharmavite......................................................................38 Procter & Gamble ........................................... 20, 22, 36 Publix ................................................................................49 Reliable Acorn................................................................30 Sephora ............................................................................42 ShopRite ..........................................................................51 Sixieme Son ....................................................................30 SmileDirectClub ...............................................................9 Sony Pictures..................................................................42 SwiftIQ ..............................................................................49 Target ....................................................................8, 37, 51 Theatro .............................................................................42 Total Wine & More ........................................................44 TransactionTree .............................................................48 Unilever ...............................................................................8 Vita Coco .........................................................................30 Walgreens.......................................................... 36, 38, 51 Walmart...................................................9, 36, 37, 38, 51 Yeti .....................................................................................46


Retail Intel

Alexa Helps Energize a New Kind of Coke BY PAT RYC J A M A L I N O W S K A

Coca-Cola Co. entered the U.S. energy drink market with the Jan. 20 launch of Coke Energy, for the first time giving its flagship brand name to a beverage that is not a soft drink. Boasting some three times as much caffeine as traditional Coke plus guarana extract and B-vitamins, Coke Energy rolled out in regular and cherry flavors, also with zero-sugar varieties of both. It is sold in skinny, 12-ounce cans depicting black waves on Coke’s approachable red (or purple, for cherry SKUs) background. Coke enlisted Amazon and its Alexa voice assistant to help energize the launch, first at the Consumer Electronics Show (CES) in Las Vegas and then with its largest single-day sampling program ever the morning after the Super Bowl. At CES, which ran Jan. 7-10, Coke made an interactive splash with an “Energy Wall” powered by Alexa, at which attendees could say “Alexa, order Coca-Cola Energy” to get the assistant to dispense a free can of the energy drink and maybe crack a joke between vending. During the Super Bowl on Feb. 2, Coke ran a 60-second spot titled “Show Up” that had film director Martin Scorsese texting actor Jonah Hill from a costume

party and asking him not to stand him up. Hill picked up a Coke Energy to give him the stamina to attend. The next day, the brand brought the Alexa-powered energy wall to fuel commuters in New York’s Grand Central Terminal while Amazon Treasure Trucks dispensed Coke Energy across 29 additional cities. For a very limited time, Alexa users at home reportedly could also get up to two free sample cans shipped to them by using the same voice command that works with the wall. In emails to registered reward members, Coca-Cola additionally plugged an instant-win game awarding 9,864 $2 Amazon.com gift cards (fulfilled as a digital code). The giveaway ran from Jan. 7 to March 3 on the brand’s website. Southfield, Michigan-based HelloWorld handled the execution. Initially only offering a 24-pack that wasn’t eligible for free Prime delivery (although that later changed) and unlikely to have facilitated personal sampling, Coke’s experiential efforts and Alexa integration nevertheless served to not only support the launch but also to provide a call to action that got the brand on shoppers’ voice-powered lists.

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The manufacturer is also targeting physical shopping carts, securing secondary merchandising space across retail channels via a variety of temporary displays, all reflecting the brand creative and employing a unified slogan: “The New Taste of Energy.” Walmart stocks the cans in Action Alley on a custom, half-pallet dump bin that builds on the brand slogan to boldly introduce the drink as “The energy you want. The taste you love.” Price header cards support. The SKUs are also stocked in-line in Walmart’s beverage aisle and in coolers at checkout. Additional activity is expected when the mass merchant conducts its modular reset in the spring. At Target, the cans sit on a power wing in the grocery department. Midwestern mass merchant Meijer and supermarkets such as Ahold Delhaize’s Giant-Carlisle and Stop & Shop as well as Albertsons’ Vons make room for tall red floorstands outfitted with bold can-cutout header cards to stock the beverage near store entrances as well as in the aisles. Some locations position case stacks near checkout registers. Regional grocer ShopRite also stocks cases on its Coca-Cola beverage endcap alongside other SKUs from the manufacturer. Walgreens merchandises the new SKUs on a shorter floorstand positioned near checkout, while rival drugstore chain CVS positions them on the power wing of a Coca-Cola endcap. Coca-Cola has additionally leveraged social media to amplify the launch nationally with a #ShowUp hashtag encouraging conversations around the theme. Social support from retailers has included a Jan. 26 Facebook update from Jewel-Osco announcing Coke Energy as new at the chain. The beverage manufacturer is also pursuing other innovation to broaden its portfolio as consumer preferences, lifestyles and tastes splinter. The brand last fall launched a limited-time cinnamon Coke flavor and in February rolled out cherry vanilla and its zero-calorie version. In March, the company’s new caffeinated flavored seltzer water brand AHA also hits shelves. IQ


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