April/May, 2005

From the Editor

Meshing With "Need States"

This month’s cover story is a classic. Take a market segment — in this case consumers age 18 to 25 — and analyze them to see what they think and what they want. It is standard brand-building research and is simply indispensable in positioning retail operations. Every retailer can profitably read the article.

The world is very complex, though, and researchers are seeking alternative ways to look at consumers. A year ago the Coca-Cola Retailing Research Council of North America introduced a study conducted by TNS NFO with the help of Bill Bishop of Willard Bishop Consulting, Ltd. This study, “The World According to Shoppers: Different Days, Different Needs,” takes a unique approach. The basic idea is that the traditional references supermarkets evaluate themselves with — price, national brand selection, private label offerings, store cleanliness, service, store hours, quality of perishables, etc. — may be important, but they make complete sense only in a context in which supermarkets are the obvious choice for buying groceries.

Today the venue of choice for buying food is not so apparent. We have warehouse clubs and supercenters, upscale markets and health-food-oriented concepts, and many more. Although supermarket executives can whip out a list of the pros and cons of each of these concepts, there is a real question of whether that is enough.

The Coca-Cola study concludes it can be useful to look at consumers not by demographics, such as age, race, income, etc., but, rather, by something they call “need states”. Today’s consumer is likely to frequent many different shopping venues for different needs. In fact, the same shopper may have different “favorite stores” for different need states.

A lot of this analysis is geared for the supermarket CEO and other corporate executives, and the comeuppance is that supermarkets are in trouble because they are good generalists but get beat by other formats that meet certain specific consumer needs.

The study identifies nine need states, ranging from “Immediate Consumption” — I want to eat something now! — to “Reluctance” — I don’t want to be here! When one analyzes these nine need states and evaluates the vulnerabilities, strengths and unique attributes of supermarkets in addressing them, something interesting occurs: In seven of the nine, “Quality/freshness of deli meats/cheeses” and/or “Quality of fresh prepared foods” are important strengths for the supermarket.

This means that deli directors can work at positioning their departments to satisfy these different need states.

The need state idea is really common sense. It says that the same consumer who normally is a “Care for family” shopper, trying to buy the stuff her family enjoys, is sometimes in the mood to be a “Discovery” shopper and wants to see new ideas and new products, maybe buy some non-grocery items on the same trip and just have a little fun. So the customer, who might normally shop at her local supermarket, might once in a while shop at a Whole Foods or a Costco. And the only way for a supermarket to fight this is by more perfectly satisfying the various need states of different consumers. For example, shoppers in the “Discovery” need state will tend to like supermarkets that always have a large “What’s New” section.

Marketing exists because executing well isn’t enough, and supermarkets that do a good job matching up to each need state may still end up losers if other shopping venues do a better job of positioning themselves in the minds of the consumer. In other words, a supermarket may carry a lot of organic items, maybe even all the ones a particular consumer would buy, but the supermarket will find it hard to “own” the mental real estate that means organic to the consumer.

The study is insightful and astute. The authors choked a little on the conclusion, however. The weight of the study indicates consumers are attracted to retailers that are specialists and reducing their involvement with generalists. The report acknowledges this and calls on supermarkets to “...select one shopping occasion, become the undisputed expert in it, and use that expertise as the focal point for differentiating your store in the minds of the consumer.”

That seems a pretty clear call for specialization. Not quite having the courage of their convictions, the study authors confuse their conclusion by also proclaiming, “This report is not a call to abandon the generalist platform, but it is a call to become the best generalist possible.”

To the extent that these two ideas can survive together, they can do so only because key departments such as the deli establish independent identities. So a supermarket can become known as the undisputed expert for the “Smart Budget-Shopping” need state, but the deli’s sandwich program, perhaps even under a different banner, can be known as the perfect solution for “Immediate Consumption”.

We have to keep studying what different groups want from us, but the population is so diverse and the options so many that, increasingly, we need to get in the heads of our shoppers. This study is a great place to start. The authors have created a special on-line tool, available by registering at www.ccrrc.org, to allow retailers to measure how well they are competing for different shopping occasions. It will take time to develop new strategies to mesh with consumer need states. Here is a way to get ahead of the curve.  DB