THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 29, 1995 TAG: 9512290586
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Long : 106 lines
Ukrop's Super Markets Inc., a Richmond-based chain, is using technology to learn about customers' buying habits - everything from diapers to diet foods.
But Ukrop's is one of the exceptions.
Today, few retailers know the purchasing patterns of their shoppers, according to an article in Arthur Andersen & Co.'s Retailing Issues Letter. Without that information, they are unable to tailor their offerings to individual shoppers.
``They talk about their customer and they pay lip service to their customers,'' said Kevin J. Clancy, a marketing consultant who co-wrote the article. ``But when you ask them about their customers, the amount of knowledge they have is slim.''
That lack of information is one of many fatal marketing flaws that consultants consistently find among retailers.
``Unfortunately, by the time a retailer asks us to help with a problem, they're usually approaching the last act of the Greek tragedy - the one where the hero is the last to know,'' Clancy and Robert Shulman wrote in last month's Retailing Issues.
The marketing consultants say Ukrop's, a 23-store chain, is part of a new breed of retailers using technology for instant marketing feedback. The privately owned company has built an extensive database for its ``Valued Customer'' program. Shoppers in the program receive a monthly newsletter listing members-only sales items. They get discounts when their membership cards are swiped through a cash register scanner.
Norfolk-based Farm Fresh Inc. and Salisbury, N.C.-based Food Lion Inc. have followed with their own frequent shopper programs.
But Ukrop's has pushed forward, using its database to give customers incentives that are tailored to their households, company marketing manager Scott Ukrop said. The chain can tell which customers buy dog food and which shoppers purchase baby food.
``They really like the fact that they are saving on products that they're actually purchasing,'' Ukrop said.
Adopting the latest technological advances to understand customers makes sense. But retailers should be careful not to blindly follow their competitors, the consultants wrote.
For example, in the '80s, much of Compaq Computer's strategy was to match IBM's prices. That worked for awhile, but then other companies began selling personal computer directly to customers, offering competitive prices and good service. Compaq fell off the cliff along with IBM.
On the positive side, when Compaq stopped following IBM, sales soared.
The two marketing consultants also suggest that retailers identify their target customers and focus on previous customers, instead of new ones.
``Remember that old Girl Scout song, `Make new friends, but keep the old - one is silver, but the other's gold?' It ought to be the opening line of the definitive retail marketing text.'' ILLUSTRATION: [Drawings by JANET SHAUGHNESSY]
Graphic
COMMON RETAIL MARKETING ERRORS
Not tailoring your merchandise to the customer. By using new
computer software and other technology, retailers can learn about
individual customers' purchasing patterns and then tailor their
marketing strategies.
Going after the wrong customers. Unsophisticated marketers don't
differentiate among different types of consumers. Many go after
everyone. Others try to go for the upscale shoppers, but they can be
expensive to court. The consultants stress identifying a target
customer group and then seeing if it's big enough and it buys
enough.
Following the competition to the slaughterhouse. It's always good
to keep an eye on the competition, but remember that the industry
leaders might not know where they're going.
Sending out an empty message. Do customers know what the retailer
stands for? Learn what matters to customers and make sure those
benefits can be delivered and communicated.
Obsessing over prices. Research shows that price is less
important to fast-food customers, but more crucial to retail
gasoline buyers and apparel shoppers. Still, consumers are not so
sensitive to price that it overshadows desires for quality, service
and convenience.
Thinking a good location is the answer. Retailers commonly stress
location. But if you are the best at something, people will find
your store wherever you locate. However, for some retailers, such
as fast-food operators, location is imperative.
Taking old customers for granted. Retailers often devote the
lion's share of their marketing efforts to acquiring new customers
whose value to the company may be low. Retaining existing shoppers
is easier.
Relying on focus groups. Compared to other methods, focus groups
are cheap. But they also yield shaky data. Focus groups can help,
but they shouldn't be the sole basis for making a decision.
Closing without thinking. Companies should figure out whether a
store's poor performance is reversible before closing.
Relying solely on intuition. Balance management intuition with
rigorous analysis.
Source: Arthur Andersen & Co.'s Retailing Issues Letter, November
1995. The bi-monthly essay, written by marketing consultants Kevin
J. Clancy and Robert S. Shulman, is co-published by the Center for
Retailing Studies at Texas A&M University.
by CNB