The Branded Pantry

3 events this week prompt yet another commentary on the risks of using CPG product information in its current state.

1. A conversation with a colleague from a large grocery chain. They were talking about populating their emerging PIM/MDM systems with product information for a variety of applications across functional silos. When asked “with what will you populate this new system” the answer was “we will simply expect to get product information from the GDSN.”
2. A fourth announced (with many yet to be announced) product rating system for health and wellness. This one from a shelf tag supplier who has hired a nutritionist and assembled some product data from various sources.
3. Additional clarification from two retailers on their expectations for product ratings using the Overall Nutritional Quality Index (ONQI).

Precise, all-inclusive, up-to-date and homogeneous product data is a prerequisite for any frictionless inter or intra company business activities that concern products. This includes supply chain, demand chain and customer facing applications. Health and Wellness rating programs are the latest, but perhaps the most serious of these applications from a product data dependency point of view. Consumers are depending on their supermarkets to give them the straight scoop, the supermarkets are depending on the rating guru’s….and the guru’s are depending on the available product information.

The current state of product data collection (DIY and databases collected by third parties) were simply not designed to be precise, all-inclusive, up-to-date and homogeneous. They will not support uses such as Health and Wellness programs, as our studies have shown. Prime Consulting and I have studied this as have others (see “Its the data stupid” post on 1/3 below with its link to the original author at GXS) and have a pretty good approximation of just how much of the available data is of sufficient quality to be useful. If the product information is wrong, dated, incomplete or not correctly converted, the ratings will be wrong and the advice to the consumer will be wrong. GIGO lives!

More importantly we have identified the four primary areas in the current product introduction/revision process where information quality leakage occurs. Doug from Prime and I will co-author a blog on these four soon.

There is a very interesting battle beginning to take shape in the CPG advertising world.   Three evolving advertising approaches are poised to pick apart the traditional advertising providers carcass (and the revenue spent thereon.)  The three camps include:

1. The traditional players disguised as new media players.  Entrants here include quadrantOne and Yahoo’s newspaper consortium (sheep in sheep’s clothing?)  As structured I don’t think this will pan out but will cover my reasoning and the capabilities in future articles.
2. Approach number two involves moving traditional advertising dollars into new vehicles and approaches to the place where CPG dollars are spent,  the store!  These advertising dollars are not to be confused with the already large pot of manufacturer dollars spent in trade allowances with retailers.  It will be a fresh infusion for brand advertising involving current and new in-store vehicles and technologies.  The approach is early stage, but with support from top pedigree manufacturers, agencies and retailers.  Their efforts under the banner P.R.I.S.M are ongoing and picking up steam rapidly.  But there are some pretty significant unanswered questions.  This too, will be the subject of future articles.
3. The web and web 2.0 are also siphoning off traditional CPG advertising dollars.  The trickle of dollars that began some time ago is becoming a stream as manufacturers discover BT and soon BT/contextual combinations.  These powerfully targeted tools are receiving rave reviews for efficiency and effectiveness and are driving the transition.  For instance Kimberly Clark spent 10% of their ad budget in 2004 on alternate media, including online.  This year they will funnel 34% into the channel.

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In addition to the consumer grocery spending shift to Wal*Mart, commented upon below, both BJ’s and Costco reported strong year over year fourth quarter gains.  Same store sales were up 5.4% in BJ’s and 7% (excluding gas) at Costco!  These gains were driven by perishable and other food items!!

The move must be in part price driven (duh) as the University of Michigan’s Customer Satisfaction Index measured Wal*Mart’s performance in the fourth quarter at its lowest rating ever (68) down 6% from third Quarter.

Ziff Davis Enterprise Researchjust released their survey of IT professionals. Not surprisingly the CIO’s agree on the need to spend feverishly on a number of fronts. Three of the top four business priorities included: providing better service to customers, improving business processes and cutting costs.

The technologies judged to offer the biggest impact included: business intelligence, collaboration and systems/data integration.

Their top technical priorities for implementation? Strategic applications, infrastructure changes and build-out to keep up with business growth and way down at the number 5 of 10 listings was improve the quality of information. (more…)