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Understanding what the customer wants

Norfolk Farming Conference 2008

Daniel Tims 21st February 2008 [email protected] 020 8832 9222

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So what is dunnhumby?

Know your customers

How they think or feel, gauging their opinions and attitudes

combined with knowing how they actually behave.

Continuously

building valuable insight

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Tesco Lifestyles

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Tesco Lifestage

Young Adults Young Families Older Families Older Adults Pensioners

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Understanding what the customer wants...

How are customers buying into the potato market and who are they?

To what degree is there shopper movement across the market?

To do this we will be looking at the market in four sectors:

Value (Tesco Value) Standard (White, Baking, Baby) Standard Plus (Jersey Royal, King Edward, Vales Sovereign, Marris Piper) Finest (Tesco Finest* / Organic)

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The potato market is relatively

fragmented in terms of shopping

habits. Nevertheless there is a degree of

loyalty to specific areas as well as movement towards premium and

regional lines

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How are customers buying into the potato market and who are they?

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The potato category is a complex marketplace

Premium 652,330

Standard

276,550

4,397,310

50% of shoppers in the potato category have only bought into one of these areas in the latest six months... ...38% of shoppers are happy to shop across two of these sectors... ...while only 13% will shop across all three

1,309,600

99,560

3,182,750

Standard Plus

542,660

© dunnhumby 2008 | confidential

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Standard potatoes have a loyal following

Premium

6% 652,330

Standard

276,550 3%

4,397,310 42%

13% 1% 99,560

1,309,600

3,182,750

30%

Standard Plus 542,660 5%

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Biggest sector, biggest spend

Compared with our typical Tesco customer the solus standard sector shopper is: Price Sensitive Younger

3,182,750

Premium

652,330

6%

Standard

3%

276,550

4,397,310

42%

13%

99,560 1%

1,309,600

30%

Standard Plus

542,660

5%

And more likely to come from Yorkshire and the Midlands

© dunnhumby 2008 | confidential

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Standard and Standard Plus ­ one in the same?

Premium

6% 652,330

Standard

276,550 3%

4,397,310 42%

13% 1% 99,560

1,309,600

3,182,750

30%

Standard Plus 542,660 5%

© dunnhumby 2008 | confidential

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No - Families and the south

When shoppers shop across these two sectors they are likely to be: Families Traditional

Premium

6% 652,330

Standard

3%

276,550

42% 13%

99,560 1% 1,309,600 3,182,750 30%

4,397,310

Standard Plus

5%

542,660

And more likely to come from the East of England and the South

© dunnhumby 2008 | confidential

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So who is the Standard Plus solus shopper?

Premium

652,330

6%

Standard

3%

276,550

42% 13%

99,560 1% 1,309,600

4,397,310

The Standard Plus shopper is not particularly loyal ­ they are most likely to shop alongside the Standard sector Regional varieties have added a new twist to this sector

3,182,750

30%

Standard Plus

542,660

5%

© dunnhumby 2008 | confidential

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More upmarket shoppers

The Standard Plus shopper is more likely to be:

Premium 652,330

6%

Standard

Finer Foods

3%

276,550

42% 13%

99,560 1% 1,309,600

4,397,310

Older Families / Older Adults

3,182,750

30%

Standard Plus

542,660

5%

And more likely to come from the South, NI or N. Scotland

© dunnhumby 2008 | confidential

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So all of our sectors play a distinct role

Standard Standard & Standard Plus Standard Plus

Price Sensitive Younger

Traditional Families

Finer Foods Older Families / Older Adults

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To what degree is there shopper movement across the market?

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Is the Premium sector trading shoppers up?

Those who have added Premium to their shop in the latest six months are likely to be: Young Families Healthy Price Sensitive

779,310 77%

Total Premium

1% 5,410 28% 230,420

New Customers

Added to Repertoire

Existing Customers

Standard (ex. Regional)

Premium

© dunnhumby 2008 | confidential

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Who is buying organic and why?

Shopper trade off driving growth in Organic? Balance of quality, health and environmental factors. Healthy Families

504,500 64% 273,580 35%

Premium Organic

1% 4,190

New Customers

Added to Repertoire

Existing Customers

Standard

Premium Organic

© dunnhumby 2008 | confidential

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What about Regional varieties?

Regional lines have similar shoppers to those who would normally purchase Standard: Mainstream Families

Standard Regional

33% 244,670

1% 4,340

66%

New Customers Added to Repertoire

493,190

Existing Customers

Other Standard

Standard Regional

© dunnhumby 2008 | confidential

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So what have we learnt... ...and what does this mean?

42% of all potato shoppers only ever buy standard

It appears that there is a different shopper buying Standard, Standard Plus and those who will cross-shop between the two

There looks to be a high level of interaction between Standard and Premium / Organic lines but this does not include regional varieties

© dunnhumby 2008 | confidential

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