As we previously noted, consumers have re-embraced coupons as a way to get more for their money.  In the third quarter, year-to-date coupon redemption was up 26 percent to 2.4 billion redemptions, making it the fourth consecutive quarter of growth, according to new research from Inmar in collaboration with The Nielsen Company.  During 2006-2008, coupon redemption stagnated at 2.6 billion each full year.  Inmar, which provides logistic management solutions to retailers, wholesalers and manufacturers in the consumer goods and healthcare markets, is forecasting that 3.2 billion coupons will be redeemed this year, marking a significant increase over recent years.

But while food coupons have typically driven activity, non-food coupons for general merchandise, household items and personal care drove growth in the third quarter, up 45 percent over the same period last year (food items were up 26 percent over the same period last year).  While supermarkets remain the traditional coupon redemption channel, representing 64 percent of redemptions, the dollar/discount/variety and mass merchandiser channels are up at a faster rate.

“It’s clear that coupons have increasingly become an important way for consumers to save some money when shopping.  Digital coupons are driving a huge increase in redemptions but still represent a small percentage of distributed and redeemed coupons.  Meanwhile, freestanding inserts account for almost 90 percent of distributed coupons, but just over half of redeemed coupons,” said Todd Hale, Senior Vice President, Consumer and Shopping Insights at Nielsen.  “Moreover, coupon enthusiasts buy more products per trip and generally have a higher spend per trip in the grocery and supercenter channels.  The fact is, coupons can yield a significant return on investment, and savvy consumer goods manufacturers should seriously consider how they may be able to play a role in driving sales.”

An average of over 19 million U.S. viewers watched the six games of this year’s World Series between the Philadelphia Phillies and the New York Yankees, the most since an average of 25.4 million people saw the Red Sox sweep the Cardinals in 2004. Game 4 of the series was also the most watched single World Series game (22.5 million viewers) since 2004.

A legendary 6-RBI game by Hideki Matsui in Game 6 propelled the Yankee DH from a postseason afterthought to World Series MVP. The series-clinching performance resounded throughout the internet as Matsui’s buzz soared across blogs and message boards in the hours after the final out:

Of all the players participating in the World Series, Alex Rodriguez delivered the most buzz. As A-Rod marched through October on his quest toward his first championship ring, his internet buzz was at a level three times higher than any other Yankee or Phillie. Surprisingly, the next-closest player in terms of buzz during the postseason was pitcher A.J. Burnett, who saw his share of ups and downs throughout the playoffs. Derek Jeter’s on-field steadiness translated to the blogosphere with the third-highest buzz of any World Series participant. The most buzzed-about Phillie was second baseman Chase Utley, whose five-homerun performance in the Fall Classic had many wondering if he could take MVP honors back to the losing city.

As with many of us who have spent our entire careers on the Internet, I have a bit of media establishment envy. Don’t get me wrong, I love the Internet; I’ve spent the past 10 years analyzing the Web and continue to believe the future is in truly interactive media. Sentiment aside, for the most part Internet professionals have spent much of our careers at the proverbial kids’ table. For far too long the Internet has been relegated to the “experimental” or “emerging media” categories.

Recent developments indicate the Internet is being taken more seriously. Case in point: NBC and Fox joining forces to create Hulu, if for no other reason than to solidify their participation in the increasingly important and transformative online video market. Google reaping ad-driven revenues that were once reserved only for the wilder fantasies of those working in print classifieds. Apple reshaping the entire music industry through innovation of the playback device, distribution and consumer experience. And the latest example of Facebook, transforming the way people congregate, communicate and navigate the Web today.

If the Internet has truly “arrived” and is being taken seriously, why have we not yet seen significant brand advertising dollars follow? Maybe it’s because we’re in the midst of one of the worst global recessions in history. Perhaps it’s because online creative units tend to replicate the print experience instead of redefining the consumer experience. Most likely is that the online ad industry has decided to remain independent—we speak our own, at times arcane, language; we use our own effectiveness measures reinforcing the belief that the Internet is a direct response media; and, we have yet to provide easy methods to help advertisers understand the role of the Internet in the entire marketing mix. In effect, we have made our lives, and potential livelihoods, very difficult.

The good news is there is hope. As a medium the Internet is quite the contender (and brand dollars are beginning to shift its way). To continue growing, the online ad world must take a hard look at itself as part of a broader, media industry-wide context and, as one prominent TV client put to me, “grow up.” The Internet does not exist in a vacuum and we’ve moved past the days when it is practical to operate like it does. Leading marketers look at media from a holistic perspective to reach today’s increasingly connected consumers. So too must anyone participating in the ad industry.

• For more about cross-media advertising, download the complete report: Integrated Measurement Solutions

The Boehringer-Ingelheim drug, which treats male urinary symptoms due to BPH, offered two creatives last season that were recalled at a rate 42% greater than the average based on all newly-launched prescription drug ads.  These latest installments of Flomax’s direct-to-consumer TV campaign feature men at a baseball game and men playing on a golf course.

“With relevant and consistent visuals that stand out from the rest, the Flomax ads prove that marketers can still be creative and memorable even within the restrictive pharmaceutical category,” said Fariba Zamaniyan, senior vice president at Nielsen IAG, Healthcare.

Cialis (Eli Lilly) and Gardasil (Merck) tied for second on the list with 32% greater recall than the average drug ad launched last season. The ad for Cialis, which treats erectile dysfunction in men, was an extension of its “What are you waiting for?” campaign and featured its iconic outdoor tubs and a variety of male and female couples. Gardasil, which guards against cervical cancer and HPV in women, filled its creative with images of moms and their daughters who “chose” to get vaccinated engaging in a variety of activities such as surfing, shopping and swimming.

Wyeth’s “Wind-Up Doll” TV campaign for Pristiq for the treatment of depression “winded up” the top three.  It was the only newcomer at the top of the DTC ranking this past TV season, with a recall index of 128.

A key takeaway from the rankings, said Ms. Zamaniyan, is that DTC advertising is not just successful when symptoms of the ailment treated by the advertised drug are shown.  Any prescription drug ad, she says, can still be memorable without the display of symptoms and still  connect with the audience while staying within FDA guidelines.

“The bar for creativity shouldn’t be lower for pharma because of the regulations in place,” Zamaniyan argues. “In fact,  it should be higher given the level of investment and volume of competitive activity on the airwaves.” 

Nielsen’s recall index is limited to responses among adults 18+ who correctly recalled the storyline of the ads they were exposed to within 24 hours after airing. Only ads airing during entertainment and sports programs on the five broadcast networks (ABC, CBS, NBC, FOX and CW) on Broadcast prime time,  Evening News, Late Night and Syndicated Prime Access (Jeopardy, Wheel of Fortune, Access Hollywood, Entertainment Tonight, Extra, Access Hollywood) were included in the ranking.  The ads are measured at comparable media weight to control for differing weight levels across the campaigns.

In a deeper analysis of audio media titled “How U.S. Adults Use Radio and Other Forms of Audio,” Nielsen found that that 90% of consumers listen to some form of audio media per day. The 77% who listen to broadcast radio surpass the 37% who listen to CDs and tapes and the 12% who listen to portable audio devices. Broadcast radio also continues to play a major role to all ages, with almost 80 percent of those aged 18 to 34 listening to broadcast radio in an average day.

“There are a lot of critics out there who want to write off broadcast radio, but this analysis of real-time media consumption shows that it continues to play a very strong role,” said Dr. Michael Link, VP of Methodological Research at The Nielsen Company.

While the recent emergence of portable audio devices like the iPod and other MP3 players was considered a threat to traditional forms of audio, this study’s evidence suggests that the new technology has had a positive effect on radio consumption. In fact, radio was found to have a higher reach (82%) among those who listen to portable audio devices, compared to the average reach for all audio consumers.

“This study proves that radio is still a popular medium for the tech-savvy, MP3-playing 18-34 year old consumer,” said Jeff Haley, President and CEO of the Radio Advertising Bureau (RAB). “This groundbreaking observational study of today’s consumer proves that the primary source of new music is the radio.”

The study was conducted by observing the media usage among participants in five DMAs (Atlanta, Chicago, Dallas, Philadelphia, and Seattle) in the spring and fall of 2008. Many of the broadcast listening trends were consistent with the findings from Nielsen’s 51-market radio ratings released in September

“The results of this study confirm radio’s importance with all socio-economic groups within the United States, as well as with those that consume other audio platforms that had been perceived to be usurping radio’s audio dominance,” said Bob McCurdy, President of Katz Marketing Solutions.

Another key takeaway from the reports is that broadcast radio is the dominant form of audio media at home, work, and in the car.

Other findings highlighted in the report include:

• Audio media exposure has the highest reach among those with higher levels of education and income.
• Approximately 12% of study participants listened to MP3s and iPods for an average of 69 minutes per day, yet eight-in-ten of these individuals also listened to broadcast radio for an average of 97 minutes per day.

Download the full analysis on radio and audio usage.

SUMMARY: When is a phone not a phone? In the hands of children and tweens, today’s cell phones are primarily used as text messaging devices, cameras, gaming consoles, video viewers, MP3 players, and incidentally, as mobile phones via the speaker capability so their friends can chime in on the call. Parents are getting dialed in to the social media phenomenon and beginning to understand—and limit—how children use new media.

• This article draws from a keynote speech delivered last month at the Children’s Advertising Review Unit (CARU) annual conference.

Digital media is an enabling framework for brands, parents and educators—it’s on demand, interactive, sensing and connected. And social media adds expression and sharing capabilities. A vast menu of web and mobile tools has been developed to facilitate information sharing and commentary on the Web. Applications and outlets have kept pace as consumers rush to populate blogs, Twitter, YouTube, Facebook, forums, message boards and online communities.

In the marketing world, the buzz is all about consumer-generated media. Companies have discovered thatno paid-for communication campaign has the impact of missives penned by consumers grounded in relevant, first-hand experience. Their influence is immediate, highly viral and authentic, with an extremely long tail attributable to archived material.

Giving voice
What motivates people to go online and on the record with personal opinions and information? In part, it is the very human need to be heard and to connect with others. It is the desire to make a difference, to influence the world around us. It is the drive to evangelize on behalf of the things and the people we love. And it is the ongoing quest for authenticity in a world governed by image.

Mobile devices represent a major impetus behind the social media movement, driving part of the 250% audience increase for the year ending February 2009. Teens represented 19% of the 12.3 million active social networkers.

Childhood connections
To adults, cell phones are a communications device. To children, they are a lifeline. Consider that the average 13-17 year old sends more than 2,000 text messages per month. Compared with the total mobile Internet population, teens are much bigger consumers of social media, music, games, videos/movies and technology/science.

Parental use of advanced data services mirrors that of their tween kids. If their children text, then 80% of parents will text as well. Although following their kids’ lead on devices and media, parents still set limits. Six in ten forbid downloads onto their children’s phone for financial and security reasons.

TV times
Even as social media dominates press coverage, TV viewing is on the rise among children and teens. Younger children age 2–11 spend almost 102 hours per month watching traditional TV at home—a 17% increase from May of 2008 to the second quarter of 2009. The increasingly popular time-shifted TV option averaged 5:26 hours during the timeframe, a 26% year-over-year increase.

Traditional TV viewing expanded at a slower rate (13.5%) among teenagers than among younger kids—to 101+ hours, and teen time-shifted viewing showed a 35% growth rate with 4:54 hours of watching time. Interestingly, Internet use was down (-15%), to 10:22 hours per month. The biggest media gainer was video viewing on the Internet, where Hulu and YouTube helped spike time by 66% for a total 2:41 viewing hours. Teens deployed mobile phones to catch videos, spending 6:30 hours with mobile video streams—a 20% year-over-year increase.

Young enough
The debate rages on: what is the right age to give a child their own phone? The answer seems to be younger every year, and if you don’t give them a phone, they’ll just borrow one. In 2008, the average age when kids started to borrow a cell phone was 8.6 years; in 2009, it was down to just 8 years old. As to ownership, in 2008, a child typically was given a mobile phone at age 10.1 years; by 2009, it was down to 9.7 years old.

The next time you hear “everybody’s got one”, the fact is, that classic ploy may be true. By age 10, roughly half of children own a mobile phone. By age 11, six in ten own a mobile phone. By age 12, fully three-fourths of all children have their own mobile phone.

Game on
How do they use phones? Two-thirds of tween mobile phone owners took pictures with their camera phones in the last year. Half spent time playing the pre-installed games. Four in ten activated the speakerphone feature. Twenty-eight percent filmed a video clip, and 24% listened to the MP3 capability.

More than half of the youngest (age 8) mobile phone owners used their cell to send text messages in the last 12 months. That figure soared to 81% for 12-year-old mobile users. The vast majority of text messages were directed to friends and family (90%). All other cell phone uses tracked in the single digits, such as voting on TV shows (8%), buying a ringtone or music (9%), buying wallpaper or a screensaver (4%), buying a game (5%), responding to an ad (5%) or looking up their horoscope (4%).

Parental controls
Surprisingly, given all the publicity about cyber stalking and cyber bullies, more than half of parents do not apply any parental controls offered by service providers to their children’s cell phone usage—although the use of these paid-for controls is increasing. Among those who do assert these built-in controls, 20% limit the number of calls, texts or instant messages, followed by download limits (17%), talk time or voice minute allocations (16%), mobile website access limits (15%), locator services and restricted in/outgoing number access (13% each), time of day restrictions (11%), and alerts to unauthorized texts, IMs or callers (6% each).

While the use of paid-for controls may not be high, just about all parents restrict how tweens use their phone and six in ten prohibit downloads that incur charges. Not taking the phone to the dinner table and maintaining certain grades are other rules put in place by 42% and 40% of parents, respectively.

Coming challenges
From a media perspective, choice leads to fragmentation, and ultimately, divided consumer attention and diminished import for a single medium. Even as social media gains popularity among the general public and marketers, there is no accepted benchmark or measure of effectiveness, making it difficult to forecast or predict the impact of a campaign.

A particular challenge for companies wanting to incorporate social media into their communications arsenal is the blurred line between private and public information, given the highly personal nature of many postings. Advertising models are still in flux, exploring boundaries of ethics, taste and transparency.

Untapped potential
Social media presents a world of new possibilities. Not a better mousetrap, but a new operating DNA for interacting with consumers. It can serve as an early radar or warning system, alerting to trouble spots and yielding fresh insights.

For parents, old rules still govern new media. They will need to stay engaged, enrolled and involved in their children’s lives. The motto “trust but verify” applies. For advertisers, old rules also are still in force. The need for transparency and trustworthiness becomes amplified on new media circuits. Ultimately, the nature of new media will prove its value, as all parties engage in an interactive, ongoing, mutually beneficial conversation. Social media is organic and ever-evolving, constantly presenting new opportunities and challenges.

Kid Stuff
For more on children and their media habits, check back next month. We’ll be exploring television, DVD, DVR, VCR, on demand, online streaming and gaming preferences for children ages 2–11. The silver screen represents marketing gold!

SUMMARY: What a difference a year makes. Restaurant operators enjoyed a solid 2008, but by mid-year 2009, more than 4,000 had closed and the average guest check plunged more than 8%. Where did all the diners go? Grocery stores, supercenters and club stores—to pick up meat, seafood, produce, deli and bakery goods for a home-shared meal.

There is nothing like staying home for real comfort. – Jane Austen

Home. It’s our refuge when the world gets to be too much. The upside of a recession is that we come together around the kitchen table to share our meal and our day, taking comfort in the safe harbor of home. While that’s bad news for restaurants, from white table cloth to casual dining, it’s good news for retailers.

Through September 2009, Nielsen reported total store sales—which includes the Rx, perishables, center store grocery (UPC food & beverage), health & beauty care, and general merchandise departments—are expanding. The perishable department is growing faster than all retail sectors in the total market.

According to Nielsen, reported household deli spend for year ending September 2009 was $200—a 5% increase from last year. Bakery whipped up average annual household sales of $174 per year with a 3% increase. Fresh meat and seafood cooked up sales of $437 per year for a 4% gain, produce increased 3% based on annual average sales of $279 per household. Perishable departments are becoming one of the most productive departments at retail and channels outside of supermarkets are taking notice.

Recession reaction
What the recession has wrought, among other things, is a transfer of dollars away from dining out toward spending more on prepared meals at retail. A 2009 Nielsen survey finds that 46% of American households say they are eating out less. And the sales data supports that statement as value-priced prepared meals at retail are posting double digit increases in supermarkets, supercenters and club stores. Other recessionary strategies include reducing unnecessary spending (27%), driving less (14%), shopping for bargains (13%), using coupons (12%), combining shopping trips (8%), going out less for entertainment (6%) and purchasing more private label goods (5%).

Meaty matters
Supermarkets hold a dominant share position with perishables in the meat and seafood department with a 70% market share. More importantly, shoppers are spending more with grocers. Key factors fueling supermarket meat and seafood sales include promotions—51% of meat and seafood is purchased on sale—and prominent circular placement noted by 41% of shoppers.

Shoppers are trading down, up and side-ways as less expensive non-red-meat and seafood protein options such as turkey, chicken and pork sourced primarily from beef department sales. This trade down is occurring in both fresh and fully cooked product categories. Retailers should offer shoppers ideas to enhance the dinner menu with add-ons such as marinades, sauces and seasonings, which are posting double digit increases on both a dollar and unit basis.

Alternative channels are also making a strong push for this business. Supercenters have done a super job with new perishable formats, growing both the purchase size (up 2% to $11.80) and frequency of perishable purchases (from 18.4 to 18.7 trips per year). This holds true in particular for the meat and seafood departments, where supercenters snagged a 0.6 share point change.

Produce picks
Supermarkets hold an even stronger share of produce with more than 72% of the business and growing, posting a 0.3 share increase versus year ago. Supercenters are turning the competition green with envy capturing 12% of the market. Club stores are still underdeveloped in produce (7.9% share) versus comparable department share levels.

In the produce aisle, shoppers appear to be sticking with core vegetables as tomatoes, potatoes and corn are among the few leading categories posting dollar and unit growth. The same holds true for fruits—shoppers are less likely to experiment these days as specialty and stone fruits are down in favor of tasty favorites such as berries, cherries, grapes and avocados.

Retailers have a unique opportunity via their produce department to build their health and wellness equity and market position. The Natural Marketing Institute has identified 25% of the population as “Well Being” shoppers that are health and wellness focused, do the best job of eating right and use quality as their purchase barometer, not price or brand image. Indeed, the Nielsen sales data affirms these results as these shoppers buy 25% more produce than any other perishable sector and prefer random weight items at their freshness peak.

Deli delights
In deli, where supermarkets hold 50% of the business, all major departments are posting strong growth. Deli cold cuts and cheese are up 7% and prepared foods are up almost 5% versus year ago. Notably, supermarket dollar share erosion has been more severe than other perimeter sectors in this broad but expanding market. However, smaller formats (convenience stores, delicatessens, etc.) that offer shoppers “in and out” convenience are posing the biggest threat to supermarkets. Some of the hottest selling prepared deli items include turkey entrees, pot pies and chicken salad. At the service counter, shoppers are buying American as pre-sliced cheese is posting double-digit unit and dollar sales increases.

Retailers exploring ways to differentiate their brand should turn to the deli department, where service counts, personality shines and the area is generally underdeveloped as a driver of retail brand equity. Adopting an “alternative to eating out” strategy has paid off big time for retailers like Wegmans, which scored well in a 2009 study as a top choice for prepared meals, as well as for offering a wide range of fruits and vegetables, high-quality fresh food, well presented displays and a broad assortment of fresh meat and seafood.

Bakery boom
Retailers should not forget to finish off their meal planning strategies with dessert options. The bakery department is posting the most significant growth of any perishable sector for grocers. And just as Clemenza famously says in The Godfather; “leave the gun, take the cannoli”, that is exactly what shoppers are doing as cannolis are posting strong growth within the cakes, cookies and specialty desserts department. Supercenters are the primary threat to grocery as they have almost 16% share of this market—more than any other perishable department. Similar to deli, club stores are not a major competitor in the service-driven bakery sector, capturing about 7% of the market.

Meal planning
Everybody cooks, but in today’s world, meal planning is maturing on both web-based resources for recipes and TV chefs for inspiration and technique. Nielsen discovered that more than one million viewers watched the Food Network during prime time in 2009—a 16% increase over full-year 2008. Furthermore, meal planning is one of the largest and fastest growing online activities, with the average browser spending roughly 10 minutes online planning meals. Retailers like Meijer have developed special iPhone applications that let shoppers check specials, locate recipes, consider wine pairings, even search from their smart phones for special needs like fat free, dairy free, gluten free and high fiber.

The lead position
What does it take to succeed with perishables? Retail perishable sales leaders share a set of characteristics including heavy penetration across one or more perimeter sectors. The average department penetration among the Top 25 retailers scored 83% for produce, 80% for bakery, 79% for meat and seafood and 65% for deli. Prepared foods represent an area of under-developed potential because of high-growth rates, strong drivers like working parents on tight schedules, and the fact that fewer than one-third of the Top 25 retailers’ customers currently buy prepared items.

Service remains key to succeeding in areas like deli and bakery, where sales outpace meat, seafood and produce. Across the store, the produce section affords the best climate for delivering health and wellness messaging. Even aside from absolute sales potential, prepared foods are unique in their ability to serve as an avenue for differentiating the retail banner. For a playbook on doing it right, turn to trend-setting retailers that have set both the delivery standard and consumer expectations for high-quality prepared meals and the multi-media formula for promoting them.

Free Webinar: The Consumer Returns to the Home

Register Now

Date: November 19, 2009 – Time: 12 pm EST/11 am CST

Today’s consumer is realizing that the home is their best resource to stretch a dollar in a difficult economy. The “trade down” from casual dining to home meals has created tremendous growth and brand messaging opportunities in perishable departments and specific center store categories for both retailers and manufacturers. In this session, Nielsen will reveal:

• Who are the new and emerging channel competitors and where are the category opportunities in the meat, produce, deli and bakery departments.
• Which center-store categories create more merchandising synergy with the perimeter.
• Why it is critical that brand advertising strategies stretch beyond the store into the emerging food preparation space.

Register Now

Chris Adrien, Vice President, Product Development, Nielsen BASES
Rob Mooth, Vice President, Client Consulting, Nielsen BASES

SUMMARY: Much has changed in the world of innovation and successfully launching new products has become more challenging. For many marketers, current metrics and action standards to gauge in-market acceptance are not quite enough to guarantee success today. Nielsen BASES has evaluated 500+ recent in-market cases globally to understand what it takes to win in an ever-changing marketplace—and has developed the next generation success models that address all facets of the consumer adoption process.

It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.

Game changing metrics
It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:

1. Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.
2. Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.
3. Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.

While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

Success is multifaceted
There are many ways to define success. From achieving volume goals and hitting strategic targets to averting risks and surviving in the marketplace, performance can be measured in a number of ways. While current pre-market performance metrics typically compare a product’s overall performance relative to the competition, the next generation success models analyze the entire adoption process by isolating areas of weakness or readiness for every key measure of success. In this way, you move beyond just measuring how a product compares relative to the competition by overlaying whether this comparison is likely to be meaningful to ultimate success. This adds important new power to competitive comparisons and allows you to focus on issues that will truly make a difference in the outcome.

Five new secrets of innovation
By applying new key measures of success and action standards, BASES in-market test cases demonstrate the potential to improve your success rate. The way to bring stronger products to market is by following five new rules of the road.

1. What worked yesterday might not be good enough for tomorrow.
Make new product development decisions based on the most up-to-date, multifaceted models of in-market success. Relying on the performance standards from the past without adjusting for current market conditions is likely to result in blind spots that can get in the way of success. The current models will help you anticipate issues more effectively and bring more sound propositions to market.

2. Consumer adoption may be complex, but the steps of the process are clear.
Measure and optimize all that matters to success by covering the entire consumer adoption process. The current key measures of success—such as purchase intent, units per purchase and frequency of purchase—continue to be critically important and are key to accurate estimations of volume potential. But there are a host of new factors—such as breaking through clutter, generating buzz and offering true innovation—that also need to be considered.

The consumer adoption process can be broken down into five key factors on which winning products excel:

• Being salient—the ability to stand out. Winning new products catch consumers’ attention and/or offer a distinct consumer benefit.
• Successfully communicating—get the message out. The message needs to be understandable, focused and translatable into memorable ad copy.
• Generating consumer attraction—generate interest. Provide a unique solution to a substantial need/desire, be credible and be free of barriers.
• Converting attraction at the point of purchase—find it in the right store, on the right shelf and at an acceptable cost.
• Delivering an enduring product—achieve lasting consumer adoption with strong repurchase strength.

For each factor, traditional and new performance measures are evaluated to pinpoint and isolate areas of strength and weakness.

3. What it takes to be ready for a successful launch varies at each step in the adoption process.
How does your product perform relative to the competition? Because each step of the adoption process—salience, communication, attraction, point of purchase and endurance—may have different ranges of in-market readiness, each evaluative measure should be benchmarked separately using a four-tier scale: Strength, Ready, Not Ready and Weakness. In doing so, performance is linked to success for every key measure.

Put another way, not all measures are created equal. For some measures, being “average” may be good enough for in-market readiness and improvements may have limited returns on the potential for success. For other measures, it may be more important to perform better than competition, as this could represent an area of real competitive advantage. Moving beyond a simple competitive comparison and adapting launch criteria with this understanding makes for a more robust decision-making platform.

4. Success is about doing most everything well enough, not about really excelling at one facet.
In-market success is not about doing one thing really well. Rather, it is about doing everything you need to do—covering every touch-point in the consumer adoption process—sufficiently. The initiative that does everything enough, but isn’t a star at any one thing is likely to be a success. A single fatal flaw can derail even the otherwise strongest of initiatives—think “weakest link”. Many marketers fall into a trap of focusing only on the one or two areas that a new product does really well, but ignoring areas that represent barriers to success.

Each consumer adoption touch-point has a limited ability to compensate for the failure of another. Take a holistic approach to vetting innovations, making sure that every consumer adoption step is satisfied and optimized. This doesn’t mean that a winning initiative has to excel on everything. A winning proposition will have mostly green “ready” bars, perhaps with a few blue “strength” bars, and no yellow “not ready” or red “weakness” bars.

5. Measure what matters, when it matters.
Set action standards for every new product development stage based on the relevant consumer touch-points. And the earlier you start in the new product development process, the better. Even at the earliest stages, you can understand an idea’s ability to stand out, catch attention, and meet a relevant need. As the idea progresses into a more developed concept and branding, features, and pricing are built in, more elements of the communication and point of purchase dynamics can be folded in. The key is to build on a consistent framework that puts the relevant touch-points into the context of in-market readiness along the way.

Putting the plan into practice
For every stage in the new product development process, set action standards based on readiness for in-market success. For the final test of the concept and product prior to launch, look for “green (ready) or higher” for every touch-point. Seek competitive advantage in the touch-points that are specific to the initiative’s strategy. Only allow initiatives with “yellow” (not-ready) touch-points to move ahead to the next phase if improvement seems likely and monitor these issues closely as the launch proceeds.

Michael Mancini, Vice President of Data Product Management, Nielsen Claritas

SUMMARY: All customers are not created equal. Now, market segmentation models are enabling business-to-business marketers to develop more efficient strategies for identifying and reaching high-potential clients. From prospecting to sales territory mapping, from advertising channels to collateral messaging, segmentation models help analysts pinpoint high-value customers and marshal resources where they’ll be most effective.

For business-to-business (B2B) marketers under increasing pressure to better target customers and prospects, segmentation can be a powerful tool for strategic and tactical applications. Although marketing segmentation systems have enjoyed widespread acceptance in the consumer world for decades, B2B segmentation systems have languished due to the limited availability of accurate data, marginal technical expertise, an inability to develop high quality leads and poorly differentiated advertising.

Enhanced datasets and segmentation techniques developed by Nielsen are helping companies create informed strategies for prospecting new customers, re-aligning sales territories, cross-selling existing customers and predicting future opportunities.

Segmentation solutions
The challenge for marketers has always been the same: know your customer. But with limited information on most companies—especially small- and mid-sized firms—marketers traditionally have concentrated their efforts in the consumer world where ample data exists to craft effective target marketing solutions.

But for B2B marketers, getting to know their end-buyers is not so simple. Unlike demographic data, accurate information about businesses—so-called firmographic data such as addresses, financials or staff titles—have been harder to come by due to the number of business start-ups, closures and unpublished information for private firms.

Fortunately, B2B marketers are now getting their due. Comprehensive databases give marketers access to accurate and current data within a consistent framework on 13 million business establishments—critical information such as a company’s total headcount and industry classification. By appending these data to its business customer file, a company can create a robust business segmentation approach to guide prospecting, sales territory mapping, advertising and target marketing.

Classifying info
In a typical segmentation analysis, business customers are sorted into categories based on company size and industry, though other defining characteristics could also be added. Using figures from a proprietary database and their own information, analysts calculate sales per employee within each business, estimate its market potential value, and rank it against all other customers and prospects.

Business segmentation can also drive changes to marketing communications and advertising. Instead of relying on intuition and tradition—using the same channels and messages that have been around for decades—marketers can develop initiatives based on hard data that address the needs of their business customers and reach them in the way they will be most receptive.

Valuing prospects
Acquiring new customers is a perennial challenge for most companies, but it is vital for growing the business. Windstream Communications, a telecommunications company serving three million customers, didn’t have a systematic way to prioritize prospects, a strategy for packaging its services, or even a protocol for initiating contact with companies.

This catch-as-catch-can approach didn’t allow Windstream to develop an understanding of the prospect’s profit potential or its potential wallet share.

Divide to conquer
To improve that understanding, Windstream worked with Nielsen to create a segmentation system that classified business customers into segments and determined the opportunity of each segment. Windstream’s existing customer records were first matched against the Business-Facts database to identify each company’s Standard Industrial Classification (SIC) code and employee count. Analysts then divided the companies into three buckets based on size and further segmented into seven industry segments using SIC codes. Finally, analysts looked at the preferred products and revenue associated with each business to determine the potential demand for each segment—and the sales potential per employee in that segment.

Setting priorities
Comparing Windstream’s customer base to a universe file of all businesses within its service area, marketers prioritized all the prospects for every business segment, taking into account the estimated value and prior success at landing a similar account. The segmentation analysis then drove Windstream’s marketing strategy, determining the number and type of sales contacts from direct mail to in-person visits. Windstream also differentiated its marketing messages, product offerings and delivery method by industry segment.

In the year since Windstream adopted segmentation analysis, direct mail response rates have risen 50% to 70% and telemarketing sales have jumped nearly 500%. The direct marketing group even hired a campaign manager and began devoting more resources to B2B marketing.

Bright prospects
New segmentation applications are being developed all the time for B2B marketing. Nielsen recently unveiled a “business density model” that allows users to map the number of businesses and their employees in one-, two- and three-mile rings anywhere in the country. Developed for site selection support, the model can help a company determine whether a commercial area offers enough of the right kinds of customers—with few competitors—to support a business expansion. In the past, that kind of information was known only by local commercial real estate agents. The business density maps can be linked to any business segmentation analysis so companies can score site locations based on the surrounding business segment density—and their establishment and employee counts—for any U.S. trade area.

Achieving success
The growing list of successful business segmentation projects suggests principles that any company can adopt for B2B marketing success:

• Leverage the value of two pieces of basic company information: size and industry classification.
• Make sure your segmentation model classifies customers into segments of similar businesses—so the science drives the strategy. A business database can help compare customer files to a known universe to calculate market penetration by size and industry segment.
• Use data on existing business customers to score profit potential, prioritize acquisition, retention and cross-selling initiatives.
• Measure the effectiveness of segmentation-based sales and marketing programs using metrics like quarter-over-quarter sales, cost to convert prospects into customers and direct mail response rates. Then fine-tune marketing based on these metrics.

Just as innovative applications drove the acceptance of segmentation systems in consumer marketing, successful B2B programs will lead more marketers to explore how information products can help them gain an edge in an increasingly competitive world. The data is out there, and your business customers are waiting.

Read the full white paper report B2B Segmentation Solutions on Nielsen.com.