r } ' _ .3 {' 3’ MARKETING kgwca ‘ . ;- ' ”mm ;19 soon 911MHz; 11mins: +5; beam M. A;- MmHI‘GAN :SIATE'ggOLLEGE‘ Harry Gene 863:an * 51951 ' ‘ This is to certify that the thesis entitled Marks t ing Res earch Appl 1 ed to Food Chains presented by Harry G. Be ckner has been accepted towards fulfillment of the requirements for FLA. degree in Enema 1 Business Curriculum in Food Distribution // Major hroiessor Date W/ 0-169 MARKETING RESEARCH APPLIED TO FOOD CHAINS 3y Harry Gene Beckner A THESIS Submitted to the School of Graduate Studies of Michigan State College of Agriculture and Applied Science In Partial Fulfillment of the Requirements for the Degree of MASTER OF ARTS Department of General Business Cm‘riculum in Food Distribution 1951 THESS c/>7/6’/ s /“”‘/* ACKIG onsmnm: T5 The author of this thesis deeply appreciates the wholehearted effort " made by everyone contacted to assist in every way possible by presenting their views on the subject and materials ccnsidered as possibly useful in carrying out this study of marketing research and the food chains. The chains contacted, American Stores, Kroger, Hart‘s Food Stores, Iilati onal Tea Company, and Safeway Stores, have responded graciously with their methods and thinking on the subject. The newspapers and research agencies contacted, the Chicago Tribune, the Chicago Herald-American, The Milwaukee Journal, A. C. Nielsen and Company, Industrial Surveys Incorporated and J. TWalter Thompson Company have responded with equal cordiality to the requests for information on their services and its applicability to the food chains. The professors I have discussed the many problems with have been equally interested in helping to solve my difficulties and point out various ideas that had to be considered in the study. I am particularly indebted to the executives of my sponsor chain, Jewel Food Stores, for their free discussion of the subject and the problems involved. The information they made available to me helped immensely in carrying on the study, and giving a practical slant to the picture. East Lansing, Michigan Harry Gene Beckner May . 1951 213.5747! 7'3 TABLE OF CONTENTS CHAPTER I. INTRODUGTION . . . . Purpose . . . . Importance of the Study Definition of Marketing Research Chapter Organization . . Belg-ted Smdies O O O 0 O O O O O O O O O O O 0 Method of Procedure and Sources of II. NEED AND EXECUTIVE APPRAISAL Need . . . . . . Appraisal . . . . Summary . . . . III. USE BY FOOD CHAINS . American Stores . Hart's Food Stores Jewel Food Stores The Kroger Company Company The National Tea Conpany Safeway Stores, Incorporated . . . . swam . C O O O O I O o o o o 0 IV. NEWSPAPERS AID TO FOOD CHAINS Your Retail Link - Chicago Tribune's 19148 Retail 0 O O O O O O O O O O O O 0 Census Covers 0 O O O O O O O O O O O O O O 0 O O 0 O O O . Me mOd O O O I Additionalinformation................ PAC-E \DkJ'lle tutu 1s 20 22 22 23 2h 25 26 28 29 3o 30 3o 31 111 CHAPTER PAGE Food store census . . . . . . . . . . . . . . . . . . . 32 Questionnaire . . . . . . . . . . . . . . . . . . . . . 32 Typical card . . . . . . . . . . . . . . . . . . . . . 33 Use . . . . . . . . . . . . . . . . . . . . . . . . . 33 Sales Operating in the Chicago Market - Herald-American . 33 Covers . . . . . . . . . . . . . . . . . . . . . . . . 33 Method........................ 31’. Economic breakdown by sales divisions . . . . . . . . . 35 Plan of data . . . . . . . . . . . . . . . . . . . . . 35 Use . . . . . . . . . . . . . . . . . . . . . . . . . 36 The Milwaukee Journal Consumer Analysis . . . . . . . . . 36 “ethod . . . . . . . . . . . . . . . ...... . . . 37 Marketdata M1 Food products . . . . . . . . ......... . . . . he The Chicago Tribune Consumer Panel . . . . . . . . . . . CC V. MARKETING RESEARCH AGENCIES AM) GOVERNMENT ASSISTANCE Avmmrorssrooncmms.............. 50 A. C. Nielsen - Marketing Research Agency . . . . . . . . 50 Food store selection . . . . . . . . . . . . . . . . . 52 Principles of store auditing . . . . . . . . . . . . . 53 Types of infonmation secured . . . . . . . . . . . . . 53 The Nielsen Year-end report of l9h9 retail food sales . 58 Summary . . . . . . . . . . . . . . . . . . . . . . . 59 Industrial Surveys Company . . . . . . . . . . . . . . . 60 The National Consumer Panel . . . . . ...... . . . 62 CHAPTER VI. CASE STUDIES OF FOOD CHAIN APPLICATION OF The National Retail Grocery Audit . . . . . . . Industrial Surveys Company Service . . . . . J. Walter Thompson Company . . . . . . . . . . Omar Smrces O O O - O O O O O O O O O O O O O The Federal Government . . . . . . . . . . . Consumer Shopping Habits . . . . . . . . . . . Metlmd .............. Theresultsofthesurvey.......... Conclusions.............. Store Location Through Marketing Research . . MEET DEG General 0 O O O O O O O O O O O O O O 00000 I O O 0 Explanation of forms and sources of information Location investigation grown) . . . . . . . . . Real estate committee . . . . . . . . . . . Steps taken in acquiring a location . . . . . . Extent to Which Consumers Use Store Directories Questionnaire used . . . . . . . . . . See Yourself - Through the Eyes of a Housewife The American Stores Experiment . . . . . . . . Method Results.................. Sm 8” O O O O O O O O O O O O O O O O O O O O 101 101 102 103 CHAPTER PAGE VII. CONCLIBIW O O C O O O O O O O O O O O O O O O O O O O O O 105 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . llO TABLE II, III, IV, VI. VII, VIII, IX, LIST OF TABLES Distance to Store . . . . . . . . . . . . . Percent and Number of Buyers of Waszaper . Consumer Preference and Dealer Distribution Brands . . . . . . . . . . . . of Leading Type of Retail Outlet for Food.Greup . . . . . Comparison of Reasons of Purchases . . . . Distance Traveled.Per Food.Group . . . . Methods of Travel . . . . . . . . . . . . Frequency of Consumer Shopping . . . . . . Friday and Saturday Shopping . . . . . . . PAGE M2 1+3 78 79 so 31 82 83 LIST OF FIGURES FIGURE PAGE 1. Descriptive outline . . . . . . . . . . . . . . . . . . . . . 35 2. Typical consumer report page . . . . . . . . . . . . . . . . N8 3. Food stare selection . . . . . . . . . . . . . . . . . . . . 52 h. Principles of Nielsen Index auditing . . . . . . . . . . . . 53 5. Complete list of data secured (Nielsen Food Index) . . . . . 5D CHAPTER I INTRODIDTIGN Purpose The purpose of this thesis, Harketing Research Applied to Rood Chains, is to study the need for such research by chain food stores, develop a statement of the general principles of evaluation as a yardstick for man- agement, show the extent of present usage and application, and indicate some of the existing aid inch can supplement the diein's activities. This is done in an attenpt to point up some of the weaknesses, which make the distribution function less efficient, so that they might be corrected. thus giving economic Justification to the functions performed. Inportance of the Study As the history of the food chain is reviewed, one cannot help but see the striking fact that they have cmtinually, througi the tremendous competition they have faced, cut their margins and reduced greatly the relative cost of food to the consumer. The continuing tendency of an ever increasing pressure from the consumer and from fine manufacturer for fur- flier reductions in this margin toward the irreducible minimum can also be sent. The average gross margin at present runs from 15 percent to 17 per- cent, and there are predictions that the future holds a reduction to around 12 percent. “any will say this is impossible, but that is not true. There are still many inefficiencies and many mistakes being made by the food chains. Then how will they be able to reduce their margin, which now only allows them 1 to 2 percent net profit, still further? This can be done only through a better understanding of heir problems, weaknesses, and he markets they serve. This can be gained only by an intelligent combina- tion of marks ting research, production research, (a study of inefficien- cies of operation) and managerial Judgment. Without effective coordina— tion of these any company attenpting to remain in competition will not succeed. This scans to be like the ideal of free enterprise and free competi- tion hat has been advocated for so long in the United States, where the consumer is the final Judge of he value of an enterprise. This picture is very true. It is living proof that the American system can and does work. Having seen the importance and necessity of solving the problun confronting the chains, the work done on this thesis is directed toward a realisation of that goal. Definition of Harketing Research The term marketing research has been used to cover a multitude of sins and almost as many different meanings as there are readers, so a statement of marketing research as used in the study is in order. - Marketing and distribution research is the use of scientific method in the solution of marketing or distribution problems.1 Research is diligent and protracted investigation or inquiry. It is ‘ thorough, honest and impartial study conducted by trained men using 1 Lyndon Brown, M at End Distribution Research, New York: The Ronald Press Company, 19%, p. 5. 3 scientific methods. Market research is research directed to the solution of marketing problems. Herket research ascertains if there is a demand for such a product. Market research determines what the consumers want.2 Finally, it is described in a very simple statement by Charles F. Kettering: "Research is nothing but looking forward to see in which direction industry may or may not go. It is an insurance policy, "3 Chapter Organization The following chapter organization was made in order to cover the information used in the thesis most adequately: Chapter 11, Need and Executive Appraisal Chapter III, Use by Food Chains Chapter IV, Newspapers Aid to Food Chains Chapter V, Marketing Research Agencies and Government Assistance Available to the Food Chains Chapter VI, Case Study of Food Chain Application Chapter VII, Conclusion Related Studies At the present time another thesis, "Uses of Marketing Research by the Food Industry”, is being submitted by another Food Distribution stu- dent covering an extensive case study of marketing research undertaken by 2 P. Converse and H. Huegy, The Elements 9;; Marketing, New YOI‘A': Prentice-Hall, Inc. ’ 19%, P. 6220 3 Charles 3‘. Kettering, Why Research is Essential, New York: Printers' Ink, 178387, January 7, 1939. 1,; food chainsf‘ The two theses should supplement each other and when con- sidered together should give a realistic picture of marketing research and the food chains at the present time. Method of Procedure and Sources of Data In carrying out this study the method of procecmre used was to attempt to discover some of the problems confronting food chains and how thq can be approached through marketing research. This was done by gene- ral reading on the subject and discussions with food chain executives and professors closely connected with marketing research. The next step, after thus developing a broad outline, was to gather further information from other chains on their methods hrough a letter- questionnaire. Since an attempt was made to discover outside aid avail- able to the chains, contact through another letter-questionnaire, was made with various newspapers and marketing research agencies. Survey information carried in the Jewel Food Stores files also was analyzed. This was supplemented with a study of textbook material in marketing research and periodical articles pertaining to the subject. The material was then organized and worked into the previously pre- smted chapter breakdown in order to presmt in a logical fashion the work contributed toward a solution of the chain's problem - a better understanding of he market it is serving. E Rugem S, “sham, ll'J-‘he Uses of Marketing Research by the Food Industry," (Unpublished Master's Thesis. Michigan State College, last Lansing, 1951). CHAPTER II NEED AND EXECUTIVE APPRAISAL Reed The grocery business has undergone a tremendous change in the last twenty years and the last six years of unbelievable advancement has served to sharply focus the attention of everyone who is in contact with a grocery store on this change. The grocery business has typically been one in which anyone with a few thousand dollars could rent a store, purchase some stock and be a grocer. “any people did Just hat and it is still possible today. But many of these "grocers" did not finish out the year, and only a very mall minority were in business at the end of five. The chains were confronted with similar problems, and during the last twenty years, these problems have multiplied many fold. During this period, due primarily to the depression dmand for lower prices, the automobile's success in expansion of the. trading area, chain store taxes and he advances in packaging - the chain grocery store has shown a continuous trend toward increased size. With this increased size the problems of store location increased preportionately. To remain successful these problems must be solved correctly. When it costs approximately $100,000 to $250,000 to open a new unit, besides the opportunity value of that money, an executive can- not afford to be wrong very often. A chain's merchandisers are continually confrmted with problems on product selection for new items and the necessity of discontinuing items because of limited space and money. They cannot afford to pass up a good item or discontinue an item that he consumer desires even though it might sell slowly. It all boils down to the fact that success depends upon pleasing the consumer. This can be done only by finding out what she wants from the sign on the front to the container he puts in her refrigerator. Marketing research helps to find these answers. At this point many people will disagree. They will say that good management can answer these questions, or they can be solved by a trial and error method. However, this trial and error method may prove quite expensive. These people do have a significant point. A good executive does have his finger on the pulse of buying Anerica, but he must have facts to keep it there. Marketing research employs a good deal of the trial and error method, although on a mall, representative scale not Just as a hit and miss proposition as implied in the above. Let us take a look at a yardsteck developed by A. 0. Nielsen and Company measuring the accuracy of executive decisions.5 About twenty years ago they discovered that executives in the great manufacturing organizations are not always right in the decisions they make on diffi- cult marketing questions. They made a study of this and developed a batting average, which showed that executives were rigt about 58 percent of the time. At first thought one might say you could do Just as well with a coin, however. there are three or four possible answers to these questions which means in all probability one would be right only about 25 or 30 percent of the time. By raising that to 58 percent, the execu- tives are undoubtedly earning their salaries. But what about the other l+2 percent? 5 A. C. Nielsen, Grocery Store Marketing - 1959: An address to the National Association of Retail Grocers, p. 5 7 When this is applied to food chain executives the figure might not be the same, but one cannot deny the fact that the ratio is probably quite similar. The problems they face are similar and they are not gifted fortune tellers any more than manufacturing executives. If they are wrong 142 percent of the time, the executive along cannot be depended upon to 1:qu the business running as efficiently as it must. His work and knowledge must be supplemented. His Judgement must be aided. 1t is not Just a desire; it is a necessity. He must be given the facts and marketing research is the only thing known so far that can give him these facts. The solution is to use research more effectively and more efficiently. The abode now in use must be refined and improved. Above all, the exe- cutive must understand it, must be able to appraise and evaluate it, and must learn how to use it. He must see that it is essential to him in re- taining his position and it is essential to his company in retaining its position. There has been, and still is, a good deal of executive skepticism about the validity and value of marketing research. This has not been without reason and many of them are good. What has caused this? First of all, much of the research done has been poor research, unworthy of the definition given to it. It has led to false conclusions. and this alone would make any executive skeptical. Secondly, research is costly. Its value is not always apparent. With capital scarce and a dozen other areas crying for this same money, why should it be used for something not tangible, something of doubtful value? After all, the present must be taken care of before the futm'e can be reached. Thirdly, many of these executives came in contact with marketing research when the methods were poorly developed.and.it left a bad taste in their mouths. The methods are new greatly improved. However, the problem of proving this to the executive is still present. Fourthly, mush good.research has been undertaken but not completed because of lack of time. Harketing research, when done properly, takes time and cannot be rushed through. Problems must be anticipated and then research.must be given time to solve them. This cannot always be done, but it must be realised.and.planned.for whenever possible. A fifth reason has been improperly defining the problem. A study is made answering the question, but then it is found to be of very little use because it was the wrong question. This can only be solved.by'man- agement, itself. A day or two of study and analysis, before Jumping into something will save much of this wasted effort and make research much more valuable. Finally, a good deal of the skepticism is Just plain preJudice. This is the worst of all. It stems from a certain hardeheadedness of managanent that must be destroyed before it destroys management. It is merely an idea that, "Well, we did it thisway ten years ago when I was working there; what is wrong with doing it that way now?" But, what was correct yesterday is not necessarily correct today. The world changes very rapidly and so do peoples' habits and desires. Executives tend to lose touch with the stores' problems and with the consumers' wants as they are promoted. This is only natural. Everyone must come to under- stand.this completely - that marketing research.is not Just a one-time Job to answer all questions, but it must continue to keep up with the 9 changes. The research man may not know how to be a grocery man, but he can surely tell a lot about the consumer that this grocery man must please to stay in business. A rather dark picture of the scene has been painted and the rest of the thesis will be spent in touching it up with a few highlights which will tend to brighten it a good deal. App rai 8 a1 As a first step let us look at a quote by Lingan A. Warren, President of Safeway Stores: 6 “Because of the importance of knowing what the maJority of consumers want , the large-scale operators have adopted scientific methods of controlled testing and consumer preference surveys as a common busi- ness routine. This is particularly true of chain store operators, who can easily use a small group of stores as the proving grounds for new prodmts or methods. Such a means of testing greatly reduces the expense of introducing new ideas.“ The progressive chains all realize its value but all of them are not doing‘as good a Job of research as they could or as they should. It may be possible to clarify the situation causirg this a bit, and through a better understanding of marketing research and through the development of a few guideposts, facilitate the needed improvement. have been developed discussing this. A restatement of most of the perti- nent points of one should give a good idea of its value.7 6 Paul Sayres, MW. New York: MoGraw-Hill Company, 1950, Chap. 2, "Mass “arketing Arrives", p. 18. 7 P, 00379?“ and H. 311633. The. Main 911W. New York: Prentice-Hall, Inc., 1940, pp, 623—14, 10 1. Calculation of market potentials, or potential demands for various products. 2. Sales analysis. This may show trend of sales of various pro- ducts and may be used as a basis of purchasing, setting sales budgets, setting salesmen's territories, determining where warehouses should be located, and so on. It may show where sales are made and the importance of various types of buyers. 3. Ascertaining sales of various products by a particular company, or by various companies: and the stocks in the hands of wholesalers, retailers, or consumers. These data are especially important in checking changes in consumer sales following changes in prices, advertising, special campaigns or deals. ’ )4. Forecasting movements of business and prices. 5. Forecasting sales and setting sales and production budgets. This can be done on the basis of information obtained by the types of research listed above. 6. Analysis of distribution costs. A research department can de- termine the costs and profits of selling to individual customers, to var- ious types of customers, of selling different products, of selling in various territories, of sales made by various salesmen, and of orders of various sizes. on the basis of this information, a seller may revise his prices, discontinue certain products, stop soliciting certain customers, or instruct his salesmen to concentrate on certain types of customers. 7. Determining selling prices. Data may be secured on distribution costs, elasticity of demand and consumer reactions. Proper pricing may 11 involve experimental research during which various prices are tried under different conditions. 8. Ascertaining the use of a good by consumers. This may be done by interviews, censuses, questionnaires, and pantry surveys. 9. Ascertaining buying motives. This may be done by interviews, questionnaires, observation and experiment. Consumer reactions (psy- chology) may be used as the basis of advertising and selling appeals. 10; Determining boundaries of wholesale and retail trading areas or territories and tracing movements of trade. 11. Determining effectiveness of sales efforts. This may be done by consumer questionnaires, observations, and experiment. Observers may be sent with salesmen to record consumer reactions and salesmen's time. Different advertisements or sales appeals can be made in different cities or different stores and records kept of sales. 12. Product analysis to determine the consumer reactions to products and to suggest changes in them. This is fairly simple with foods, where the Jury technique may be used. With other products, interviews and questionnaires may be used. 13. Operating techniques such as methods of stocking, accounting, warehousing, or delivery. Time and motion studies may be involved. 11$. Collection and analysis of data on credit , finances, and mor- tality of business concerns. -—-.—-——-_—* stated some of the uses of marketing research, the methods by which this 8 Lyndon Brown, ligrioeting and Distribution Research, New York: The Ronald Press, 1919, Chap. 15, pp. 295-35h. 12 information is obtained should also be clearly understood. The fundamental methods of marketing and distribution research are the survey method, observational method, and the experimental method. Illustrations have already been described where each method is used in the previous section. The food chains use each method with the survey being the most popular. The observational method is used extensively in studying shelf position and shelf frontage arrangements for maximum sales.9 It also 18 used to a large extent in studying new items through a group of test stores, where sales figures are closely observed. The experimental method has not been used on a scale with the other two, although innovations have been tested on an experimental basis in new stores. Primarily, it consists of product testing in the food indus- try with the consumer and in kitchen testing laboratories in the chains. May. In the survey method data are gathered by asking questions. This is some times called the questionnaire technique. The essential ele- ment in the survey method is that data are furnished by an individual in a conscious effort to answer a question. There are many types of surveys - factual, opinion, interpretative - each delving progressively deeper into what the consumer does. To do this scientifically a thorough understanding of psychology must be com- bined with the prOper marketing research methods. This type of market- ing research is not completely developed. When depth questioning be- comes more effective many of the present problems of getting only the surface answers or the most obvious answers will be avoided and the core of consumer thinking can be reached. , 9 Dipman. 0.. R. Mteller and R. Head. deli-isnwe Lead. M. New York: The Progressive Grocer, 1916, p. 267-72. 13 The panel technique, which.is described in greater detail later on, is also a.form of survey research. Its maJor'benefit is a continuous record of the behavior of individuals comprising the panel, making changes more easily observed. There are disadvantages of drop outs, an unrepre- sentative group as time goes on, inaccurate reporting and high.expense. There are many limitations to the survey method of research. Howe ever, it is the best available for many'puuposes at present; therefore it must be controlled to make it as scientific as possible. Four specific practices will aid in this. They are: (1) careful phrasing of questions. (2) Careful control of data gathered. (3) Cautious interpretation.~ Cu) Restricting the method to obtaining rela- tive facts. W The observational method relies upon direct obser— vation of physical phenomena in gathering data. The observational method of marketing research is similar to the newer psycholOgical approach which studies psychological problems from the physical and me- chanical points of view, observing only event behavior’and drawing con- clusions from the actions or responses which are observed. Its major weakness is that it still does not get at the basic buying motives and other psychological factors which.will be the greatest help to the chain. However, it is more obJective and accurate than the survey. W The experimental method is essentially the same as in all sciences. It is holding constant or controlling of all variables except the one whose effect is being measured. It is still largely in the pioneering stages of its development in marketing research. It should be a valuable tool to the solution of many problems when research perb sonnel in food chains learn to use it effectively. 1’4 l'inally, L191 gag _t_.,h_e_ gggecutive evaluajg garke tigg research? ‘There is nothing that can replace an executive's thorough understanding of marketing research procedure and the many areas where it can fail to meet the standards required to be significant research. Many food chain executives have not had the opportunity to study marketing research in any great detail. It would probably be well worth the while of any exe- cutive connected with a chain to undertake some independent study of marbeting research either through a textbook on the subject or through a night school course, if available, to him. The time spent in deve10ping an understanding of marketing research would be paid for many times by the increased efficiency in preparing studies, properly defining problems and in detecting false research before it causes a costly error. This is the ideal, but only a hope, which cannot be reached for many years. lluch has been written on the subject in periodicals. A review of a few of these may bring out a few salient facts which as a minimum should be understood by all executives. Four trends in research are becoming more irxrpor’c.. (_ * E 7 ME A? A S S . o ' 8 new»! 2 1 E c u 9.95,; mama bowed L- U D an. i “fill. (an; (afljafiefl IUCOM e Fig. 3. Food store selection 53 W. The retailer is not expected to keep the records other than merely saving‘every invoice of purchases made be- tween the inventory periods. "Blank" Brand Baking Powder in John Doe's Food Store For December - January, 1939 Pmcmsss: NO. or ORDERS mamas Kai-.43. From manufacturer 1 214 $ 7.00 From wholesalers 10 62 .1349. Total $26.10 INVENTORY : January 1 11h pkgS. March 1 m Change .2}. CONSUMER SALES: Packages L91 Price, per pkg. $ .141 Dollars, Total STORE PROMOI'I ON: Window display Inside advertising Inside goods display Local advertising, by store Special price sale At what price? NNN 3*! la Jig L x L39. Fig. 1%. Principles of Nielsen Index auditing 'Eypes of information secured. The basic data gathered through the use of the previous form is analyzed to reveal twelve types of information. Since all Nielsen Index data are punched on tabulating cards, special breakdowns are readily obtained (e.g. , sales in stores that display goods 5‘4 versus sales in other stores). These special breakdowns frequently fur- nish the solutions to the most perplexing marketing problems. Note that all work is repeated every two months, so that trends are determined on all types of information. Continuity and accuracy are the primary features of this We of research. 1. Sales to Consumers 7. Trices (Wholesale do Retail) 2. Purchases by Retailers 8. Retail Gross Profit 3. Retail Inventories 9. Direct vs. Wholesale Purchases ’4. Stock - Tom 10. Average Order Size 5. Distribution 11. Dealer Push (displays, spec. adv. . etc.) 6. Percent Git-of-Stockfi Total Sales - All commodities Broken own By: 1 ‘rE‘alrooaes can: Junta: ‘ r-f Wm r"———l W 9A¢Ku€ “xxx“ ' Hum: [ “'6‘ l I "N ova loan: ‘—H was 4' 5mm. '— ‘ z ‘ ‘ma vPPE‘ on an .__....... ——l ‘5 3 ' M Mus a ‘r—w -—-—-‘ 1___.1, g 4 9;? "£900” : n... [moon f 5. mot ‘ —-'——i Mutt? : ‘ em- 06mm 6 In” 4 ’n" was ‘—‘ _ _‘ 53.0w 7 _._y __l._. J '— sewn. 9 (son 0 WE‘ '5'“ [0,009 6" f 9 ma L—» _. ‘_ 4 ~— 4—- ' I 1'13. 5. Complete list of data secured (Nielsen Food Index) 55 Manufacturers use Nielsen Index data in the following primary ways: I 1. To distribute avertising and merchandising effort correctly among various territories, city sizes, store sizes, seasons, and consumer income levels. 2. To separate the profitable from the unprofitable; e.g., (a) copy appeals, (b) quantities of advertising, (0) types of media, (d) deals, combinations, premiums, and so forth, (e) displays, et cetera, (f) radio prOgrams. 3. To detect marketing weaknesses and to reveal the result of every effort to correct them. M. To provide advance warnings of sales declines, competitive in- roads, need.for a change in product, package, et cetera. 5. To reveal the causes of sales declines and.to point toward the remedies.- 6. To detect gains or losses in dealer goodswill. 7. To determine the most profitable price levels. 8. To pre-determine the results of proposed.promotional expendi- tures. This is done by testing in certain cities or areas. 9. To reduce the risk of marketing new products. Since many of the large chains do a good deal of manufacturing and‘ since they almost all carry private label merdhandise, the Nielsen Index will be valuable to the chain in the same ways it is to the manufacturer, besides being able to give valuable infbrmation on competitive standing in many areas and on many products. The A. C. Nielsen Company has over 2,000 full-time employees. There are well over 100 field men continually working on the store audits for the Fooernmg division. 56 The method of securing consumer data from each retail outlet consists l. Obtaining an inventory record of the items being studied. This covers only a few commodity lines and not complete inventories of all merchandise handled by the store. 2. Obtaining a record of quantities received by the store during the 60-day interval between calls, for the commodities included in our studies. By knowing the inventory change and the quantities of merchandise received between calls, sales to consumers can readily be determined. 3. Cbtainim a record of total store dollar sales for the 60-day period. These figures are projected and merged with volumes from other stores to determine the dollar volume for the entire market. At the time of each call and for each store used, a 331$.50 cash pay- ment is made. The only work to be done by the retailer is the retaining of the record of his purchases, preferably the invoices. This nominal payment is quite insignificant to the larger organizations who are more attracted by periodiCal reports on re tail trends. - In a pamphlet describing the company and its work to a chain organi- zation the following qualifications were included under permissible uses of the index and disclosure safeguards: "Obviously, for permission to use a few of your stores as a part of the Nielsen Food Index, you would expect, and justly so, to receive valuable marketing information. However, there must, of course, be a clear understanding as to the uses of data made by either party. "For your protection against disclosures which might prove harmful we would expect to agree in writing 'to never divulge records, facts, or figures to any party or parties except as a part of an anonymous group report'. It is recognized that this wor‘dage or any other might be subject to question if there were any possibility of intent to side-step the thought of nondivulgence. However, we believe our past 57 record of dealing with chain organizations, many of whom have been with us since the inception of our business, furnishes a more posi- tive proof of our intent in this respect than any contractual stipu- lation we might now evolve. "As further protection against the possibility of divulgence or the eventual request for divulgence, we stipulate in our client contracts that the Nielsen information of any type 'is not to be furnished separately for any indivimial store or chain organization but is to be supplied only as specified, the figures for each group (chain or independent outlets) being projected figures designed to reflect the approximate volume of all retail stores”. "In this same connection we must, of course, point out now that we could never report to you any detail of any kind secured from any other single chain organi zation. This would not deny comparisons of any kind you desired against the total chain record in any large area or nationally, but it might prevent in some instances furnishing all of the detail that you might like. We recognize that our position in this matter may sound arbitrary, but we have no alternative but to respect confidences to exactly the same degree as bankers, lawyers, or public accountants." ' The Food-Drug Index which has been discussed is only one of the many Nielsen Index Services. At the present time the company has the following Index service: A. Nielsen Drug Index B. Nielsen Department Store Index C. Nielsen Food Index D. Nielsen Radio Index E. Nielsen British Food and.Drug Index F. Nielsen Canadian Food.and Drug.1ndex C. Nielsen Syndicate Store Index ‘ B. Nielsen Australian Food and Drug Index I. Nielsen Pharaceutical Index J. Nielsen Variety Index K, Nielsen Consumer Index L. Nielsen Television Index With the development of radio and television advertising by the food chains the Nielsen Radio-Television Index will become an important tool in measuring the success of advertising through such media. The company is attempting to find answers to such questi one as: What happens to radio listening, in a typical American home, when a tele- 58 vision receiver is installed? Through its many electronic devices devised and used in measuring radio listening besides those now in use on tele- vision, the advertiser should.have a.good.picture of the most effective way of advertising through a combination of this media. Another of the more significant pieces of information put out by the Nielsen Company as an assistance to members of the food industry, particue larly helpful to the food chains, are the bi-monthly reports on food trends issued six times a year. Once a year it contains the Nielsen Year-End Report of Retail Food Sales with a review of the past decade ending with that year. This is usually completed.and ready for publication around the middle of March. This includes a general economic review and some factors that influenced.the food business for'that year. The Nielsen YearbEnd Report of 1939_Retail Food Sales. The report is made in two sections. The first is: Q We p_f_ Food Store Sales in the United States It first indicates the general trends such.as population, population changes by areas, growth in individual income, consumer income changes by area, per capita income, diaposition of individual income and division of retail sales. ‘ Next, it indicates the annual food store sales trends, by territory, per capita.and compared to disposable income. Food store efficiency, grocery sales by type of service and advertising by types and city size are also included. Finally, a comparison of sales trends of chains and independents by territories and city sizes. Thus, there is a compilation of much valuable data in a compact report indicating general trends making a rapid comparison possible of a 59 single chain's data with these over-all figures for the busy chain execu- tive. A rapid pinpointing of failure to meet the average or less favorable increases compared to last year thus indicating a need for additional attention. Sales increases looked at as sufficient when viewed on a com- parative basis indicating a less favorable increase. Naturally compari- sons are limited because of the large area covered by the figures, but it still gives a good over-all picture. The second section is the bi-monthly: {13391-1 91 Retail Food Store Sales Trends for December - Januagz, 13139-2 These reports, as previously stated, are made six times a year. They cover such things as sales trends by territories on the two-month basis conpared to last year and the last two-month reporting period. This is broken down by territories, by size of store, by chains and independents and meat sales as a percent of total sales of the store. Then the analysis continues with chain food store sales trends, by territories, and by city size. With this report one can see part of the final use made of the data collected in the store audit 3. This is mostly generalized material collected primarily from the sales volume reports but more specific infor- mation can be obtained and smaller areas covered with the limitations stated previously. Then besides this are the single commodity reports, which are handled primarily on a chart basis, e.g. , Sales Comparison of Frozen Orange Concentrate and Single Strength Orange Juice, with various significant breakdowns. m. The A. C. Nielsen Company primarily does work designed for the use of food manufacture rs in an effort to make their part of the market- 60 ing function more efficient. The food chains have cooperated readily with the caspany in giving their section of the picture. Much of this informa- tion though necessarily general, is adaptable to information needed and used by the food chains. This can be easily seen when we see the impres— sive list of chains throughout the country cooperating with Nielsen representatives in their bi-monthly store audits. A partial list includes American Stores, Colonial, Grand Union, Jewel, Krger, Nati onel, Loblaw and Stop and Shop. 0f the maj or chains, only [Safeway and A & P seem to be missing. As more and more use of television is made by the chains as a primary method of advertising, more of the Nielsen information will be used by the food chains. It will help them do a more efficient Job in serving the consumers. Industrial Surveys Company Another marketing research agency doing significant work in the food industry is the Industrial Surveys Company. Like A. C. Nielsen, Industrial Surveys work is desigied primarily for the manufacturers and packers of nationally distributed products. With regard to the larger food chains, insofar as many of them are packers and manufacturers in that they have their own private labels of certain products, the reports would have the same applications. Mr. Rome G. Arnold, Vice-President of the company states some further important uses made of the type of data developed by the company as: ”1. For many product classes as a whole, such as family four, coffee, margarine, and the like, we can report to a food chain the purchase rate or potential in the entire territory in which they do business. 61 "In this way they would be able to estimate whether or not they are doing an above or below average ,job in selling each of the chain‘s prochmts. Obviously, this enables them to spot weaknesses in pro— motional activities on certain prodm ts. "2. We could show what percent of his total business a consumer gives to the particular chain and what percent he gives to other chains or other independent stores in the area. This could be applied, of course, to individual products as well as total dollar volume (on only the products for which we get information. We do not attempt to get all of the food purchases of our participating families, omitting fresh vegetables, fresh meats, et cetera. ”3. 1 chain migit well be interested in brand positions of the maj or manufacturers and packers in the chain's territory to be able to analyze how the pattern of brand positions within the chain itself compares to the whole territory." This information on brands in regard to their relative position and their sales trends is invaluable. Chis is clearly seen when one considers the many difficult decisions that must be made by buyers and merchandising executives in adding new items, discontinuing others and in following brand shifts. They must have facts other than their own sales figures to make more intelligent decisions and the work done by Industrial Surveys can offer much of this necessary information. ”The limitations, of course, are in the number, size and distribution of the stores of the particular chain. Our sample size is not large enough to be valid for use by any other than the eight or ten largest food chains.” Even though there is this limitation, much of the information gathered by Industrial Surveys would still be valuable although not directly applicable to the maller chains. Industrial Surveys Conpany maintains two primary facilities which pro- vide continuous marketing infomation for manufacturers of food, drug and household products and their advertising agencies. 1. The National Consumer Panel - the source for facts about consu- mers and their purchases. 62 2. The National Retail Grocery Audit - the source for facts about food store distribution and inventories. W The National Consumer Panel is a repre- sentative national sample of 1t,200 families. These families are scienti- fically selected so that the Panel represents all segments of the total United States population. Every week each family submits a detailed record of all purchases covering a field of approximately 70 food, drug and household products. Information is reported in diary form by date of purchase, brand name, type or variety, size, volume, price and kind of outlet in which purchased. Families earn points, redeemable in quality merchandise, for submittingreports. A substantial majority of these families remain in the Panel year after year. This service provides a continuing analysis of the United States consumer market and supplies complete information on the trend and level of national product movement by type and brand. The national market is divided by geographic areas, (tailored to meet each client's needs), city size and types of retail outlets. F‘m‘ther correlation of purchases with family characteristics makes it possible to point out the differences of purchase volume and brand position within selected breakdowns, such as family size, economic class, children's age groups, occupation, age of housewife and others. The cmtinuing nature of the panel containing purchase information I secured from the same families, makes possible the study of consumer buying patterns over extended time periods. Such studies reveal the fundamental changes in brand strength as measured by repeat buying 63 together with the sources of customer gains and the eventual disposition of customer losses. Types of families accounting for the major portion of product pur- chases can be isolated and examined at the consumer level. Success or failure of new or improved products and revised promotional or sales methods can be evaluated as indicated by actual consumer performance. Manufacturers’ sales are dependent on reaction at the consumer level. To measure this reaction, National Consumer Panel reports are presented quickly - approximately three weeks after the end of each month. Weekly reports to meet specific situations are delivered within six days. Purchases made from all sources are included - food stores of every type and size, drug stores, house to house, mail order, et cetera. All brands and types of a product are covered. The service is complete and therefore flexible. Basic data. can be adopted to most immediately any new set of marketing conditions. kfifliQBflLfifiifingfiQfimu. The National Retail Grocery Audit is based on a national sample of 2,000 food stores. Probability sampling techniques, designed in cooperation with the Bureau of the Census, have produced the most accurate and representative continuing sample available today. Stores are entered by the Industrial Surveys field staff during the first week of February, May, August and 1il'ovember. Interviewers report two basic facts about the required list of items; Distribution - In or out of stock at time of audit Inventory -- Physical count of can or package volume Facts about store distribution and inventory are correlated with store location and classification. Reports may show distribution only, or both 61+ distribution and inventory. Requirements can be comprehensive to cover all types and sizes of numerous brands or restricted to cover only one brand, or one variety of all brands. Distribution and inventory are provided for the United States in total and geographic areas plus the New York, Chicago and Los Angeles markets separately. Additionally, breakdowns are provided for kind of business, city size groups, type of management and store dollar volume. Special information may also be secured regarding displays, shelf facings, pricing, or other store considerations. Reports on food store distribution and inventory are fast and flexible, built to supply maximum infomation about these basic retail conditions at a minimm cost to clients. Industrial Surveys ComLanLService. Implementing the factual reports, trained Client Service executives are assigned to each account in order to interpret Indus trial Surveys marketing data and assist in applying results to clients' operations. J. Walter Thompson Corpany The J. Walter Thompson Company works on the fundamental idea that saying and doing are two different things. They state: "The observance of this distinction is the “key to any objective study of the consumer. For, in the final analysis it is not what the consumer says about your product, but rather what he does about it, that counts." The J. Walter Thompson Company in an attempt to find out what he does about the product, conducts a continuous Consumer Purchase Panel of the daily buying habits of 5,000 representative families throughout the United States. 65 The panel is a statistically accurate cross section of all the people in.the United States. Purchases are recorded daily indicating Where they are made. The continuous purchase record is forwarded.monthly to the company for study and analysis. These records provide a continuous case history of the facts about each family's purchases. Buying habits can be checked against family characteristics. It has proved its reliability as an index of buying habits of the entire country. Again this is primarily designed as a tool for the manufacturer and is much too broad an analysis except for the top two or three food.chains whidh cover*large areas and thus could.use such a representative national study. . However, it does point up the work being done in attempting to learn more about the consumer, her likes and dislikes, and trends of this kind, which through such a study are rapidly brought into view. This work is valuable to even the smallest chain in making them more conscious of the dynamic market they are facing. Since information gathered.by the company is available only to clients, its usefulness is limited. It is.plain1y seen, that an expendi- ture for a study such.as this by a small chain, would.be much less beneficial than the many other outlets of marketing information that are available to the chains in their own areas which.can present much better and more pertinent information. 66 Other Sources This chapter previously has been investigating some of the specific marketing research agencies, some of the information they can make avail- able to food chains and assistance which they can offer. There are many other sources available to the food chain. Care must be exercised in selection of these sources because there is less of a demand for an honesty of purpose and more of a temptation for a twisting of statistical data to meet a special purpose. However, much of this data is useful and, if considered in the light of this caution, can be used to advantage. The information can be used to supplement data the company has - information that can be used as a basis for planning a specific study or research. This information forms the foundation and helps to narrow the problem, thus saving much of the expenseaf the initial work and blind research. Examples of some of the various studies might include: 1. What the public spends for food and other items sold in food stores - 191% versus 191%? and 1949 versus 19% md 1947 - Food Topics Research. 2. Consumer Shopping Habits - Department of Agricultural Economics - The Extension Service - University of Maryland. 3, Stop, Look and Buy - DuPont study of Food Buying Habits - 19% ’4. Family Shopping Pattern - Colliers Grocery Shopping Study - reports on various metropolitan areas (e.g. Kansas City, Boston) 5, Candy Manual for Food Markets - E. J. Brach & Sons 6. Magazine Sales in Super Markets 67 7. How to Merchandise and Operate for a Profit - Survey by Saturday Evening Post and Members of Super Market Institute - May 1949. 8. Survey of Food Buying Habits in three large cities - Armour and Conpany 9. Who Buys What Food in Super Markets - for McFadden Publications by A. S. Bennet Associates 10. Determination of Factors Influencing Brand Choice - W. F. Brown - Journal of Marketing This is only to name a few of the hundreds of sources of information that are continually bombarding the food chain executive. Troublesome, yes, but at times invaluable in answering some of the perplexing questions confronting him. It is easy to see that there is no lack of volume. The major problem is to determine which is siglificant and which is not. To find which can answer his questions and which cannot. This is a job in itself, but if it can be successfully accomplished, much valuable time and money can be saved and turned to more profitable use. The executive cannot hope to get all of his answers from this sort of material, but he can get a good many, or at least a starting point from which to direct some individual marketing research which can now go right to the core of the problem. Wmljgyemm There is no need to go into much detail about the information available from the Federal Government which would be of value to the food chains. Listings of them are easily obtainable at the district office of the Department of Commerce. Needless to say the government does have available much of the infor- mation which is needed for market analysis, although it may be too broad 68 for much of the work undertaken. However, it too, serves as a basis to start many analyses. The Population Census and the Census of Distribution plus the corollary data developed are used in many surveys and analyses to initiate the work and plan the sample. An example of some of the more refined and narrowed studies made by government agencies might be represented by the following study: I Food Consumption 9_f_ Urban 1Families i_n_ the United States - Spring, 195% United States Esparuneni 9_f_ griculture, Agricultural Research Administra- tion, Bureau o_f_ Human Nutrition and Home ngnomics. This study was further amplified into a series of commodity summaries based on the Food Consumption Surveys of 19148 and 1919, The series consis- ted of: 1. Meat Selection of City Families 2. Fats and Oils Consumed by City Families 3. Grain Products Consumed by City Families . Eggs and Poultry in City Diets 5. Sugars and Sweets in City Diets 6. Dairy Products in City Diets 7. Potatoes and Sweet Potatoes Consumed by City Families 8. Citrus Fruits Consumed by City Families 9, Fruit Selection by City Families 10. Vegetable Selection of City Families This gives one of the most complete pictures on consumer buying habits ever undertaken and represents work that no chain could afford to under- take, hit information through which they can all profit. This last state- ment in some measure describes an important part of the government's work. It is the food chain's job to find out what is available and then break it down and adapt it to its own purpose. Summmy In this chapter an attempt has been made to point out some of the other sources available to food chains in their quest for marketing 69 research data. Sources used to supplement existing research departments in the larger chains and to do much of the work for those chains that do not have a distinct research department were also pointed out. No matter what the size, all of the functions must still be performed. only the size and volume varies. The marketing research agencies discussed were primarily interested in the manufacturer, but much of the information is adaptable to the chain's needs. We may find in the future more of an effort made by the COIHPE‘JlleS to gain the business of some of the larger chains, who may prove to be some of the most valuable accounts if properly serviced with helpful and significant data. There are many other sources that continually bombard the chains with varied bits of information. All serve a purpose and offer many valuable facts when properly screened and catalogued. Finally, there is a mind of information available from government sources. The main problems encountered are, first, the acquaintance with the information available, and second, the application of the facts. Out of all of this one major thought seems to grow. That is: no matter how small the chain, one major job in research is present and is hardly avoidable. There is a need for one man to be responsible for the collection, cataloging and indexing of the information and sources of information available which will help solve marketing research problems. This is the first step in forming the department for many small chains which could be supplemented with outside agency assistance after they are able to clearly define the problems and know whether or not they have the 70 information at hand to answer their questions. is men, with the right background, could. develop plans for marketim research work to be carried. out by the individual departments for which he could. serve as an advisor. CHAPTER VI CASE STUDIES CF FOOD CHAIN APPLICATION OF LIATKE‘TIZTG RESEL‘LRCH In the previous chapters the need for marketing research, the methods of appraisal, the extent of use by several chains at present, and the var- ious sources of outside information have been covered. It is the purpose of this chapter to show by a case study how the chains have used the ideas developed and the sources of information available to solve various pro— blems that confront them. The first section is not an actual study made by a chain or actually used by a chain as such. It is merely an attempt to illustrate the possible uses of outside data, which have been discussed at length in this thesis, in the development of the thinking, of food chain executives. Most of the cases presented represent a specific study to solve a specific problem. The first section is used for the purpose of showing how a study of general ideas may be made and used to develop lines of thinking or reasoning by executives in an analysis of what the future may hold in store for the company. The company plans for the future must be analyzed and formulated to consider the repercussions of these expectations, if the executives believe the facts represent the true conditions. To serve the purpose of indicating the general use of marketing research studies this section on Consumer Shopping Habits has been included in this chapter on case study application. Consumer Shopping Habits The way to be successful in retailing is to give the customer what she wants, when she wants it and how she Wants it. This is a simple 72 statement which belies the complexity of the problem. Those merchants who do succeed in retailing are the ones that can go straight to the core of the con sumers' desires and then fulfill these desires to a large degree. The executives in the food industry are constantly considering the charac— teris tics of consumers and devising means of more adequately meeting their demands. The present techniques and facilities used in retailing food products are the result of countless experiments and much thought on the part of store: operators, signervisors, research agencies, and others interested in increasing the efficiency and effectiveness of food distribution. The wide variation in the characteristics of consumers makes it difficult to evaluate and describe their preferences, opinions and habits. A knowledge of these bwing habits should be of considerable assistance to the store operator by serving as a basis for the development of more effective merchandising practices. Much of the pragress in the development of merchandising techniques has come about through the thought, initiative, and experimentation of the retail store operator. However, many mistakes have been made and many false conceptions are still carried. Further advancement depends on a coordination of effort between the researcher, the line executive and store operator. The researcher must discover and establish the buying habits, methods and motives of the consumer. These ideas must be effectively transmitted to the store operator who can translate the ideas into effective and more efficien 1: me rchandi sing techniques. 73 This need has been seen by many and a volume of studies on consumer habits has been turned out. Some of these studies have been significant, while many are meaningless. However, they all serve a purpose. Research, in itself, cannot be applied in its pure state. By quoting the figures of a survey, that l$9.6 percent of the consumers, purchase meat from inde- pendent meat stores, we have merely germinated an idea. All that is known is that approximately half of the consumers purchase meat from inde- pendents. It carries little significance until the reasons for purchasing from independents are determined. Then, the chain's methods of selling must be revised in light of these facts. Finally, when all of the ideas on food retailing and what is most desired by consumers are marshalled into one complete picture, plans can be made to develop a successful series of merchandising techniques. These will be based more on what the consumer actually wants than on guesses of what she wants. Surveys must be taken, combined with field experimce and experimentation, and that adapted to the peculiar circumstances which con- front an individual chain. With this method the most effective merchan- dising techniques will be developed. A consumer shopping habits survey made by the extension service of. the University of Maryland, helps to illustrate the development of ideas and their effect on food store thinking.19 Questions such as: Why do consumers purchase food groups in a partic- ular store? Where do consumers shop for food groups? What is the distance l9 Shul?and Godwin, Consumer Shopping Habits, WBlnlgfijn m, University of Maryland, June, 1950. 71+ traveled.to purchase various types of foods? On what days do consumers shop for food? These questions continually are asked and continually are studied.to develop the best method of reaching the consumer. Realizing that such a.need existed, the extension service at the University of Maryland set out to find.the answers from the actual consumer. Eejhpd, Personal interviews were made with U5” consumers in Baltimore, Maryland, during August, l9h8, The survey was restricted to the middle income areas of Baltimore, which was developed from the 19h0 census indicav ting median bIOCK rental.payments ranging from $25.00 to $3M.OO per month. Baltimore contained 18 general areas containing a preponderance of such families. Interviews were obtained from approximately M5 households in 11 of these areas. The survey stated that: "Adequate and approved sampling procedure was followed in making a random selection of the households within each area. Consequently, the data.presented may be considered as representative of middle income families in Baltimore, and indicative of the characteristics of middle income consumers in other sections of the United States." Housewives were questioned to determine the basic reasons underlying their choice of a particular store as a place to purchase the family food supply. Information was also obtained on the shopping habits of the housewife and on the more important characteristics of the family. Considerable caution was taken to avoid rigid field classification of responses to opinion questions. While prepared forms were employed in conducting the interviews, enumerators made no attempt to classify answers which did not readily fit into groups indicated on these forms. Unusual or unanticipated responses to opinion questions were given special considp eration after the field.work had.been completed, and.were, therefore, classified.with greater uniformity than would.have been possible if such 75 classification had been completed at the time of the interview. Personnel from the Maryland College of Agriculture were used as enumerators. Ade- quate instruction on interviewing techniques was given them before the field work was undertaken, Maniaw 5 mm; 1.) 2149. 251221 IQ £111.91]. W $19.2 191'. m Baltimore house- wives indicated.a considerable inclination to patronize more than one retail store in the process of Obtaining the family food supply. Food groups were broken into, meats, fruits and vegetables, canned.foods, and dairy products. The housewives were asked to indicate the retail store in which they made most of their weekly purchases of meats, fruits and vegetables and canned foods. From the replies it was possible to determine the extent of the practice of purchasing from more than one retailer. Forty-ehght and two-tenths percent indicated they purchased all three food groups from one retailer. Nine and six-tenths percent purchased meats, fruits and vegetables from one retailer. Twenty and two-tenths percent purchased meats and canned goods from the same store. Fruits and vegetables and canned.goods were purchased.in the same store 6.6 percent of the time. Fifteen and four-tenths percent purchased each group from a dif- ferent retailer. These data indicate clearly the importance of good.merchandising prac- tices on the part of the retailer in all departments of his store. The fact that half of the consumers purchased.groups of foods from two or more retailers emphasizes the importance of balance between departments within a store. 76 It is apparent that there are limits to which outstanding merchandis- ing in one department can.be used.to build.up total store volume. Special sales or special features in one department may increase store traffic, but it would appear that there is likely to be a larger increase in traffic than in total store sales. 2.) WWWMWMWW The reasons why consumers choose one store over another should be of consider- able value to retailers who feel that they are not meeting competition. The housewives were asked.to indicate the underlying reason behind their decision to purchase each group of foods from the retailer they patronized rather than from others in the same locality. a. Meet purchases A.tabulation of the reasons why consumers preferred a specific store in meat purchases showed: (1) quality - 25.8 percent (14) personal - 13.1 percent (2) convenience - 21.8 percent (5) price - 12.2 percent (3) selection - 20.9 percent (6) other - 6.2 percent The assurance of fresh, well trimmed, ”high grade meats and the convenience of frequent purchases with little effort in obtain- ing grades, cuts, and types of meats desired seemed to relegate price to a role of relative unimportance in the selection of a retail meat seller. This seems to indicate a need for a realignment of merchandising programs, with a greater stress placed on quality and selection in advertising and merchandising programs. b. C. 77 Canned foods purchases The ranking of the reasons given were as follows: (1) convenience - 29.1 percent (1‘) quality - 12.9 percent (2) selection - 20.9 percent (5) personal - 12.0 percent (3) price - 20.1* percent (6) other - 1L7 percent The ability to melee frequent purchases with a minimum of travel and loss of time was considerably more important than the more directly economic factor of price. It also indicated the extent to which canned foods have gained the confidence of the consumer, showing that many customers automatically assume a. good quality of carmed products. Fruit and vegetable purchases In fruit and vegetable purchases: (1) convenience - 33.3 percent (1}) price - l3. 6 percent (2) quality - 23.6 percent (5) personal - 8.0 percent (3) selection - 16.5 percent (6) other - 5.0 percent The importance of convenience may be partially ascribed to the bulky and perishable nature of fruits and vegetables and the con sequent necessity for making purchases at frequent intervals during the week. Suimzery In reviewing the reasons for store selection we find convenience, quality and selection ranging far ahead of price. Convenience seems to be the major factor in most cases. Are the new, giant super markets lying in greatly separated areas possibly a step in the wrong direction? Has price been stressed too much in advertising? These are only a few of the questions brought to mind. 78 3.) fibers.cansnnezs.nnrshase.fond.ezenns TABLE IV TYPE OF RETAIL OUTLET FOR FOOD GROUP TFPG 0f Canned Fruits and Retailer Meats Foods Vegetables W Eben: 36.5 % 62.2 1‘3 32.8 33 Ind en endent 1&9, 5 35.} 28. 2 §pecialty Store 141.3 - 10.0 Meat Store 2.L — .. chkster - — 29.0 Other ____: 1 2. ====f— -—-— a- .— Total 100.1 5% 100,0 7:. 100.0 % To a large degree, the more extensive practice of purchasing meats from independents is indicative of the importance which consumers attach to convenience and personal aeguaintence in selecting a store in which to purchase these products. In noting the relative importance of hucksters in fruit and vegetable selections one must remember the survey was made in August, the best time for hucksters. The biggest opportunity for chain store sales expansion would. seem to be in meat and produce through a development of superior or at least equal quality and superior promotion of their values and selection when compared to the independent stores. 79 1+.) Why food groups are ppgchased from particular types 91; retailers. TABLE V COMPARISON OF REASONS OF PIECEASES fruits and Reason Meats Canned Goods Vegetables __ Indep en- - Tndepem Indep en- Chain dents Chain dents Cgagn dents My 19.3% 21.2% 10.153: 17.3% 18.52% 25.3?» convenience 20.7 211.2 22.2 39.3 23.2 30.1 Selection 22.3 20.3 25.5 13.6 22.3 11551 Pric e 211. 2 151 29. 0 5.0 26_L_6 h. 0 Pere @121 6.7 18. 8.2 _1L8. 2 3. 8 18. 8 Other 6.3 6. 9.. 3. L 6. 6 5-6 5.9 Total 100.0% 100.07% 100.05% 100.0% 100.0/’5 100.033 The fact that the important reasons given for purchasing groups of foods from independents, chains and other types of retail outlets dif- fered considerably points out the difficulties which the operators of each type of store must strive to overcome. In meats, chains are strong in selection and price and weak in what have been found to be the two most important fact0rs, convenience and (DJ-811W. Ihe weaknesses are obvious. What can be dme about it? The data presented indicates rather clearly that there are many rea- sons other than price mtering into the decision of the consumer to patronize a particular store for the purchase of all or part of her foods. It is interesting to observe that not only are other considerations of 80 importance, hit that consumers apparently recognize that their preferences for certain stores because of convenience, quality, selection or other reasons, is often at the sacrifice of price advantages which they may obtain by shopping elsewhere. It is apparent that the grocery man who wishes to expand his business should consider factors other than price in his program to improve merchandising practices. 5.) WWQWMnsmcimds. TABLE VI DISTANCE TRAVELED PER FOOD GROUP Dis tance veled anned ruits and F0 V 1.78 at For many types of promotional work and in planning store location, it is essential that the retailer have some idea of the area which he serves. It is interesting to note in this study that over half of the customers shopping for each food group live within a half-mile radius of the store. In meats over two-thirds of the customers live within one and one— half miles of the store. In canned goods three-fourths of the customers live within one and one-half miles. In produce it jumps to about four- fifths within a one and one-half mile radius of the store. 81 There is some tendency to travel shorter distances for canned foods than meats. There may be an exaggeration in the .5 of a mile group for produce due to the inclusion of huckster purchases, but it would probably be safe to say that it will lie somewhere between meats and canned goods or well over 50 percent. Again the question comes to mind, which will be most effective, the extremely large stores, spaced at great distances or the medium-sized stores located closer t0gether? 6.) Eg§n§_g£_transportation employed in_§hgppi§g, The next logical step is how do they get to the store? This may further clarify the optimum store size and it will surely help to develop an idea on whether a parking lot is necessary. TABIE VII METHODS OF MVEL Canned Fruits and _ Method Meats Goods Vegetallgg @mobue 143,9?5 146. 3% 11;. 6?? Walk gym 35.6 20.9 Public Conveyance 16.1 1§.5 13.1 Belivery 2.0 2.6 31.“ Total 100.0% 100.0% 100.07!» The excessively high percentage in delivery of fruits and vegetables is again distorted by the huckster. However, in every case it seems as if people drive to the store more than they walk even though the shoppirg radius in over 50 percent of the cases is less than one-half mile. 82 Is this a trend, possibly showing a future of greater distances for shopping? Surely, if this use of the automobile continues, a parking lot will become imperative and perhaps the large super ma, Ezet may be the store of the future. Convenience may no longer be the prime factor, with quality, selection and price becoming increasingly more important. 7.) Eranwmpz. Lith midi owners elm far. toad. was... This may add to the insight into what can be expected from the future by way of consumer habits. Should an attempt be made to channel the cus- tomer into the store several times weekly? This would smooth out the work load and make the medium size store the most efficient. or is the trend toward one-degr-a-wee}: shopping, by automobile, in large super food stores an irresistable force of the future? mm m: FREQUENCY or consume 330er ii.— of shopping Canned Fruits and T_rip§ per week Heats Goods Vegetables page 60.02% paint 63.5% Twice ago 30.5 gin Three A338 8% 12$ 1% 530111. or more 5.6 NJ 2.6 = Total 100. 0% 100.0% fig 100.0% These figures would seem to indicate that the trend has gone too far for any change from the once or twice a week shapping. The study indicates that over 80 percmt in all groups are already shopping only once or twice a week. But still the convenience factor ranks high in the consurer choice of stores. Why is this true when the maps only once or twice a week and 83 uses the car at least “0 percent of the time? Perhaps a look at wlw housewives shop on Friday and Saturday may throw more light on the subject. 8.) Reasons L132 housewives shOp g; Fridaz and Saturd_a1. TABLEIX FRIDAY AND SATURDAI SHCIPPIH} Percent of L Reason Housewives kid of Week 41:5; 8% linden 313.5 g: of! 3.6 Selection L9 Convenience 3L6 g-gier f 1&6 Total T 100.07% The term convenience covered numerous and rather varied circumstances, such as the availability of the family car on week ends, the fact that the husband was home to take care of the children or to go along and handle the packages, the fact that stores were open evenings after the housework had been completed. the convenience of Friday and Saturday in relation to housekeeping routines and other similar reasons. illness reasons and the habit developed seem to add up to a deep and swiftly flowing river whose course cannot be diverted. A continuance of this trend in the future can be expected. W The study has succeeded in its major purpose, that of developing an awareness of future problems. A rough idea has been devel- 3h oped.of the prevalence of certain consumer habits in shopping and.the germination of ideas as to changes necessary to tap most effectively the consumer market. However, the facts tend to develop a dilemma. The survey shows the trading area of a food store to be about one-half mile for over 50 percent of the customers. Convenience appears to be the main reason for store selection. This would seem to indicate medium sized stores rather closely spaced. While on the other hand, these same people use automObiles extensively and shop only once or twice a week, so why the great desire for convenience? ,A large super market located a good dis- tance away would fit these circumstances. .A solution to this dilemma is necessary to straighten out much of the thinking as to the future for a food.chain and those that answer it correctly will be the most successful. The purpose of analysing this data is to reach.conclusions which will lead to the fermulation.of plans. In.dcing this, the executive must look into and.qnastion various phases of the research to determine its applies? bility and.validity for the situation he faces. A.suggestion of a few of these points now may tend to add a.word of necessary caution in analyzing such data. First of all, can one consider the middle income family characteristics of Baltimore, assuming them to be typical thro1gh a correct research method, indicative of the character- istics of middle income consumers in other sections of the United States as the study states? With such a limited area and sample, such an accep— tance would be doubtful and.highly questionable. Secondly, the wording of the method followed.in completing the curb vey tends to suggest depth questioning, but this cannot be assumed. If this cannot be assumed, can the respondent to the survey be expected to 85 give her true feelings on all the questions, especially those concerning price? Is the housewife apt to place the true emphasis on price, which she actually feels, in answering questions in a perscnal interview survey? This, too, is open to question and considered highly doubtful by many. Thirdly, it has been seen how the season has affected some of the results especially in hurkster purchases thus creating a heavy bias which is not representative. This may add a bias to much of the other results. This, too, must be considered. There are many other points that may be subjected to this type of reasoning. This brings out one major point that must never be forgotten and that is: the applicability and true representation of conditions must be considered in any use of marketing research and must be established without a doubt before one can proceed to any definite conclusions. Store Location Through Harketing Research For an industry which operates on a one to two percent net profit margin, an investment of well over one hundred thousand dollars in a new store must prove successful. A company cannot afford to tie up valuable money in an unprofitable store with a five or ten-year lease on the poor location, especially when that money could have bem used in many other areas for an expansion of stores to meet competition. Errors of this kind can quickly destroy the competitive position of a company, which has taken many years to build. At one time many store locations were planned on single Judgement based on a haphazard collection of facts and sometimes on no facts at all. Stores were located on the intuitive belief that a store should be located 86 somewhere in this neighborhood. This was successful in many cases, while in many others a poor selection was made, deeming the store to failure before it even opened its doors. However, this is no longer the case. Competition and limited funds have caused more efficient management to develop methods of determining with a great degree of accuracy the best location for a food store. The tools used by food store executives may be classifi ed under a heading of marketing research. In most store locations a complete analysis of the market or trading area is made. Consumer surveys study the location of customers and whether they drive or walk. Sales analyses are made of similarly located stores determined by such factors as population density, income level and nation- ality. Expected sales for the new store are then estimated. Independmt analysis of the area is made by company executives and their ideas are collected on a questionnaire report. Finally, after the presentation of this factual data to a real estate committee, a decision as to desirability is made and plans put into operation. Then a. follow-up analysis is periodically used to check the group's decision and the expected progress of the store. This may be illustrated by the following plan used by Jewel Food Stores in store location through marketing research called, "Acquiring Locations." W, A review was mde of the entire Chicago Metropolitan shop- ping area, with respect to shopping points in this area - major, minor and neighborhood. In this respect the following areas were eliminated? one, 37 l - All areas now served by the conpany's stores 2 - All undesirable areas 3 - All areas which are too close to company stores at other nearby shopping points It - Heavily foreigi populated areas 5 - Extremely low income areas 6 - All sparsely populated areas 7 - All predominantly industrial areas 8 - All predominantly non-whi to areas The areas of/the remaining shopping points are then analyzed, one by as the need ariseS. Sometimes a suggestion is made that a location be planned in an area not selected by the above method. If the area has possibilities, the same procedure will be followed in analyzing the area by assembling the infor- mati on necessary. In some cases the site may be offered in an area not selected on the above basis but which may have some possibilities. In this case, also, an analysis of the area will be made. In an analysis of an area, the following information is gathered: 1 - Business block 2 - Trading area boundaries 3 - Housing - Trading area population (numbers of people, income level, nationality, et cetera.) 5 - Total estimated food business 6 - Competition and size 7 - Transportation This information is obtained through the use of various forms, along with a detailed emblanation. Decisions concerning locations are made by the real estate committee, based on the information available and the recommendation of the location investigating group. Elanation of forms and soug:ces of information. 1. Store Location - Ana Information. An explanation of the headings 88 on this form and the sources of information are listed below: a. Business Block. It is necessary to consider whether it is a major, minor or neighborhood shopping point. Major shopping centers, i.e. , the Loop, Sixty-third and Halsted, are not generally good grocery locations, because food is usually purchased more on the basis of conven- ience to customers' homes. Major shopping centers pull people from a much greater distance, but it is generally for non-food merchandise. Some of the best food store locations are in minor or in the neighborhood shopping centers in Chicago. In the suburbs, however, a central location is generally desirable. Sources 9; Information ”Sales Operating in the Chicago MarketLHerald American uYour Retail Link” - Chicago Tribune Personal knowledge and current investigation _ b. Trading area boundaries. Generally speaking, experimce indicates that customers arepulled from up to a one-half mile radius of the stores. Coupany surveys indicate that the following percentage of customers come from the following distances: 63 percent - three block radius of the store 87 percent - four block radius of the store 13 percent - outside of the four block radius of store Normally, insofar as city stores are concerned, a four block radius of the shopping point is the trading area. Natural barriers or artificial barriers such as; rivers, railroads and wide, heavily traveled streets, may tend to shut off people from the other side of these barriers. Such barriers must be considered and their probable effect on where people shap. 89 In suburban locations, the trading area boundaries are generally con- sidered to be the suburban limits, plus that area within a reasonable dis- tance of the suburb. The above is in reference to suburbs of from approximately 5,000 to 20,000 people. Large suburbs, from 25,000 to 50,000 or more people, must receive different consideration, since it will require more the: one store to service the area properly. Sources gf_ Information Various maps available “Sales Operating in the Chicago Market" - Herald American ”Your Retail Link” - Chicago Tribune Personal Investigation c. Housing. The type of housing - one family, two family, or apartment areas - gives valuable infomation as to the density of the pop- ulation and the size of the families. A visual survey of housing, with consideration given to the type and age of the structure, is indicative of the income level of the people. Areas which consist of predominantly new houses, built since the war, may not be as good a source of business as older sections, since many of the owners of new houses have substantially high monthly mortgage payments to mains. In most cases, this payment is higher than rent would be in older sections or mortgage payments in older sections where houses may be largely or completely paid up. These new housing areas also represent a possible fast declining sales volume in bad times when owners will cut down on food purchases in order to continue to meet their mortgage payments. Future growth possibilities of areas must also be considered. Generally, it should be known whether the area is fully developed, or not. Is there room for future growth? Is it a stable area or is it a declining area? 9O ism of. Informaiinn Census Tract Information Chicago Land Use Survey Chicago-Tribune Business Survey Herald-nAmerican Maps Visual survey of area Building Reports - suburbs only 6.. Trading area population. The density of pepulation in Chicago varies from 50,000 to 5,000 in a one-half mile radius of a given point. The average size family is 3.6 persons. A study made of sales in Jewel stores indicates that a trading area population of under 15,000 may result in a sales volume too low to support a unit of the size which the company operates. They are, therefore, very careful about approving areas with a population below this figure. Suburban areas and locations are generally considered on the basis of a slightly smaller trading area pepulation. The trading area is generally considered to be the suburb itself, plus the population outside the suburbs which is likely to trade in the suburb. (1) Income level. In Chicago this is determined from cen- sus tract information and from newspaper and market information sources as well as visual surveys of the area. The income level gives a clue as to the volume of business possible. One source of information indicates the following: Above average income level families (above $5,000) spend $23.19 per week for food. Average income level families (3,000 - ’4,999) spend $20.00 per week for food. Below average income level families (below $3,000) spend $13.81 per week for food. (2) Nationality. This can generally be determined from the census tract information or from newspaper market information but is 91 also determined by personal knowledge of the areas and on the spot Surveys. Moss. 21. Infometinu 191m census tracts Bell Savings Reports 1910 Population Map (Chicago Regional Planning Board) Maioofu New Residential Construction by Neighborhood l9 - 19 ”6 (Chicago Plan Commission) Population Density Map (made by Jewel field surveys) Chicago Tribune Economic Status maps "Your Retail Link“ - Chicago Tribune Chicago Tribune Business Survey Book Chicago Land Use survey a. Total estimated food business of area. By estimating the percentage of families in the various income levels, it is possible to estimate the total food business of the population in this trading area. Formula: (1) Population times percent of population in three income groups = population in income groups. (2) Population in income group times dollars spent per week for food a total dollars spent per week for group. (3) Add total of the three groups. f. Competition and size. This is limited to major competitors and is a guide as to whether the area is adequately or inadequately ser- viced by existing food stores. We of. Information Herald-American Sales Division Maps Visual Surveys g. Nearest Jewel store. This is simply to see if a store at this shepping point would tffect the sales of any other Jewel store which 92 is at a nearby shopping point. h. Transportation. This is not too important except that a transfer corner may result in additional business and also that peOple who come to the street for transportation may find it convenient to shop for food on their way home. 1. Other 50—foot Jewels in similar areas. Since the standard store is a 53-foot store, by selecting other 50-foot stores with compar- able population type, density and income level, a total of the other stores' sales and populations can be made so as to arrive at a sales per 1,000 papulation figure. This figure can be applied to the population figure of the proposed area as a means of estimating the possible sales volume. This method is proving itself quite accurate. Experience has shown that the company can predict the new stores' sales within 5 percent from the comparison with similar areas. 2. Outline Trading Area Map. This outline represents a one-half mile radius of the shopping point (four blocks in each direction). Added to this outline are any artificial or natural barriers, indications of business streets, location of competition, and population in each quarter section. This helps in getting a complete picture of the area. 3. Store Location Site Information. This is for the purpose of supplying the location investigating group with all the information in connection with the available site or sites for a given area. This information assists them in forming an opinion as to the desirability of the site. Sometimes a sketch or plot of the street is supplied to clarify any particular points. In locations where a variance from the standard 93 store would be necessary, a sketch of the preposed store and parking lot, if any, is prepared to show the possible use of the available property. it. Location Questionnaire. This form is self-explanatory. It simply provides a convenient way for the location investigating group to express its views, which are than consolidated for discussion and decision by the real estate committee. 5. Present Store Facts. The information presented to the location investigating group on this sheet is necessary to males a decision and recmnmendation in connection with the relocating of a store. WW 1. Composition and Function. This group consists of the gmeral manager, the operating manager, superintendent of stores in the area and the district manager of the stores in the district, as well as the head of the real estate division. 2. Area Investigation. This group is sent the completed "Area Information" sheets and the questionnaire for their investigation and appraisal and report of the area. In the case of a relocation, the ”Present Store Fact" sheet is included. 3. Site Investigation. When an area has been approved and a possible site or sites are available, this information is sent to the group with the questionnaire for their investigation and appraisal of the site. B. Area and Site Investigation. In some cases, the site may be approved but a considerable time may have elapsed before a si te is avail- able. In this case, the area information would again be sent to the group, along with the information as to the available site. on the other hand, at there are times when the site may become available in an area which has not yet been investigated. In this case, also, the area information sheet, the site information sheet and, in the case of a relocation, the present store fact sheet will all be sent out at the same time. An outline map, showing the trading area, is included and other infor- mation in certain cases, such as: a photostat of a customer survey showing where fire customers come from. Egg] Estate nggijm 1. Composition and function. This committee is composed of the general manager, Operating manager, staff manager and the real estate divi- sion head. We group meets weekly and reviews the questionnaires received from the location investigating group and decides, in the following order: a. Area. Do we want a store in this area? How much business can we expect? b. Site preference. Where are preferred sites or site? Is a parking lot necessary? What size of store is required? c. Site available. If a specific site has been investigated: Is it acceptable, as to location, size of store and parking lot, if any? a. Lease and term. If a specific offer has been made for an approved site, is it acceptable as to the size of the store and parking lot, if anyI Is it acceptable as to term and rental? The decision at each step, as listed above, determines the subsequent action by the real estate division or later presentation for decision on the following steps . 95 WW. 1. Send area information sheet and trading area outline map to location investigation group for individual and independent investigation, appraisal and report, using the questionnaire fans which is supplied. 2. Consolidate the questionnaires received from the location invest- igation group and submit to the real estate canmittee at its regular weekly meeting. This group will decide whether or not to approve the area for a Jewel Food Store. 3. Upon approval by the real estate committee of the area, a request is made of the company real estate broker to check the sites preferred in the area which will give the size of the store desired and parking lot, if desired. The broker thin advises the company on what sites are available where the rental and the term will be within the limits set. R. Submit on the site information form the available sites in.the approved area to the location investigation group for their independent and individual investigation and appraisal. The location questionnaire form is used.for the purpose of reporting this information to the real estate division. A.plot or sketch may be included, if necessary to clarify the site. 5. Consolidate location questionnaire reports and.submit to the real estate committee for consideration, selection or rejection of location site available in the approved area. If accepted as a location, the committee will then consider the term, and the rental offered.and accept, reject or approve a counter offer. In any case where the layout of the store or parking lot varies from 96 company standard, a store and parking layout will be made for the real estate committee's consideration in reaching a decision. 6. Advise the real estate broker of the decision and action wanted and follow up until the deal is either closed or they are sure that a decision is not possible. 7. Relocations. The same procedure in the case of a relocation is followed, and when supplying the location investigation group with infor- mation as to the area and the available site, they are also supplied with information as to the present store results, using the "Present Store Fact" sheet. There is, at present, a tentative decision to relocate cer- tain stores which are too small and which cannot be enlarged or are not properly located. These stores are selected at a real estate review annually when all leases are reviewed. An analysis of customer location is employed in a store relocation. This is done through a consumer survey on Friday and Saturday and/or a review of the check cashing cards. The customer's home is plotted on a map. From analyzing this map the relocation can be planned more accurately. Extent to Which Consumers Use Store Directories‘2O A research service is studying the feasibility of using product directories in A Food Company stores. They have asked the company's own research department to find out, as background information: 1. How much trouble their own customers now have in locating pro ducts in the ir store 8. 20 Actual study made by a chain's research department, but reference to that chain and competition is not made specifically in compliance with a request by the submitting company. 97 2. To what extent directories are actually used in stores which have them. During December and January the company made six hundred home inter- views in the following areas: Area 1 Vicinity of X store in town M. This store has both well and cart directories . Area 2 Vicinity of Y market in town N. This store has a wall directory only. Area 3 Vicinity of 2 store in town 0. This store has cart director- ies, only. In each area they talked with one hundred women who shop regularly at A company, and another one hundred who shop regularly at the competitor's store. WM 1. When you first started.shopping at , did you have any trouble in finding where items you wanted were stocked, or was it easy to find things? (Broken down by A's customers and three competitors) 2. Have you had any trouble recently in locating things at 7 (Again broken down by A's customers and three competitors) 3, Do you remember what things you were not able to find at A store? (Broken down by items stocked and not stocked) 14. What do you usually do at when you cannot find some- thing right away? (Broken down by A's, X, Y, and Z stores) 5. As far as you are concerned, are the section signs above the tables and shelves helpful or not helpful? (broken down by A's customers and three conpetitors) 98 6. What about the store directory on the shopping carts (or mounted on the wall)? As far as you are concerned, is this directory helpful or not helpful? (Broken down by customers of X, Y and X,Z) 7, Do you use this directory to help find something you want, or do you use it as a sort of shopping reminder list? (Asked of women who said cart directories were helpful) m This is the summary made of the information gathered by this study of the information after tabulation and interpretation by the department. In A's present stores, at least, there would seem to be little need of a store directory. 1. Only two percent of A's customers reported recent difficulty in finding things carried in the store. 2. .Not even all of these would have been helped by a directory, because the items they could not locate were primarily specialties which would not be listed in a directory. of the nine items mentioned, only five were shown on any of the competitors' directories examined and none was found on more than two. 3. The proportion of customers claiming that A's present section signs are helpful in finding things was larger than the proportion of competitors' customers who said that directories are helpful. Even new customers apparently have no particular difficulty in find- ing things at A. The percentage who said they had trouble when they first shopped at A in their neighborhood was the same as the number who reported recent difficulty. some of the former, of course, had previously shopped at other A stores and were already familiar with the general stocking plan. 99 There is more argument for store directories in large sized stores. Nearly one out of five customers of the three large competitors said they had difficulty finding things when they first shopped there, while only three percent have had trouble recently. Of those who said it was easy to find things at these stores even at first, roughly a third said the store directories helped them to get used to where things were located. Interestingly enough, however, when customers (of both A and other stores) cannot immsdiately find something they want, their first tendency is to ask a clerk or simply to hunt around until they find it, rather than to refer to printed signs. As to the relative advantages of wall and shopping cart directories, it would appear that the latter is more useful as far as shoppers are concerned. Only two percent .referred to a wall directory against five percent who mentioned cart directories. Similarly, in answer to another question, 65 percent of the customers of stores using cart directories said they were "helpful“. While in stores with wall directories, the figure was only l+0 percent. (These latter percentages are not too impor- tant in themselves because there is a tendency to give an affirmative answer to a question of this type, but the relative size of the two figures is of interest.) About one out of five women who shop in stores with cart directories say they sometimes use them as shopping reminder lists as well as aids in locating things. See Yourself - Through the Eyes of a Housewife This is an unusual study conducted by the Safeway Stores that helps to point out the varied types of problems in which marketing research can help to supply the answer. 100 This study, made by the Safeway research subsidiary, Oxford.Bushness Surveys, is presented.in the form of a report to Safeway employees on the vital subject of the housewife's eye-view of the courtesy customers receive in Safeway Stores. It is an attempt to picture for the employee, through.examples, what impression a housewife gets from employee contact in the store. To gather information for this study typical housewives were ques- tioned.in 177 Safeway Stores in four cities. In their shopping they came in contact with employees in all sections of the store. As they did this, they noted what happened and.how it made them feel. They reported to the company what it was that made them think that an employee was courteous, impersonal, or discourteous. The purpose of the report was to help the personnel to perform their JObs more successfully. They were urged to apply what they learned.from it in their dealhngs with customers in their own stores. To get the whole picture. it was broken down into five sections: 1. Volunteering help to customers - the housewives reported.what happened when they acted as though they needed help and were near an employee working in the grocery or*produce section. 2. Handling customers' requests for help - In all stores visited, each housewife asked an employee to adst her in locating the brown rice. She observed.how he answered her question. 3. Courtesy in the meat section - Each housewife made a.purchase in the meat section. She also asked the meat cutter for cooking instructions on a roast that she pointed to in the meat case. 101 ’4. Courtesy at the check stand - The housewives felt that it was important that checkers recognize them as individual customers and display some friendliness toward them. 5. Answering questions on policy - The housewives asked a question about company policy in each store visited. Each housewife requested the telephone number of the store so that she could phone in her order and have her husband pick it up. This is against company policy and it was necessary for store employees to refuse the request. In each case a classification into cmrteous, impersonal, and dis- courteous was made and a tabulation and relative comparison was presented to the empl'yees, with examples of housewives' actual reports. The American Stores Emeriment After the compulsory packaging in glass containers during the war and then the rapid reconversion to tin cans, the merchandisers were left with many questions on the use of glass in packing. What was its effect on sales? that about its impulse value? Did customers actually want the increased visibility? To answer some of the questions the Owens-Illinois Glass Company com- bined with the American Stores of Philadelphia to test the salability of glass containers. They set out to answer the biggest question all, what would happen to total department sales? Would glass sales merely cut into tin sales? M An experimental technique of re search was used. They made every attempt to hold conditions cmstant so that a true relationship could be determined. 102 In every possible instance, identical brands were stocked in both glass and tin. Where this was not possible the handicap of the less pop- ular brand was assigned to the glass pack. Specialty packs were passed up, in favor of volume items - peas, beans and beets. Twelve stores were paired into six tests. Each pair consisted of stores as nearly identical as possible in respect to volume and type of trade. Special display treatments were ruled out. Merchandise was made available from shelf stock only. Price differentials between the glassed and canned items were figured realistically against actual comparative costs to American Stores. Especially important was a check made on the movement of the same processed food items in brands and. packages not under test. This would indicate whether the test result was actually an increase or decrease, or whether one marketing period was merely better than another. For four weeks, one store in each of the six pairs offered the test items only in tin. The opposite store in each pair utilized the same amount of shelf space but allocated one-third to one—half that space to glass, with prices shown. To double-check whatever results were secured, a second phase of the test was established at the end of the four weeks. While the sales figures continued to be recorded for the six stores carry- ing both glass and tin, glass was added to the stores not previously stocking it. Emilia, Peas - 3 cent premium to same brand of merchandise. Wax beans - 2 cent premium for a less popular brand than the tin pack. Green beans - 2 cent premium on a less popular brand for the glass. 103 Sliced beets - 1 cent premium on the same brand. Whole beets - 2 cent premium for the first four weeks, 3 cent in the second four. Same brand merchandise. In every instance, glass added extra volume and resulted in substan- tial glass sales. Glass sales were: Peas - 32 percent, Wax beans - 35 percent, green beans - 38 percent, whole beets - ’43 percent, and sliced beets - 51 percent. The key fact of the emeriment is that with the same, identical amount of space allocated to tin and glass, rather than to tin alone, the result is the sale of more merchandise. Summary After having viewed several examples of research used by various food chains it is easily seen that there are many techniques of marketing re- search. The problem is the adaptation of the type of research and method used to the circumstances. The survey-questionnai re method, the observa- tional, the controlled-observational or experimental method have been repre- sented. An example of the application of a combination of methods to a broad continuous problem, thus establishing a plan for scientifically solving a continuously arising problem has also been shown. Research techniques have been applied to the general and. to the specific. Finally, the development and use of critical techniques has been made. The food chains are doing a great deal in the way of research but there is still room for much improvement, and elimination of poor research. Marketing research can do a great deal for the industry but it again must be pointed out that in all cases the applicability and true repre- sentation of actual day-in, day-out conditions must be considered in any 10h use of marketing research. This must be established.withcut a doubt before one can.proceed to any definite conclusions. This is a difficult thing to do, but if one does not make sure of the applicability, any failure to give the answer should not be blamed on marketing research it- self, but rather on faulty application of the techniques. CHAPTER VII CONCLUSION The purpose of this thesis has been to contribute to the general study of the food industry, through the study of the application of mar- keting research to the food chains as an essential tool of management. To achieve this purpose, various phases of the picture have been viewed in an attempt to get a clear analysis of the situation. The major points considered in obtaining the understanding have been: (1) The establish- ment of the need of marketing research. (2) Briefly developing a picture of how it can be used and briefly setting down the basic methods and techniques that can be used. (3) Establishing some general principles of evaluation as a yardstick of practical use by management. (‘4) Showing the extent of present usage in some of our larger chains. (5) Describing some of the existing aid which can supplement chain activities. (6) And, finally, using a. case study of actual applications to solve business pro- blems. Along the way, an attempt has been made to underline some of the major faults and pitfalls of marketing research which must be avoided to make research valuable in its prime purpose of developing facts to help answer managenents' questions. The conclusions must be drawn from an analysis of the major ideas presented, thus indicating the necessity of a brief review of these ideas and the conclusions drawn from them. 1. The need for marketing research is quite evident. Executives are not endowed with powers of crystal-balling the future. They must have facts to make decisions and marketing research is a basic tool for the 106 interpreting these facts. Marketing is a relatively new field and market- ing research even newer. The economy has been a production economy for years, and only recently has the need of a market developed. Thus, the need for marketing research has been of a recent nature, so obviously the methods are far from completely developed. Management has developed in many cases a great deal of skepticism for various reasons which must not be overlooked. However, the need is still present and only marketing re- search can adequately fulfill it. 2. There are enumerable uses for marketing research from deveIOping the market potential to the determination of selling price. In other words, it can help in almost every distribution problem. Its methods and techniques are varied. It is almost impossible to set down any rules for using a certain technique or method to solve a certain type of problem. Each method from survey to experimental has its merits and its disadvan_ tages. Therefore, the technique must be developed for the most effeciemt way of obtaining the answer for each individual problem, not in a fitting of the problem into a method. In other words effective marketing research requires flexibility, ingenuity and above all, open-mindedness. 3. Management must be able to understand the methods used and realize their inadequacies. They must have a knowledge of the basic fundamentals of research and be able to decide whether the research being used is truly adequate to give them the answers or facts they need. Management must be able to define their problems and be able to pin point what they need to know before they attempt to make a research study to solve a specific problem. of course, much research, of great value, is undertaken with no definite problem in mind, but merely to get a general picture. Management 107 must keep alert to the many changes occuring in the field of marketing research which are continuing to develop its potentials. This is basically an educational process for management which is essential in maintaining an enlightened management in this highly competitive grocery field. Management must be able to evaluate research intelligently and deter— mine its applicability and true representation of conditions before draw- ing definite conclusions. This management perOgative must never be abdi- cated, but it must be earned. With every right goes an equally important responsibility. h. It is impossible to develop the best way of handling marketing research as a general rule applicable and.useable by all food chains. This is seen when a consideration is made of the various methods of handling research now used. They vary from complete decentralization to a.complete centralization of all research.problems under a subsidiary company. Each company knows its problems and has its own ideas on how'best to solve them. In the future, through a trial and error method, a relationship between size and departmentalization may develop to obtain the most effective way of handling market research, but at present this cannot be determined. At present all that can be stated is that a great deal of research is being done, some of it good and.some bad. There are almost as many points of view on techniques of handling research as there are companies. 5. One thing can be said, though, and that is no matter what the size of the company it still faces similar problems which must be solved. The smaller company is limited in the funds and personnel it can delegate to marketing research problems, but that does not remove the problem. They must rely more heavily on outside assistance of newspapers, research 108 agencies, government agencies and the many other sources available to them. There is a great deal of valuable information continually pouring into the chain's office, but it needs screening and cata10ging, otherwise its value may never be known. This screening is the foundation of a re- search department and must be done by every chain. The need for caution is paramount in this job and essential to effective work. There is a great temptation for a twisting of statistical data in this type of mater- ial. This must be anticipated and used to avoid good-looking, but basically unsound interpretations or research. Again its applicability and true representation of conditions must be known before it is considered significant and useable. Another observation that should be made. is that much of the large agencies' work has, up to this time, been primarily for manufacturers and only useable by the largest chains (up to the top ten) because of its broadness. It may well be that this will change in the future as chains become more research-conscious and demand a great deal more research. They may possibly become some of the agencies' best customers. 'Bie agen- cies at present do not realize the potential in this field, but all indi- cations seem to point to an imminent awakening. 6. Finally, the many applications of marketing research and the many techniques used have been shown in the final chapter. The chains have used in many cases a great deal of understanding and ingenuity in getting at the answer to their problems. As marketing research matures and methods are improved and developed, its use can be expected to increase in the chains with the resultant increase in efficiency necessary to main- tain its position under the ever increasing competitive pressure they face from without and within. 109 The task is far from completed,'but it does have a good start. Much valuable information is gathered.which never reaches the proper channels to be of optimum value. In many consumer studies, this information should go to store managers and the district managers to really be effective in creating improvements. Marketing research has a job, too. It must prove its realiability to management. It must push out of its ivory tower and get down to the levels where it can really accomplish something. It has a selling job to do to everyone in the industry. The keynote of this selling must always be quality and accuracy. BIBLI UERAPHY 111 BIBLICERAPHY The AAGIILQQQ” Stores Milegtgne. Motion picture review. Owens-Illinois Glass Cmpany. he pp. ,Brandenburg, G. , Advertisers, Agencies Call Audits Top-Value Research. Warsaw 's e 82:5. May 7. 19119. Brown, Lyndon 0., Marketing and Distribution Researgg New York; The Ronald Press Company, 19149. 599 PP. The Chicago Tribune Consumer Panel, Standard Report, Grocery Commodities, July - August, 1950. 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