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Last month, my blog post focused on how Virtual Shopping technology evolved from its inception through today. In this installment, we'll discuss the many ways in which Virtual Shopping is currently being utilized. As you'll see, the uses and applications of virtual shopping are expanding as creative marketers and researchers alike look to leverage the considerable benefits of immersive virtual testing stimuli into a wide array of product innovation, portfolio optimization and shopper exploration initiatives.

Probably the single-biggest driver of growth in the Virtual Shopping arena over the past 15 years has been from retailers and manufacturers working together to improve the performance of individual FMCG categories. "Category Captains" are routinely tasked by retailers with developing strategies that will invigorate growth. Many of these manufacturers have turned to virtual shopping methods to help test a wide variety of category management strategies and tactics. FMCG manufacturers leading these efforts believe that the investment of virtual shopping-based category decision-making allows them to help guide retailers on proposed category changes, and positioning them as valued partners in ensuring incremental category growth. Their investments in virtual shopping also ensure that any changes recommended affect their own brands in a positive fashion.

Category Reinvention: While many FMCG manufacturers routinely test the effectiveness of alternative product and brand blockings in key grocery categories (i.e. cookies, frozen dinners, etc.), they are also increasingly expanding this critical application of virtual testing into broader category reinvention initiatives that seek to optimize entire category flow and sub-category adjacencies.

Recently, a leading FMCG manufacturer was interested in re-creating the ever confusing condiment aisle from scratch, incorporating shopping behaviors and preferences into new planograms for both Grocery and Mass channels. We leveraged a new, interactive virtual category creation exercise called "Build Your Own Aisle" that allowed shoppers to create their most-preferred aisle flow and sub-category adjacencies.

The results of this online quantitative exercise were used to create two new category configurations, which were subsequent testing via online virtual shopping along with other manufacturer- and retailer-driven aisle scenarios. Interestingly, the planograms that were derived from shopper-preferred adjacencies produced the greatest incremental reach, revenue and volume for both the client's brand and the category overall, prompting further in-store testing of these new 'shopper-preferred' category arrangements to validate the results prior to broader implementation.

Portfolio & Pricing Optimization Research: Global macro-economic trends over the past several years (including rising commodity prices) have prompted a rise in the use of virtual testing methods to test new portfolio, pricing and product size strategies. In the past, a manufacturer may have test-marketed various merchandising alternatives or size/price combinations of products and determined optimal merchandising after months of collecting sales data. Today, manufacturers are integrating virtual shopping techniques with Discrete Choice Modeling (DCM) for rapid testing of various price and size combinations. These methods produce powerful simulation models that allow manufacturers to predict how consumers will respond to changes in package size or price (or both), and how these portfolio changes affect reach, share, volume, profitability and product migration.

Packaging and Design Research: As packaging continues to play an important role in standing out on shelf in an increasingly cluttered retail environment, many manufacturers are embracing virtual testing to move beyond a "beauty contest" of design to actually quantify how new packaging, graphics, structure or the inclusion of other elements such as secondary and shelf / retail-ready packaging affect at-shelf shopper behavior. This is particularly true as more manufacturers are shifting to more cost effective packaging (such as pouches) to help offset rising raw material costs, or incorporating enhanced secondary packaging to help elevate on-shelf communications. When armed with virtual shopping data that shows the impact of changes on actual purchase behavior, companies are less likely to miss the mark when it comes to real-world execution. Our recently completed research on research shows that consumer eye movement closely mirrors our "virtual eye tracking as well.

Point-of-Sale (POS) and In-Store Marketing Research: Both manufacturers and retailers alike have adopted virtual shopping methods to understand what impact various signage, secondary displays, endcaps, and other in-store Point-of-Sale (POS) materials have on sales. In this context, virtual shopping technologies allow multiple creative executions to be tested virtually prior to deployment, providing an in-depth understanding of how various creative and communications tactics impact shopping and purchase behavior.

Disruptive Retailing Strategies: As manufactures look to non-traditional distribution and merchandising strategies to help increase incrementality (such as secondary merchandizing locations, vending and other scenarios), virtual testing methodologies are increasingly being employed to efficiently predict the performance of secondary distribution and merchandizing scenarios and also to assist in 'sell-in' presentations with retail partners. Armed with virtual testing data that quantifies the impact of these strategies, manufacturers are moving away from a 'test in-store and learn' mentality and are instead now targeting specific outlets (i.e. mall operators, retailers, Quick Service Restaurants, etc.) and providing them with fact-based evidence as to why distribution through their channel or secondary merchandizing locations makes sense.

New Product Category Placement: As new product innovation continues to grow, FMCG manufacturers are also using innovative virtual shopping applications to not only understand how a new product will perform on-shelf and where its source of volume may come from, but to also understand where in store a new product should be placed. This is particularly true for disruptive product innovations that have the potential to be shelved across a wide variety of categories. In these cases, manufacturers are employing hybrid virtual testing methods to both assess benefit alignment with other similar products and to quantify performance when placed within a variety of categories.

In-store Eye-Tracking: As in-store environments are becoming increasingly cluttered, both manufacturers and retailers alike are seeking more information on what catches shopper attention - from end cap displays and shelf violators to package designs and POS. While eye tracking techniques have traditionally been used to answer many of these questions, new alternative eye tracking methods have emerged in which research participants are shown virtual stimulus and asked to click on areas that pique their interest. While these methods are more cognitive in nature, they are often accompanied by interactive, online reporting tools that allow for diagnostic refinement of stimulus to maximize their effectiveness.

Virtual Shopping-based In-Home Usage Test (iHUT): Manufacturers have long embraced iHUTs to assess product performance and repeat purchase, and are now also beginning to 'book-end' these studies with virtual shopping exercises, so that the impact of the product's performance on reach, revenue and volume can be quantified. This new type of virtual shopping-based iHUT consists of an upfront virtual shopping exercise that is followed by an in-home product placement and evaluation based off of the products actually purchased in the virtual shopping exercise. Then, a subsequent virtual shopping exercise among the same consumers is conducted to quantify the impact of actual product usage on subsequent shopping and purchase behaviors, taking results far past traditional stated purchase intent. This unique longitudinal research plan provides a multitude of data for fact-based product and category decision-making for both manufacturers and retailers alike.

These are but a few of the many creative approaches manufacturers are taking to continue their thought leadership within their respective categories. In future blog postings, we'll focus on Broader Industry Adoption of Virtual Shopping technology and the role of other "reality" technologies under development.

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