Spreading The Wealth

William Atkinson, Contributing Editor

8/1/2005

When it comes to popular ConAgra table spreads like Fleishmann's, Blue Bonnet and Parkay, operating with tight margins are a constant challenge. As such, the company was set on obtaining clear visibility around effective pricing on the shelf from a promotion perspective. "In sum, we wanted to be able to spend our trade dollars more efficiently and effectively," says Greg Kerr, business development manager, ConAgra Foods.

ConAgra's dairy group evaluated technology tools from different vendors and ended up selecting web-based category management software solutions and sales planning tools from Sequoya. Before ConAgra adopted Sequoya, the company primarily relied on syndicated data. "We didn't like it, because unless we were willing to pay for additional analysis, it didn't provide a lot of information," says Kerr. For example, it did not provide the granularity of understanding in terms of what would happen with base pricing changes or incremental pricing changes. "As such, we ended up having to rely on a lot of gut feelings based on information we had from historical shipments."Overall, Kerr says the dairy group felt Sequoya tools were more robust as its applications can be used with syndicated, POS and internal company data. Kerr says that since his arrival in March 2005, he has become the resident "power user" of the group. He breaks down Sequoya's application offerings in the following:

PriceKey - A web-based pricing analytical tool that manages and analyzes all pricing effects and determines the impact of price changes on SKUs, brands and categories across stores, price zones and markets. It offers historical and predictive tools to help make better investment decisions.
ProKey - A category-driven promotion evaluation application, which determines the impact and level of promotional activity on the promoted brand.
InteractionKey - A graphic grid that identifies which brands within a category interact with each other. This helps determine which brands generate incremental volume to the category, and which brands are sourcing from other items within the category.

"As we use this more, it will help us understand what the interaction is between our table spreads and those offered by our competition, as well as compared to butter," says Kerr. "For example, when butter pricing is high, margarine spreads win. However, when butter pricing decreases, we tend to see some volume declines."

AlertKey - Provides automated alerts, complete with "drill down" pages and graphs of details of key issues in specific product categories. "I am starting to use AlertKey to develop reports for our sales teams," says Kerr. "This is an extremely powerful tool that gives the sales teams quick, at-a-glance information on what is happening at their accounts."
DriverKey - A category management analytical tool. AlertKey has the ability to perform most DriverKey functions."We plan to roll out AlertKey as a pilot program to the sales teams where it will have the most impact first," says Kerr. "Then, we hope to roll it out nationwide in time for FY2007."

Tools in Use
Kerr and his colleagues have been working with ConAgra sales teams in terms of changing promotion pricing on Fleishmann's, the company's premium table spread brand. Sequoya technology helps the salespeople understand what the company anticipates happening as a result of various pricing changes in terms of volume and dollar impact. "For example, when they see this information, it helps them understand that they will not lose volume, but that the retailer will be more profitable," says Kerr.

Sequoya also helps ConAgra identify the company's "star" retailers, so that they can understand these retailers better. "If we can find out how we are making each other successful in terms of doing shelf sets, and so on, then we will be able to find ways to translate this success to other retailers," says Kerr.

ConAgra's plan for Blue Bonnet in FY2006 is to increase its bottom line. By using Sequoya tools, Kerr says the company can change its promotion pricing on its three-pound business in a way that should add almost five million dollars to the bottom line. "We also plan to change our pricing strategy on our one-pound business, and expect that to increase our bottom line by another three to four million dollars."

Measuring Marketing Effectiveness
Sequoya technology is also helping ConAgra understand how effective its marketing tools are. For example, the company may find that they don't need to deploy POS in certain markets, because it isn't giving ConAgra much of a lift in those markets to begin with.