Market Basket Nov 02

1

November, 2002

Market Basket Analysis of Magazine Purchasers in the Grocery Channel

Management Science Associates, Inc.

GROCERY CHANNEL MARKET BASKET ANALYSIS

AGENDA

I. Study Methodology

II. Who is the Magazine Newsstand Purchaser?

III. What is the value of the Magazine Newsstand Purchaser to the Retailer?

IV. What is the Shopping Behavior of the MagazineNewsstand Purchaser?

V. What is the Value of the Magazine NewsstandPurchaser to the Publisher and Advertiser?

VI. What are the Opportunities?

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02

3


Analyzed blind loyalty card data for over one million households and over 285 million purchase transactions

Covered a full year of purchases, September ‘01 through August ‘02

Involved ten stores at each of two mid-sized, regional grocery chains

Cleansed data to eliminate:

Shopping trips resulting in a purchase of under five dollars Negative purchase values Cards that showed over thirty-five scans in a one-week period Cards that did not show at least one shopping occasion during

the last three quarters of the study period

Market Basket Study Methodology


4


Who is the MagazineNewsstand Purchaser?

5


Age

8%

21%

26%23%

13%

8%9% 10%

14%

21%24%

21%

0%

5%

10%

15%

20%

25%

30%

18 - 24 25 - 35 36 - 45 46 - 55 56 - 65 66 - 75

Per

cen

t o

f H

ou

seh

old

s

Magazine Purchasers Non-Magazine Purchasers

Note: Data provided by one chain

6


Education Level


5%

31% 30%

15%

20%

6%

34%

28%

14%18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Grade School HighSchool Some College 4-Yr College Post Graduate

Per

cen

t o

f H

ou

seh

old

s


7


Education Level by Category

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Auto Technology Tabloid

Per

cen

t o

f H

ou

seh

old

s

Jr HighHigh SchoolSome CollegeBachelors DegreeGraduate Degree

8


Income Level


6%

28%

33%

22%

11%9%

32% 31%

18%

10%

0%

5%

10%

15%

20%

25%

30%

35%

< $20,000 $20,000-$39,999

$40,000-$59,999

$60,000-$79,999

$80,000+

Per

cen

t o

f H

ou

seh

old

s


9


Household Size


20%22%

9%

3%1%

16%

35%

8%

3% 1%

31%

13%

19%19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

One Two Three Four Five Six Seven +

Per

cen

t o

f H

ou

seh

old

s


10


Household Size by Category

0%

5%

10%

15%

20%

25%

30%

35%

40%

Animals Kids/ Teens Tabloid

Per

cen

t o

f H

ou

seh

old

s

One Two Three Four Five Six +

11


What is the Value of the Newsstand Purchaser to the Retailer?

12


Significance of Magazine Purchasers

24%

58% 58%

76%

42% 42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

% of Shoppers % of Total RetailGrocery Dollars

% of Total GroceryItems Purchased


13


24

32

21

0

5

10

15

20

25

30

35

Total MagazinePurchasers

Non-MagazinePurchasers

Annual Shopping Weeks

14


$46

$67

$39

$0

$10

$20

$30

$40

$50

$60

$70

$80


Non-MagazinePurchasers

Average Dollars Spent Per Shopping Week

15


Average Number of Items PurchasedPer Shopping Week

20

29

17

0

5

10

15

20

25

30

35


Non-Magazine

Purchasers

Nu

mb

er

of

Ite

ms

16


Grocery Spending Definitions

17


Percent of Households by GrocerySpending Level

53%

37%

10%

23%

41%36%

0%

10%

20%

30%

40%

50%

60%

High GrocerySpending

Medium GrocerySpending

Low GrocerySpending

Magazine Purchasers

Non-Magazine Purchasers

18


What is the Shopping Behavior ofthe Magazine Newsstand Purchaser?

19


Percent of Shoppers Within Each Business Line that are Magazine Purchasers

57%54% 52%

45% 44% 42% 41% 41%38%

34% 34% 33% 31% 28%25%

0%

10%

20%

30%

40%

50%

60%

PHARMACY

VIDEO

PHOTO

FLORAL

GREETING C

ARDS

SEAFOOD

PREPARED FOODS

GENERAL MERCHANDIS

E

TOBACCODELI

HBC

BAKERY

MEAT

PRODUCE

GROCERY

24% of Total Grocery Store Shoppers Purchase Magazines

20


Coupon Usage Among Magazine Purchasers and Non-Magazine Purchasers

24%34%

140%

76%87%

66%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Total Households Total Coupon UsingHouseholds

Total Coupon UsingHouseholds (Indexed)


Note:Data provided by one chain

21


Percent of Magazine Titles vs. Percent of Magazine Dollars by Category

0%

5%

10%

15%

20%

25%

30%

35% % of Total Magazine Titles

% of Total Magazine Dollars

22


Average Yearly Magazine Spending By Purchase Frequency

$16.15

$5.35

$16.11

$25.82

$38.62

$55.13

$121.12

$0

$20

$40

$60

$80

$100

$120

$140

TOTAL 1 - 3 4 - 6 7 - 9 10 - 15 16 - 20 21+

Purchase Frequency

23


Percent of Households vs. Percent of Dollarsby Purchase Frequency

68%

14%

6% 5%2%

5%

23%

14%9%

13%7%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1-3 4 - 6 7 - 9 10 - 15 16 - 20 21+

Purchase Frequency

% of Households % of Magazine Dollars

24


Percent of Households by Purchase Frequency Within Each Magazine Category

HOME ENTER-

TOTAL WOMEN SPORTS BUSINESS KIDS COMPUTER TAINMEMT SCIENCE

MAGAZINES ANIMALS FAMILY AUTO FITNESS NEWS MISC TEENS ELECTRONICS FOOD MENS TRAVEL TECHNOLOGY TABLOIDS

TOTAL # 275,258 2,848 134,505 45,591 47,889 56,036 69,257 19,728 12,342 30,880 7,554 30,725 2,237 41,365

PURCH 1 - 3 68% 37% 54% 43% 48% 46% 47% 44% 43% 42% 45% 43% 36% 46%

PURCH 4 - 6 14% 18% 18% 18% 18% 19% 18% 19% 19% 18% 20% 18% 18% 17%

PURCH 7 - 9 6% 11% 9% 10% 10% 10% 10% 11% 11% 11% 10% 10% 11% 9%

PURCH 10 - 15 5% 11% 8% 11% 10% 10% 10% 11% 11% 11% 10% 11% 12% 9%

PURCH 16 - 20 2% 6% 3% 5% 4% 4% 4% 5% 5% 5% 5% 5% 6% 4%

PURCH 21+ 5% 17% 7% 13% 10% 11% 11% 11% 12% 13% 11% 14% 16% 14%

25


HOME ENTER-



TOTAL $ 4,444,881 18,943 1,341,173 287,025 395,085 500,009 521,850 129,420 126,718 274,995 47,749 290,376 18,740 492,797

PURCH 1 - 3 23% 27% 23% 23% 31% 22% 23% 28% 29% 23% 32% 22% 22% 11%

PURCH 4 - 6 14% 17% 15% 14% 17% 14% 14% 16% 18% 14% 19% 12% 14% 7%

PURCH 7 - 9 9% 10% 10% 10% 11% 9% 9% 11% 11% 11% 11% 9% 11% 6%

PURCH 10 - 15 13% 14% 14% 13% 13% 13% 12% 13% 14% 13% 13% 11% 14% 9%

PURCH 16 - 20 7% 7% 7% 7% 6% 7% 7% 7% 7% 7% 6% 7% 8% 5%

PURCH 21+ 35% 26% 31% 32% 21% 35% 35% 24% 22% 32% 19% 39% 31% 62%

Percent of Magazine Dollars by Purchase Frequency Within Each Magazine Category

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Percent of Magazine Dollars Spent by Month

0%

2%

4%

6%

8%

10%

12%

Sep-0

1

Oct-0

1

Nov-01

Dec-0

1

Jan-0

2

Feb-0

2

Mar

-02

Apr-02

May

-02

Jun-

02

Jul-0

2

Aug-02

Pe

rce

nt

of

Do

lla

rs

27


Magazine Shopper’s Average Basket Expenditure by Number of Magazines in Basket

$45.14

$62.79

$81.96

$92.26

$73.65

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

0 Magazines 1 Magazine 2 Magazines 3 Magazines 4+ Magazines

28


Percent of Magazine Dollars by Purchase Frequency and Store Location

0%

20%

40%

60%

80%

Total 1-3 4-6 7-9 10-15 16-20 21+

Magazine Purchase Frequency

% o

f M

ag

azi

ne

Do

llars Main Line Front End

29


Percent of Total Magazine Dollars by Grocery Spending Level and Store Location

33%

41%

11% 11%

2% 2%

0%

10%

20%

30%

40%

50%

Main Line Front End

High Grocery Spending

Medium Grocery Spending

Low Grocery Spending

30


What is the Value of the Magazine Newsstand Purchaser to the Publisher and Advertiser?

31


Percent of Households that Purchase Advertised Products

24%

44% 42% 38%

76%

56% 58% 62%

0%10%20%30%40%50%60%70%80%

TotalHouseholds

AdvertisedCookies

AdvertisedCrackers

AdvertisedCereal


32


Category Development Index for Advertised Products by Magazine Purchasers and Non-Purchasers

174%159%

74% 77% 81%

182%

0%

50%

100%

150%

200%

AdvertisedCookies

AdvertisedCrackers

Advertised Cereal


33


Propensity to Purchase by Business Line for Magazine Buyers within a Category

HOME ENTER-

WOMEN SPORTS BUSINESS KIDS COMP TAINMNT SCIENCE

ANIMALS FAMILY AUTO FITNESS NEWS MISC TEENS ELECT. FOOD MENS TRAVEL TECH TABLOIDS

BAKERY 106% 98% 100% 99% 103% 97% 103% 98% 104% 91% 104% 101% 99%

DELI 106% 99% 99% 101% 103% 96% 104% 97% 107% 92% 101% 100% 98%

ENTERTAINMENT 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

FLORAL 121% 93% 97% 107% 106% 89% 116% 93% 110% 85% 104% 105% 85%

GENERAL MERCHANDISE 115% 93% 99% 103% 103% 96% 106% 98% 102% 93% 101% 104% 90%

GREETING CARDS 118% 93% 99% 104% 105% 93% 109% 93% 108% 88% 106% 99% 92%

GROCERY 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

HBC 106% 98% 99% 103% 101% 98% 103% 99% 100% 100% 98% 102% 93%

MEAT 104% 99% 100% 101% 100% 99% 102% 99% 102% 97% 100% 100% 99%

PHARMACY 124% 97% 109% 103% 106% 92% 118% 92% 99% 77% 117% 109% 83%

PHOTO 135% 86% 97% 113% 109% 86% 136% 81% 104% 90% 104% 98% 81%

PREPARED FOODS 116% 94% 100% 103% 106% 90% 108% 97% 108% 90% 101% 104% 92%

PRODUCE 102% 100% 99% 100% 101% 99% 101% 99% 102% 97% 101% 100% 100%

SEAFOOD 118% 94% 98% 106% 103% 91% 108% 98% 118% 79% 100% 108% 87%

TELECOMMUNICATIONS 141% 77% 97% 121% 101% 96% 127% 91% 88% 108% 98% 104% 76%

TOBACCO 110% 90% 108% 103% 100% 106% 109% 94% 80% 138% 94% 85% 115%

VIDEO 135% 249% 37% 105% 103% 91% 136% 86% 97% 82% 118% 98% 85%

= above average = below average

34


Average Number of Basket Items

35


Average # of Items Purchased by Business Line When a Magazine is in the Basket

HOME ENTER-



Overall 28.4 32.4 30.2 28.5 28.5 30.0 27.4 33.7 28.7 32.6 25.0 28.7 26.6 27.8

Pharmacy 1.8 2.0 1.8 1.8 1.7 1.7 1.8 1.6 1.7 1.7 1.8 1.7 1.8 1.9

Video 1.9 2.2 1.9 1.9 1.9 1.9 1.9 2.0 2.0 2.0 1.8 2.0 1.9 1.9

Photo 1.4 1.6 1.4 1.4 1.5 1.5 1.4 1.5 1.5 1.5 1.6 1.5 1.3 1.4

Floral 1.5 1.6 1.5 1.5 1.5 1.6 1.5 1.5 1.5 1.6 1.6 1.5 1.6 1.5

Gen Merch 2.2 2.5 2.3 2.2 2.3 2.4 2.2 2.6 2.4 2.5 2.2 2.3 2.3 2.2

Greeting Cards 2.2 2.3 2.3 2.1 2.2 2.4 2.2 2.4 2.3 2.4 2.1 2.3 2.3 2.2

Seafood 1.5 1.5 1.5 1.5 1.6 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.5 1.5

Prepared Foods 1.8 1.9 1.8 1.8 1.9 1.9 1.8 2.0 2.0 1.9 1.8 1.9 1.8 1.8

Tobacco 1.9 1.9 1.9 1.9 2.0 1.9 2.0 1.9 1.9 1.9 1.8 2.0 1.8 2.0

Deli 2.4 2.4 2.4 2.5 2.5 2.5 2.3 2.6 2.6 2.6 2.4 2.5 2.5 2.4

Bakery 2.9 3.1 2.9 2.9 2.9 3.0 2.9 3.2 3.1 2.9 2.6 3.0 3.0 3.0

HBC 3.0 3.4 3.1 2.9 3.3 3.2 2.9 3.7 3.1 3.1 3.3 3.0 3.1 2.8

Meat 3.2 3.5 3.2 3.2 3.4 3.2 3.2 3.7 3.7 3.2 3.5 3.4 3.3 3.2

Produce 5.5 5.8 5.7 5.7 5.8 5.8 5.1 6.0 5.5 6.6 5.3 5.1 5.2 5.0

Grocery 17.3 19.6 18.3 17.2 17.3 18.0 16.6 20.6 17.8 18.9 15.2 17.6 15.6 16.4

= above average = below average

36


What are the Opportunities?

37

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02

Opportunities

Broad-scale approach to better merchandising

Cross-merchandising between magazines and high-margin or high-ticket items

Magazine department located near high-margin departments and seasonal or impulse items

Placement of magazine racks within related grocery departments

38

Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02Copyright © 2002, MANAGEMENT SCIENCE ASSOCIATES, INC. BMH10/02

Opportunities

Business line product mix adjustments based on magazine sales or Magazine category adjustments based on business line sales

Multiple magazine purchase incentives managed through loyalty card program

Coupon effort or other trial or continuity promotional programs

On-product subscription premiums or copy offers with the purchase of advertised product

Date post:	22-Oct-2014
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