Working with Numbers - Part 3

So my apologies for being so inactive, Anupriya had sent me this post a few weeks back, and owing to work pressures and other such things in my life, I was unable to update the blog - although planning a revamp and lots more interesting stuff next quarter, so keep visiting the blog!

As always, thanks Anupriya - star you are! Very kind of you to take time out and write :)

Also, just crossed 10,000 hits! Thanks for your support people!

Working with Numbers – Part 3
 In the 2 previous parts we have covered the basic sources of data that we have access to or use as marketers and a deep dive into 2 very important ones – internal numbers and ACN.
In this part we will try and understand Household Panel (hereafter referred to as panel) and then try and put the 3 sources together i.e. internal numbers, ACN and HHP
Panel is your one stop shop to understand what your consumers are doing. What is their purchase behavior? Understanding of Panel makes you understand the consumer need.
Panel can be put to many uses and analysis. I personally use panel to make operational decisions on the brand. As you understand the panel better or speak to more people who have been in the field for some time they will give you different uses of Panel. I however, strongly recommend panel to be used to making strong operational decisions for the brand. For e.g. in which state should you run a consumer promotion or which SKU to support with trade scheme or what is the ideal SKU size for your brand. If you want to do on ground activation against a competitor which one should it be?
Panel has answered all these questions for me.
CAUTION: a very important thing to remember throughout this post is that Panel measures everything at a household level and not individual level. Hence, panel gives you purchase behavior and not consumer behavior. Please do not use panel for consumer behavior
It will give you WHATs – it’s the job of the smart Marketer to understand the WHYs
Panel has given diaries to 74000 households in the country who are representative of the entire population and then extrapolate the data to the entire population. The households which have the diaries are supposed to note every purchase in that and then panel representatives also do pantry checks/dustbin checks.

Key Metrics to dig into:
1.    1Penetration – this measures the number of households (HH) your brand is bought by. Penetration = Brand HHs/Total Category HHs. Penetration numbers are important at 2 levels:
a.       Category Penetration – this means for the entire category what is the penetration amongst all HHs. This determines the lifecycle of the category and hence is a very important measure. Cat Pen = Category HHs/Total Universe. Very high category penetration means that the competitive heat will be very high and loyalty lower. E.g. soaps  have almost 100% penetration which means that you can grow only at the cost of other brands. On the other hand if category pen is low you actually stand to gain by just category growth e.g. hair colour have penetration of less than 30% hence category growth is the single biggest brand objective
b.      Brand Penetration – as explained earlier it measures the HHs that your brand is bought into within a category. As a marketer you have to set a penetration objective for yourself. For e.g. L’Oreal Excellence and Garnier Color Naturals will not have the same objective. However, once the objective is set then one must craft the marketing activities to achieve that and then to maintain it. Drop in penetration often means it is a cause of grave worry. Also, penetration drop cannot be measured on a month on month basis – It must be measured over a quarter. 

2.       Consumption - This measures the actual volume of your brand/category consumed in a HH. Now this can be measured at 2 levels:
a.       Total  Consumption – which is total volume of your brand in all the HHs you are bought by
b.      Avg. Consumption – this measures your brand consumption in 1 HH. This is usually the measure that is referred to when one says consumption has fallen. It is an extremely important measure as it gives you your brands consumption pattern in a HH. This is also the measure you look when looking for seasonality, impact of consumer promotion, impact of communication etc. For e.g. if you ran an ad which said for best results use twice a day – it should ideally move your Avg. consumption up.

3.       Share of Requirement (SOR) – this is the share of your brand within a household. SOR = brand volumes in brand HHs/category volumes in brand HHs. This basically is a measure of multiple brands being present in a particular HH and how strong is your brand within that HH. Again do remember this is at a HH level and hence multiple brands are present. Simplest example being shampoo, with avg HH size in India being 5-6 people more than 1 brand is but obvious. However, the measure to watch out for is the trend of SOR – if you have a SOR of say 60% and every quarter see it going down – it means there is a problem and more people in the HH prefer some other brand or they are using the other brand for more occasions. And when you were an occasional use brand and see your SOR going up it means that the consumers are sticking to your brand more than their usual brand. This may happen for a lot of reasons – increase in availability of your brand, you having corrected your pricing, affluence of the HHs going up etc

4.       Entry Erosion Analysis – this analysis tells you for a particular period what is the source of HH growth of your brand. It gives you the following measures:
a.       New Triers – for a particular period what % of your users were new triers i.e. who tried your brand for the first time in that period. Now this is an extremely important thing to know because this is a measure of trial ability of your brand. This measure also gives you the new triers constitute what % of your total consumption ie when these new triers come in do they consume more of your brand than existing HHs or avg consumption or are they only trying your brand. The key here is to choose the correct period for which we want this number. Ideally anything less than 6 months is futile – but again it depends on the nature of your category and business
b.      Retainer Users – these are the HHs who were using your brand in the last period as well. This measures the loyalty of your brand – how many HHs continue to buy you over a period of time. The important thing to note in this is the consumption trend. Whether these HHs are consuming more of your brand or have they reduced the consumption for your brand and added some other brand to their repertoire
c.       Lapsers – these are the HHs who purchased you in the last period but have chosen to not buy you in this period. Now this is a very critical measure for obvious reasons. If the lapsage for your brand is very high then it is a cause of concern. Also, lapsage is a relative term and again extremely dependent on the time period. Let me explain this with some examples.
                                                               i.      Say you are a baby food brand who has baby food only for infants from the age of 6-9 months. Then for sheer demographic reasons every year or every 3 months HHs will lapse out of your brand to some other brand which is relevant for their babies in the age of 9-12 months.
                                                             ii.      If you are a summer brand, let’s take Glucon-D where >60% sales comes in Mar-June. Now if we choose time period of Q2 vs Q3 then obviously the lapsage in Q3 will be extremely high as the brand or category is no longer relevant
Hence it is important to analyse this number within the framework of your category. And for this also it is important to know who is lapsing out of your brand. Were they heavy users of your brand or were they HHs who were marginal consumers who bought you occasionally
5.       Gain/Loss – this gives you the source of your volume growths or volumes losses. This tells you where are your volumes coming from or going to. Now you can gain/lose volumes in 4 basic manners:
a.       New Category users/lapsers – these are HHs who entered the category through your brand or were your brand users and then decided to exit the category completely. The classic example in this case is baby products. After sometime these HHs will exit the category or enter the category when the category is relevant and will be usually heavy users in that time period. And when they exit the category or enter the category they impact the brand a lot
b.      Increase/Decrease in Consumption – HHs who started consuming more or less of your brand in absolute volumes. Now this may not be an absolute decline at times. For e.g. if you are a shampoo brand and instead of 7.5 ml in a sachet you start filling up 6 ml. Now consumers will not buy 2 sachets because you have reduced fill rate. What will happen is that the absolute consumption in your HHs will come down by that amount because they will still use 1 sachet of your shampoo. On the contrary if say you give 10% extra volume – on small SKUs that small volume may not make the HHs buy lesser number of packs and hence absolute consumption will go up for your brand
c.       Addition/Deletion to Repertoire – this when a HH starts buying your brand over and above the brands they already purchase. This could be because of a special consumer need that your brand fulfills which their other brands do not so they use your brand in addition to their existing brands. For e.g. say you are a fabric softener, then HHs will buy you over and above their existing detergents and not replace their existing detergents with you. Taking the same category example, in winters a lot of HHs will add liquid detergents like Ezee to their repertoire of detergents and then remove It from their repertoire as soon as winter is over
d.      Gain/loss from competition – this is when consumers substitute your brand with competition or vice versa. This is a scary reality check and something to completely watch out for. This is where you can pin point who your real competition is and who you need to attack in the market – and whether as marketers we like it or not – this is a reality check and we need to embrace it as a fact and work with it. E.g. you launch a premium fairness cream with a new texture, with world class technology and price it at 200% premium to the market. And when you advertise it you assume that consumers who use premium skin care will move to your brand. However, this measure may show you that you actually recruit your consumers from the bottom of the pyramid. This could be a good or a bad thing – depending on what you make of it. If this is true – it means that your media deployment will need to be for these HHs and not for the premium skin care or it could mean that even with limited money, great profitability and limited visibility in media you can actually get consumers. However, the reverse would be devastating. Imagine your HHs actually lapsing to the bottom of the pyramid brand. It would mean all your assumptions about your technology or strength of communication have gown down the drain – consumers prefer their old brand over yours.

Panel of course has lots of other measures that you can dig into. But these according to me are the most important.
And unlike Nielsen where you can only take geographical cuts, here you can actually drill down into demographics of HHs and you can actually arrive at which SEC, which type of city, how many people in a HH, HHs with children etc are your brand users. With Panel you can get into as much granularity as you want.

Now, I will explain why I said I use panel for operational/tactical brand decisions. I am going to give you some examples and then when you explore the panel further you will realize that there are more and more of such decisions that you can take:

1.       Consumer Promo – this gives you the empirical evidence of what your and your competitions consumer promo did for your brand. Did it get new HHs, did it make your exiting HHs consume more of you, did it increase your SOR in the HHs, did you gain volumes from completion and same answers for your competitions Consumer promos. And there you go – you know which consumer promo actually gives you results – or even which will screw your competition the most and you go for it
2.       Cross Promotion – if you want to do a cross promo for your brand, you can actually know which other product to give. For e.g. Panel will throw up what is the intersection of HHs b/w you and intended promotion brand and whether you will each new HHs at all or will you only reach the same HHs etc.
3.       SKU choice – if avg consumption for All India for your brand is 100 gms while in a particular state or a particular SEC which is a big contributor your avg consumption is 500 gms then there is merit in the launch of a 500 gms SKU thereby saving packaging cost for yourself and also locking in the consumer for a longer time – as the HH will only think of purchasing another brand once they have consumed your 500 gms
4.       Media Deployment – if you know that while you thought your TG was SEC AB but your actual HHs are Sec C &D then there is merit in taking your media more mass or adding mediums which cater to these SECs
5.       Cannibalisation from a LUP – whether or not to launch a LUP is often a much debated decision with the fear of cannibalisaton of a bigger more value & profit generating SKU. And only panel can tell you for your competition and other categories how much cannibalization can you expect.
And there are more such decisions which only panel can help you with.
At the beginning of the post I said this post will cover marrying the 3 sources of data that we have covered so far together. However, I think this one has become longer than I thought it will. And marriage is a complicated process anyhow!!! So we shall keep it pending for the next part in the series.
And unlike what Kaushik said – I think this may just go into 5-6 parts. So please be patient.


  1. readers of the blog - I want an opinion - the working with numbers part 4 should cover the other information sources or talk about how you can put Nielsen, Internal numbers and HHP together? I am torn b/w the two and cant decide

  2. I feel it would be more useful if you could tell us how to put the numbers together

  3. very nice blog.. i am a management trainee and never understand what my brand manager keep doing his numbers whole day and ask me to keep taking print outs and giving him same..

    now i know...

    ya mam please tell how to relate all these numbers together..

    but with due respect my brand manager never used HHI numbers.. where we get these numbers..

    he only uses nielsen and internal sales..

    But he uses one small printed notebook once a while which has state wise information... delhi ..population, consumption habit... .. i wonder what he dos with it and how he uses it...

    he got one 6 months back for 2012 and it was called marketing whitebook

    please explain that mam


  4. Hi Anupriya, Very interesting blog. Did you actually manage to write part 4 and beyond?


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