Check out this incredible graph below. Don’t worry, I can’t read it either, but what’s important is what the underlying data tells us.

RichRelevance data guru Josh Lemaitre pulled this information together and was kind enough to explain the results. The graph represents two category-leading nappy brands and their respective browsing patterns over a month on a large multichannel retailer.

What’s revealing about these patterns is that most new parents initially spend an enormous amount of time researching all of the different SKUs across all brands for their newborn (the cluster toward the centre-left and below are almost entirely newborn SKUs).

Browsing pattern for nappy brands

However, as
their child grows into bigger sizes, toward the top-right, the browse
activity is much more focused, only looking at 1-3 SKUs in isolation,
and generally within the same brand. In fact, these parents tend to come
back and view only the brand they’ve previously purchased.

So the key
time to lock in a brand-loyal nappy consumer is right around the arrival
of the newborn.

From the brand marketer’s standpoint, this is incredibly valuable data that can guide campaign direction, spending and timing.

Yet
what if nappy brands weren’t able to glean this information from their
retail partners? How much harder would it be to plan their product and
marketing strategies?

On the flip side, a retailer without this data would
also find it much more difficult to work with the manufacturer on a
merchandising strategy around new parents.

Brands, particularly
FCPG manufacturers, have jumped on the e-commerce bandwagon, establishing
their own direct-to-consumer domains, not just for the opportunity to
sell directly to consumers, but also to engage and understand their
shopping behaviours.

As you can see, the lines are quickly blurring
between manufacturer and retailer. And there’s no doubt that this will foster accelerated
innovation and cooperation.

What’s driving this market shift? I can think of a few initial reasons:

The
economic crisis

Simply put, the rise in commodity prices and recent
recession have forced us to innovate. The ability to combine advertising
budgets to reach the right consumers preserves margins for both
manufacturer and retailer.

Access to the consumer 

For brands
that don’t have their own retail website, this represents an opportunity
to get closer to the consumer.

Proximity to the consumer allows a brand
to capture more meaningful insights that can then be used for
spotting market trends, or uncovering ways to accelerate a brand’s
product development. 

Lack of effective means to gather customer
feedback
 

Brands that lack the capability to capture these insights may
end up using blunt-force consumer surveys, which creates misinformation
that results in products like the ‘Homer-Mobile‘.

The
convergence of retailers and manufacturers foreshadows a flattening of
the marketplace and increased challenges in differentiation.

The
existing tablet market is a great example of flattening value chains.
How many of you can actually explain the difference between tablets from
RIM, Samsung, or Motorola? I can’t.

If everyone has access to the same
manufacturing facilities and hardware technology, how do you truly differentiate? Apple has obviously shown it can be done by owning the
entire value chain, but what about the rest of the market? We’re going
to need to work together.  

The lines are blurring folks.
Retailers and manufacturers that work together will be able to extract
incremental value, and consumers will be better off because of it.