Catalina is Changing Supermarket ShopperMeasurement

Catalina Inc. is a Florida-based company specializing insupermarket shopper tracking and coupon issuing. The company hasabout 1,200 employees and operates in the United States, as well asin major European countries. The company built its business modelon issuing coupons to grocery shoppers online when they check out.The basis for this business model is that traditional print mediahas long production lead times, and the response to these media isnot measurable on the individual customer level. Thus, supermarketsand manufacturers cannot run and track individualized campaignswith traditional media. Catalina’s system consists of a printerconnected to the cashier’s scanner and a database. The informationon each shopping basket that checks out via the scanner is thenstored in the database. Using the person’s credit card number orcheck number, the database links individual shopping baskets overtime. If the person pays cash, the system cannot link the basket.The system then allows both manufacturers and retailers to runindividualized campaigns based on the information in the database.For example, Catalina could partner with the retailer to improveits cross-selling. A typical issue for any given retailer is thatcertain customers use the store as their primary shopping location,whereas others use it as their secondary store. To improve the SWwith the latter group of customers, Catalina first investigatesbasket composition of the various buyers. It then finds thatcertain buyers buy, for example baby or children products (thus,there is apparently a family behind this shopping bask), yet thenumber of calories in that basket does not match that of an averagefamily. One explanation for this might be that this shopper usesthis outlet as a secondary store. Given this interpretation, thedecision then is to allocate to this customer a gift of say $10,for shopping for 4 weeks in a row spending at least $40 per week inthe store. The goal is to selectively target those shoppers of whomthe store captures only a low SW, and to entice them to changetheir behaviour.

1. Explain whether Catalina’s approach to storing customerbuyer information and using it to target shoppers who visit thestore as a secondary location is a good business practice. Do youthink this helps the store build customer retention?
2. Discuss the role of traditional metrics (such as marketshare) in this new CRM environment. Should they bediscarded?
3. Do you think Catalina’s legal practice of targetingshoppers based on past buying behaviours is ethically acceptable?Discuss from the perspective of both, the customer and the storeowner