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The science of shopping: Mining biometrics and behavior to drive consumer sales

Tucked away at the back of an anonymous west London industrial estate is a blindingly modern laboratory operated by one of the world's biggest pharmaceutical companies.

The scientists who work there are not seeking to unearth the next pioneering cancer medicine or answer the big questions of Alzheimer's disease or cure psoriasis. Instead, they surround themselves with interactive maps charting local retailers and demographics, tinker with a myriad of textures and flavors, and watch the reactions of a hand-picked group of testers.

This is U.K. pharmaceutical giant GlaxoSmithKline PLC's sensory science laboratory, which powers growth at its consumer health unit, one of the three pillars of the company's corporate structure.

SNL ImageGSK's shopper science lab, entrance hall.
Source: GSK

Each year some 10,000 consumers are surveyed from the London lab for their reactions to new respiratory, pain and oral health products in an attempt to satisfy different tastes from around the world.

Take toothpaste, for example: GSK is seeking to create a version of Sensodyne — a product with 2018 sales of over £1 billionthat appeals to the Asian palate, thus tapping into the growing opportunity presented by China and other emerging markets for over-the-counter products. With some 2,000 varieties of mint and 150 ingredients in Sensodyne alone, it is a complex task. To help fine-tune the process, the company's sensory scientists have enlisted the help of the large perfume houses that specialize in flavors and fragrances like Givaudan SA and International Flavors & Fragrances Inc., who collect initial samples to find the nuance of flavor.

"There is a science behind formulating a mint that's tasteful, like a bouquet in your mouth; it's actually a lot like wine," said Nicolas Pochart, global director of consumer innovation and sensory science for GSK consumer healthcare.

To encourage Sensodyne sales in China, Pochart and his team worked with traditional Chinese medicines experts sourcing flavors linked to pain relief and teeth, creating a botanical version of the toothpaste with extracts of centella, eucalyptus and fennel.

Rethinking consumer health

GSK says its three shopper science labs — in New Jersey, London and Singapore — have helped the Brentford, England-based company boost consumer sales, which are forecast to reach $10.3 billion by 2020, according to UBS estimates. The business accounted for 26% of GSK's total revenue in 2018.

Revenue from consumer health products ranging from toothpaste to flu remedies has helped some pharmaceutical companies such as GSK maintain a steady stream of income amid the ups and downs of drug development. The loss of patent exclusivity on brand-name medicines means steep declines in sales as cheaper rivals enter the market — a phenomenon known as the "patent cliff."

However, drugmakers have recently been rethinking their consumer health strategies. In March 2018, GSK bought partner Novartis AG's share of their consumer joint venture, which had been run by L'Oréal SA veteran Emma Walmsley before she became GSK's CEO. In December 2018, GSK unveiled plans to join the consumer unit with Pfizer Inc.'s similar unit, with the combined business scheduled to be spun out by mid-2022.

Meanwhile, Sanofi, a rival drugmaker, said Dec. 9 that it will make its consumer health business a standalone unit within the company.

"The determination to make [Sanofi’s consumer health unit] stand alone is to put speed and agility back in the business," Sanofi CEO Paul Hudson said on a call with reporters. "It's giving them full control over everything that they do, so that they can get there, because that's the type of business they're competing with. They move fast, so we need to move fast."

The combined GSK-Pfizer consumer health business will be a leader in pain, respiratory, oral health and vitamin supplements, and have a presence in skincare and digestive health globally. Brands include Advil, Robitussin, Listerine and Centrum. Euromonitor, the consumer research group, said it will pose the greatest threat to Johnson & Johnson, the world's largest healthcare company. Along with German drugmaker Bayer AG, whose consumer health products include the Aleve painkiller and Alka-Seltzer for heartburn, J&J will be the most direct competitor to the GSK-Pfizer consumer health group, Euromonitor said in a November research note.

'This is gold'

The shopper science labs have an important role to play as GSK seeks to maintain its edge in the consumer health market.

Observing people in an environment as close as possible to reality, the London lab's 20 scientists say, helps to illuminate behavioral triggers, given that some 80% of our sensory information comes through sight. In Germany, video cameras installed in the homes of panelists for 24 hours showed that many were putting moisturizer up their noses after taking Otrivine, a nasal spray to relieve congestion.

"For us this is gold," Pochart said. GSK subsequently introduced a moisturizing compound to the nasal decongestant.

Equally relevant to innovation in R&D has been the data provided by consumers selected to undergo observation of their shopping habits by behavioral scientists inside the sensory science lab itself. The lab houses a series of antiseptic confessional-like booths with one-way mirrors, adjustable lighting and iPads to transmit responses in real time. It also includes a virtual reality room to recreate the aisles of a supermarket and to help envision where products ought to be placed to achieve the best sales.

SNL ImageTesting booth at the shopper science lab.
Source: GSK

"With the push of a button you can change floor, ceiling, aisle, the size of it and everything within it," said GSK's Crispin Haywood, commercial excellence director for Europe and the Americas. "That's great when we want to engage with retailers and actually start showing them some future concepts."

While the booths monitor attitudes to innovation — for instance a change in color for liquid Panadol or whether the texture of a toothpaste resembles ricotta or cream cheese the third aspect of the sensory lab is a full-size mock-up of a pharmacy, rival products included. By providing a totally immersive experience, the imitation pharmacy can trigger reactions according to the positioning of products on the shelf.

GSK is one of the first companies in the world to use biometric data and augmented reality to unpick insights into shopping behavior, Haywood said. In the mock-up pharmacy, panel members wear special glasses that track the direction of their eyeballs while cameras and microphones embedded in the ceiling record their movements.

"How that vision is triggered in-store is really important for us to understand — especially when it's really complex, there's thousands and thousands of different products, hundreds of types of messaging in there," Haywood said. "So how do we make sure that cuts through effectively? Eye-tracking is a brilliant tool for doing that. It's really powerful."

SNL ImageMocked-up pharmacy at the shopper science lab.
Source: GSK

Competition

While GSK believes that innovation from the shopper science labs has helped to speed up product and brand development and drive preference across the world, Bob Kirby, a senior director at Fitch, said that consumer brands in general are always coming out with new and improved types of products. Moreover, as all consumer products are made of the same 100 to 200 active ingredients, tinkering with the formulations — like introducing melts to the Listerine brand — is the only way to differentiate, he said in an interview.

"The industry does have to innovate to improve their product," Kirby said. "Compared to pharma, this is not huge, but for consumer health, they have to be leading the industry. Otherwise, private label just seems more attractive to consumers," he added, referring to generic or cheaper options available on the shop floor.

Still, Walmsley said she is excited about the joint venture with Pfizer, notably the opportunity in China, even once the business stands alone. She expects to extract £500 million in synergies and increase the operating margin ahead of the spinoff's U.K. listing.

"If they love the experience, if they love the flavor, they will come back to it," said Pochart. "They will become loyal customers, and that's sales forever."

SNL ImageMocked-up pharmacy at the shopper science lab.
Source: GSK