Uncovering the "key drivers" that will increase your business success rate

Marugame Seimen and XICA's efforts are an attempt to uncover the "key drivers" that will increase the success rate of business. Nagumo believes that uncovering the key drivers will help them to have a clearer idea of ​​where to invest, speed up decision-making, and ultimately lead to business growth. The company is using data science as a way to further increase the resolution of the marketing model it had originally built and to uncover the key drivers that will grow the business.

The project with XICA began with an effort to use MMM (Marketing Mix Modeling) to determine the optimal investment allocation for product promotion and branding. After the project lasted about six months and the optimal investment allocation became clear, we next began work on clarifying the background and mechanism behind the sales of the product. This is an approach that uses data to clarify the attitudes that influence customers before they take action (purchase).

In this article, we will introduce Marugame Seimen's marketing philosophy, which is the premise of this initiative, and its efforts with XICA.

Marugame Seimen's "KANDO-driven marketing"

"Customers are not something to be collected, but something to be created, and I believe that 'emotion' is the source value that creates customers. People take action (purchase) because they are deeply moved (emotional)."
(Mr. Nagumo)

Based on this idea that Nagumo speaks of, all thoughts and actions at Marugame Seimen exist for the purpose of creating "emotions." All of the company's strategies and tactics are designed to lead to the realization of its vision of "providing the No. 1 moving experience." And the source value of this is defined as the moving experience woven together by "each and every noodle factory," "handmade, freshly made deliciousness," and "the power of people." This applies not only to marketing strategies, but also to product strategies, sales strategies, digital transformation strategies, and everything else.

Nagumo believes that in order to make "emotion" the top priority in decision-making and to grow the business sustainably, it is necessary to balance intuition and data. "Emotion" cannot be created from data. The probability of success is low with intuition alone. For this reason, they are strengthening their efforts to combine the two and put together marketing strategies and tactics. This is the "dual compatibility" that is alive and well at Marugame Seimen._■It also reflects our commitment to pursuing a trade-on based on the idea of ​​"competitive pricing."

*The idea of ​​achieving "dual compatibility" between elements that tend to be "contradictory" in order to achieve unpredictable levels of evolution.

In fact, Marugame Seimen's marketing communications create the reasons and perceptions that lead to their selection by approaching the left brain/rationality, and the impulse to choose them by approaching the right brain/intuition.

Marugame Seimen's "KANDO-driven marketing"

Marugame Seimen's Hybrid Strategy
--80% of sales are determined by brand power

"We have adopted a hybrid strategy of creating an upward trending baseline through branding and then creating a mountain of impulse with fair products. 80% of our sales are determined by our brand power, so we think it is most important to create an environment in which there is high understanding, favorability and empathy for the brand. On top of that, we roll out fair products eight times a year, every 1.5 months, to maximize the urge to eat and ensure sustainable growth of our business."
(Mr. Nagumo)

As Nagumo explains, the company strategically combines branding and fair product promotion (a hybrid strategy) to create an ever-increasing baseline and periodic peaks of excitement.

Image of a hybrid strategy of branding and fair product promotion

In the short term, we believe that the accumulation of customer experience value (CX) will lead to brand power, so we are practicing how to make customers feel value at each touch point along the customer journey by integrating it into a customer experience. We value agile, high-speed action using data science to visualize the accumulated CX and share it with related departments so that we can work together as one.

To achieve this, we are working on the following two initiatives in our project with XICA:

<Initiative ①> Clarifying the optimal allocation of investment between product promotion and branding: Brand equity analysis

• What is Brand Equity Analysis?
  • An analysis that takes into account the long-term brand accumulation effect through the application of MMM. An effort to visualize the effects of Marugame Seimen's "hybrid strategy of creating an upward trend baseline through branding and creating an impulse peak with fair products."
• What we learned from the analysis
  • The synergistic effect of the short-term spike in product promotion and the long-term accumulation of branding had created the steady growth that was aimed for. Furthermore, it was found that branding boosted the effectiveness of product commercials.

"Being able to visualize what I knew intuitively to be correct numerically has not only made it easier to make decisions, but it has also been helpful when deciding on advertising budgets for new products."
(Mr. Nagumo)

What are the “key drivers” that lead to business success?
--A new approach using MMM x KSF analysis

<Initiative ②> Verifying key brand indicators that lead to business results and measuring sentiment with data: Brand KSF (Key Success Factor) Analysis

• What is brand KSF analysis?
  • An effort to clarify the background and mechanism behind sustained increases in performance. Using survey data, we will clarify brand KSFs (key brand indicators) for store visits and also clarify the factors that influence those brand KSFs.
• What we learned from the analysis
  • We found that the most important brand KSF for both repeat and new purchases is usage intention, and that the perception that "the udon is delicious" is what most influences usage intention.
  • The images directly linked to "delicious udon" include "can be eaten with peace of mind" and "has something different from others," and it was found that there is a correlation with items close to Marugame Seimen's source value.

Overview of KSF analysis at Marugame Seimen

Smooth communication with internal and external stakeholders

Nagumo says that quantitatively showing the effects of branding and key brand indicators in this way not only serves as a justification for strategies and tactics, but is also extremely useful when putting formulated strategies and tactics into action. In order to disseminate strategic and tactical guidelines to stakeholders inside and outside the company, sometimes it is effective to appeal to emotion, and other times it is effective to appeal to reason using data. In particular, in situations where the latter is required, it was possible to promote understanding of the strategy and tactics, and communication with each stakeholder became smoother.

There is no 100% correct strategy, but I want to improve the resolution of the path I believe in.

"When it comes to designing a strategy, there is of course no 100% correct answer," says Nagumo. However, in order to increase the resolution of the path you believe in and pave the way for the future, you need something to rely on, and Nagumo explains that this is why he uses data science.

In terms of tactics, too, it is becoming increasingly important to combine intuition and data for agile optimization in today's rapidly changing marketing environment. Nagumo explains this approach to fighting that makes full use of intuition and data by comparing it to the use of data in the world of sports.

"In the world of sports, you need to intuitively grasp the condition of the players and the progress of the game, while also looking at data such as scores and success rates. You cannot win by only looking at one or the other. In marketing, too, the market and consumers are changing every day, so you cannot win unless you make full use of both your senses and data."
(Mr. Nagumo)

As an effort to put this into practice, Marugame Seimen provides daily feedback to each store based on the "Udon Score" and "Experience Score" in the form of the "Marugame Emotion Score." Daily store experiences and customer emotions are also accumulated and shared as data._■

*This is not the content of the project with XICA.

Nagumo, who is using data to drive his business forward, explained how he approached MMM and why he chose XICA as his partner for this project:

"MMM is a means, not an end in itself, and we don't believe that MMM can explain everything. That's why we expect our project partners to be willing to work with us to find the right answer through discussion. Of course, leaving everything up to our partners won't increase our chances of success, so we always try to take the lead ourselves. With that in mind, the deciding factor in choosing XICA as our partner was the speed and the approach of the consultants."
(Mr. Nagumo)

"Speed"
In order to adapt to the ever-changing marketing environment, it is necessary to increase the speed and frequency of analysis accordingly. In the company's projects, MMM is analyzed once a quarter, and if new analytical points are added, the model is adjusted each time while going through the PDCA cycle.

"The consultant's attitude"
In a world where there are no 100% correct answers, new issues that need to be solved emerge one after another. Furthermore, as the environment changes, the issues at stake are constantly being updated. Their flexible and persistent approach to these issues was the deciding factor in choosing us as a partner.

Our vision beyond growth
--I want to increase the significance of people working in the restaurant industry

-- "Fill the planet with the excitement of food." (TORIDOL's slogan)

Beyond the company's growth, Nagumo aims to bring about change to the entire restaurant industry. He says he wants to expand the restaurant business by uncovering consumer insights in the industry and improve the meaning and value of the people who work in the industry.

"We want to prove that by continuing to pursue the creation of unique moving experiences, rather than focusing on numbers, we can inevitably achieve high profitability and sustainable growth."
(Mr. Nagumo)

Nagumo said this, and is currently working on a project to improve employee experience (EX) as a further initiative. This project is based on the idea that by balancing employees' happiness at work with their happiness in their private lives, it will promote intrinsic motivation, allowing them to provide customers with the best moving experiences ever, which will ultimately lead to business results. By modeling this series of events, the company aims to create an organization that can produce results with a high degree of reproducibility.

In this way, XICA will continue to accompany Marugame Seimen as they take on the challenge of evolving to a new stage.

Marugame Seimen Project Transition