Where Pur­chase De­ci­sions are Re­ally Made

Point of Purchase - - INTERNATIONAL -

IRI

re­leased some re­search last month that found most de­ci­sions to pur­chase “Store-Brand” prod­uct are made at the shelf-edge, as com­pared to “Name-Brands” which tend to be planned pur­chases. This prompted a bit of dis­cus­sion on LinkedIn with the old “70% of all de­ci­sions are made in store” state­ments be­ing rolled out again (Peter Breen sum­ma­rizes the va­lid­ity of that statis­tic here). Read on the next part of ‘Way to Shop­pers’ mind wal­let and soul.’.. The re­al­ity is that pur­chase de­ci­sions are not a sin­gle mag­i­cal mo­ment of truth. Rather, they are the cu­mu­la­tive re­sult of a huge num­ber of pre­vi­ous ex­pe­ri­ences. I doubt any pur­chase has ever been made in a re­tail store with­out be­ing in­flu­enced by the in-store ex­pe­ri­ence. There are the eas­ily iden­ti­fied in­store in­flu­ences such as: price, lo­ca­tion, in­ven­tory level, as­sort­ment, mer­chan­dis­ing, pro­mo­tion, etc… but there are also oth­ers that are more dif­fi­cult to mea­sure. If con­struc­tion was mak­ing it dif­fi­cult to ac­cess a park­ing lot, would you make your pur­chase else­where? If a check­out line is long, would you cur­tail your pur­chases to the bare min­i­mum to take ad­van­tage or the rel­a­tive speed of the ex­press lane? If your planned pur­chased was held hostage by a surly and poorly trained sales as­so­ciate, would you com­plete your pur­chase or walk out? That’s not to say that all ran­dom in­store ex­pe­ri­ences hin­der pur­chase de­ci­sion. What if ev­ery per­son you saw in the store was pur­chas­ing the same item. Would you be in­trigued? Would that influence your de­ci­sion to buy it? If you are in­tend­ing to pur­chase a suit, would you be more or less likely to buy one like the one you saw on the at­trac­tive salesperson? The con­sumer de­ci­sion tree and path to pur­chase are far too com­pli­cated to be di­vided into two col­umns (made-in-store vs. made-out-of-store). Fur­ther, the path to pur­chase will be dra­mat­i­cally dif­fer­ent for a $1 con­sum­able item than for a $1,000 durable good. So given IRI’s fo­cus, when they talk about “Store­Brands,” they mean al­ter­na­tives to Tide, not items such as In­signia Tele­vi­sions at Best Buy. While the con­sumer’s path to pur­chase is al­ways in a state of evo­lu­tion, I do be­lieve we are cur­rently ex­pe­ri­enc­ing a pe­riod of dra­matic and dis­rup­tive change, to which our con­nected life­style, the in­ter­net, the rapid evo­lu­tion of con­sumer goods, and the global eco­nomic slow­down have all con­trib­uted. It’s clear that the strength of Name Brands have eroded as a re­sult of the “pretty good” phe­nom­e­non. If poor­ly­made flour might kill you, Pills­bury may seem like an im­por­tant brand. But if all flour at the store is “pretty good” and does not jeop­ar­dize your mor­tal­ity, the pref­er­ence for the Pills­bury Brand isn’t as strong. (Rob Walker talks about this in his ex­cel­lent book: Buy­ing In: What We Buy and Who We Are ). The best­selling brand of tele­vi­sions in the US, Vizio, didn’t even ex­ist in 2002. That kind of me­te­oric rise of a durable con­sumer goods man­u­fac­turer could never have hap­pened with­out the “Pretty Good” ef­fect. It’s also clear that shop­pers are do­ing a lot more re­search be­fore they even en­ter the store. Best Buy re­cently dis­closed that half of all shop­pers who spent more than $50 had re­searched the pur­chase on-line. Not that long ago, less than half of all Best Buy shop­pers even had ac­cess to the in­ter­net! If on­line re­search fol­lowed by in-store pur­chase is the pre­dom­i­nant shop­per be­hav­ior, how will Best Buy fa­cil­i­tate un­planned or im­pulse pur­chases? The in-store shop­ping ex­pe­ri­ence will have to change to be more re­search friendly. QR codes on the shelf-edge, any­one?

Add to that:

Prod­ucts are more com­pli­cated. To­day’s TV can stream movies from Net­flix, turn them­selves off to save elec­tric­ity when you leave the room, and show you 3D movies. They, like other con­sumer elec­tron­ics prod­ucts, have come a long way as com­pared to the rel­a­tively static fea­ture set (size, brand, re­mote) from a few years ago.

Prod­ucts are in­tro­duced faster and have shorter shelf-lives, so con­sumers (and sales as­so­ci­ates) have less op­por­tu­nity to get fa­mil­iar with a par­tic­u­lar model. re­quire­ment. We no longer ex­pect to sim­ply use a prod­uct, now we need for the prod­ucts we buy to work with all the other prod­ucts we own or might own in the fu­ture. Will this TV work with my Tivo? My WiFi net­work? Is it com­pat­i­ble with 3D? If so, will I need to buy spe­cial glasses? In the midst of all this com­pli­ca­tion, what is re­plac­ing Brand at the top of shop­pers’ de­ci­sion trees? Vari­a­tions on peer rec­om­men­da­tions and ex­pert opin­ions seem to be ris­ing up the list. And that makes per­fect sense… as the de­ci­sion gets more com­pli­cated, more of us will out­source our choice to a spe­cial­ist. This is why I think K-Mart’s ef­fort to get prod­uct re­views on the shelf edge make a lot of sense. It’s an­other rea­son why mo­bile will play a ma­jor role in the fu­ture of in­store mar­ket­ing. But this is only a first step… the prob­lem with peer re­views is that the sig­nal-to-noise ra­tio is very low. I don’t want ran­dom re­views from strangers; I want re­views from a per­son in my so­cial net­work whose opin­ion I trust. That’s not go­ing to hap­pen with a static fact tag. The bot­tom line is that we need to learn what sort of ex­pe­ri­ence this new con­sumer wants at each phase of the pur­chase de­ci­sion – and de­liver it to them, no mat­ter if it is in the home, out of the home, or in the store. I can tell you where you won’t find these new cus­tomer ex­pe­ri­ences… in your rearview mir­ror! We won’t be able to meet these new con­sumer needs by re­cy­cling our old as­sump­tions and ideas from the past. It’s time to get out the blank sheet of pa­per and in­vent new shop­ping ex­pe­ri­ences. I, for one, can’t wait

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