BrainTrust Query: Three Purchase States

Through a special arrangement, presented here for discussion is a summary of an article from Views, the blog of TNS Retail and Shopper. Click here for a copy of the full essay.

In what I refer to as my purchase states hypothesis, the trillions of unique events in an in-store shopping experience, for practical purposes, can be boiled down to three simple buckets.

The Routine/Autopilot State: The first and by far the largest shopping state is when you buy something over and over again and it becomes an habitual process. The shopper shifts from consciously thinking about the purchase to an autopilot state that efficiently makes the purchase without a thought. It is this behavior that Neale Martin refers to as "the 95 percent of behavior that marketers ignore."

The Surprise/Delight State: You find the new $35,000 car you want is available for $29,000. The one huge problem in surprising/delighting shoppers: almost invariably, the retailer instinctively turns to price as the tool of choice.

The Frustration State: You need shoe laces, a piece of luggage that is "just right" or maybe a particular type of sauce that you can’t find in the store. Simply finding something that you might buy every two years may be a chore unless you are in the habit of seeing it regularly.

Why is this is important? Although category management is essential to managing stores, it falls well short of addressing item purchases. Shoppers do not purchase categories, they purchase individual items. By focusing on these three purchase states related to items, I have recognized the diversity that may occur from purchase to purchase on a single trip.

These three states also illuminate some of the issues in the continuing evolution of retailing across online, mobile and bricks-and-mortar. Although online can deliver some surprise/delight, the emotional, immediate experience in the "real" world would seem to give the advantage to the physical store. But, in terms of search, it’s hard to see how the bricks-and-mortar store will be able to compete without a huge inventory and shopper electronic search capabilities — smartphones, for example.

This leaves the routine/autopilot purchase as a real battleground between bricks and clicks. Automating routine purchases is a potential winner for the online store. However, bear in mind that surprise/delight may seriously alleviate the drudgery or blandness of the routine in the bricks store. The real challenge for the bricks store is to minimize frustration by moving as much purchasing into autopilot as possible and spicing the mix with a limited amount of surprise and delight. Spice is good, but only in limited amounts!

BrainTrust

Discussion Questions

Discussion Questions: What do you think of the author’s purchase states hypothesis? What are the advantages as well as perhaps some possible shortcomings of analyzing item purchases in this manner?

Poll

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Bob Phibbs
Bob Phibbs
12 years ago

I would offer that surprise and delight happens from an engaged buyer looking to solve the make-or-break question in retail, “What’s new?” It never has been price but emotion that makes people delighted – see Bloomingdale’s in its heyday, Apple retail stores, Magnolia Bakery.

To compete in such a “me-too” world surprise and delight must reign supreme from the merch to the store design to the employees — not the discount or the app.

Dr. Stephen Needel
Dr. Stephen Needel
12 years ago

There are 3 types of people in this world — people who believe there are 3 states of shopping, people who don’t, and people who have better things to do with their time than come up with 3 categories.

Yes, most of the time we shop by habit. This is what marketers pray for — that they can create a habit, through marketing, that makes their brand the first/only/automatic choice.

If a retailer gets it 95% right, that’s an “A.” And I’ve never seen any evidence to suggest that consumers are experiencing what we psychologists would consider frustration. Nor do most shoppers find grocery shopping drudgery — and there’s plenty of literature to support that.

Doron Levy
Doron Levy
12 years ago

Since the bottom line in our business is customers, analyzing their behavior will always provide critical marketing information. Retailers tend to focus on in-store customer behavior and template their layouts to cater to those variables. I like how the author has identified 3 buying states that exist outside the doors. Although, I wouldn’t say this is ‘groundbreaking’ information. The theories themselves are spot on.

Paula Rosenblum
Paula Rosenblum
12 years ago

I think the hypothesis is a bit simplistic. People buy items, but in apparel, they actually tend to shop categories/sub-classes.

And the surprise/delight thing can happen in many different ways.

And nothing is more routine than grocery shopping, yet it’s just not very profitable in an online world. Bits and pieces maybe, but the whole thing? Not so much.

Joan Treistman
Joan Treistman
12 years ago

I’d like to know more about the purchase states in any one retail environment because then I can develop strategies with the retailer or marketer. Although consumers don’t necessarily think in terms of categories, they do indeed shop particular categories as this is where they find the product they are looking for. When we understand the shopping process in each of these categories, we can organize the display, create the appropriate packaging and help guide the consumer to our brand and products. When I understand the mind set in any one store, I can guide behavior to the benefit of revenue and profit. It’s about thinking inside the trenches. I am all for the big picture, but my clients are asking for “now what”? And that’s what we have to deliver.

Max Goldberg
Max Goldberg
12 years ago

When consumers think about making a purchase, they weigh a number of factors, cost and convenience being two of the most important. If they need groceries, they think about which products are needed, how much time they have available, and which retailer will have what they want, at a quality and price that are acceptable.

If they need a new television, they do online research, visit stores to see the models in person, and then decide where to buy based on price, service and convenience.

Consumers want to flow seamlessly between online and brick and mortar. This is the trend amongst most consumers.

Herb’s three states might apply to grocery, but I don’t see this applying to much else. And even in grocery, with consumers pressed so hard financially, many are giving up habitual shopping purchases and trading off for private label.

Joel Rubinson
Joel Rubinson
12 years ago

Love Herb. Don’t love this. Here is what’s wrong based on my own insights from shopper insights R&D. First, the routine/auto-pilot state actually has 4 distinct sub-states. One of those is people deciding to buy a product category but not having decided on the brand until they get into the store. Hence, I disagree that people don’t buy categories. Secondly, I am starting to have real problems with the Neale Martin statement about habit. I believe it is appropriate to say that 95% of purchases follow shortcut shopper heuristics which is something well short of “habit” (unless you stretch the word habit so far that it loses meaning). Or maybe I just had too much coffee this morning? 🙂

Tony Orlando
Tony Orlando
12 years ago

It makes sense, because customers want the treasure hunt in the bricks and mortar stores they shop in. You have to surprise the folks with in-store crazy deals every week, and they almost have to come back to see what you have. Don’t always show your cards, and hold back some crazy stuff from the ad as an experiment, just to gauge the response. I’ve done it many times, and it gets good chatter in our local area, so the article makes very good sense to me.

Dr. Emmanuel Probst
Dr. Emmanuel Probst
12 years ago

With all due respect, I think this classification may be a bit simplistic. I don’t think discretionary purchases — the hedonistic shopping trip — are addressed appropriately in these hypothesis. Furthermore, I’d argue that a shopper may sometimes switch from one state to the other, i.e. from routine to surprise state, based on in-store promotion for example. Finally, I agree with J. Rubinson on the fact that people shop categories and make decisions on the brand literally in front of the aisle.

Ryan Mathews
Ryan Mathews
12 years ago

I also Love Herb but hate this approach.

Taxonomies are never adequate substitutes for effective marketing, merchandising, communication and/or customer knowledge.

With all due respect — I think we’ve spent too much time trying to create a clever box to put customers into and not enough time thinking outside the box.

Doug Fleener
Doug Fleener
12 years ago

I think the surprise and delight state might have more to do with people than price. It seems that no matter how low a price is, because of this commodization of products we’re still fearful of overpaying. So even a good deal doesn’t feel as good as it use to.

To me surprise and delight is when someone enhances our shopping experience. A person who proactively meets and even exceeds our expectations…as low as they may be. It truly is a differentiator and a nice surprise.

Doug Garnett
Doug Garnett
12 years ago

The surprise/delight purchase (I don’t really like the moniker — it minimizes the power of this state) should be looked at as a question of value.

Innovative new products deliver tremendous value here — and a much bigger long-term impact than price reductions.

He is accurate in that discounting is relied on far too much by retailers. However, as Zyman has observed, without good reasons to choose one product over another, consumers will always fall back on price. So if you can communicate, you can build significant value and avoid the lazy man’s reliance on price.

Dave Wendland
Dave Wendland
12 years ago

Analyzing item purchases through these rather narrow lenses may create a “picture” of shopping behavior. But, honestly, there’s nothing in this very simple hypothesis that provides me new and useful insight. Retailers need to concentrate less on trying to categorize shoppers and more on the experience, loyalty and satisfaction.

Art Williams
Art Williams
12 years ago

I think Herb has just explained extremely well why Costco is so successful. The Routine/Autopilot state they have totally under control as people are programmed to shop there to save money on good, quality offerings. The Surprise/Delight state they also do extremely well as shoppers are eager to see what new items they have added at a great bargain price. The Frustration state is their only shortcoming, but people are trained to not expect to find everything at a warehouse or limited assortment type store.

So when you compare this to shopping at a regular, chain, high-low price supermarket it is easy to see why we are seeing the market trends that we are. While I was thinking primarily of grocery, most of the comments apply to general merchandise as well, but not so much in clothing.

Charles P. Walsh
Charles P. Walsh
12 years ago

With all due respect to this thoughtful hypothesis, this approach brings to mind a scene from Charles M. Shulz special “A Charlie Brown Christmas” in which Charlie Brown plops down in a seat in front of Lucy’s “psychiatric booth” and tells her that he is depressed. Before Charlie Brown can utter another word Lucy demands a “nickel” for her advice.

Charlie Brown then goes on to explain how he knows he should be happy but he just can’t manage it. Lucy responds boldly with the infamous line “I think we better pinpoint your fears. If we can find out what you’re afraid of, we can label it.”

Coming up with a label or a category in which everything can be neatly organized is certainly convenient and meets our needs to “bucketize” behaviors so we can better analyze them, but I am skeptical that in doing so any significant improvement in sales can be achieved.

M. Jericho Banks PhD
M. Jericho Banks PhD
12 years ago

This article mixes apples and oranges, interestingly both food products. Seriously, to what retail channels does The Routine/Autopilot State “bucket” apply other than food and CPGs? Does it apply to $35,000 cars or to luggage? This is a silly hypothesis because it attempts to throw a blanket over widely diverse purchase behaviors and make sense of them in some formulaic way.

In their own way, each of the author’s “purchase states” point to certain categories of goods. And while there is clearly some overlap, a Venn diagram would reveal much more stuff outside the intersections than inside.

And what about our consumption of water, electricity, phone service, gasoline, babysitting, lawn care, and dog grooming? This “Purchase State” theory requires some significant work — or vastly more specific parameters — to be taken seriously.

Cathy Hotka
Cathy Hotka
12 years ago

I share my colleagues’ doubt about the categories, but I think retailers should concentrate more on frustration. It’s not just the inability to find random items in the store — it’s also about realizing that milk really does cost $4.39 a gallon, or finding one checkstand open when four are needed, or realizing that the skirt you like comes only in size 8.

Dennis Serbu
Dennis Serbu
12 years ago

Isn’t that what they taught us in B School, to make the complex simple? Dr. Sorensen understands the business and the best way to approach complex problems. Beyond that, the science of this business has too many variables and assumptions that outdate faster than they can be published. We haven’t had much luck predicting the weather either.

The simpler the better, adjust, and keep looking for the changes that will occur next week.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.
12 years ago

Unfortunately, many missed the essential point that my purchase states hypothesis addresses individual item purchases, NOT the shopping trip, which would typically have possibly all three purchase states occurring on a single trip. It’s no surprise to me that this thinking cuts across category thinking. I’ve spent the last several years driving down to the individual item purchase, because the reality is, that for any retailer, a relatively few ITEMS drive the success or failure of the entire business. Few could be 3, 30 or 300, depending on whether you are the brand manager, category manager or store manager.

Otherwise, it is gratifying to see wide recognition of the surprise/delight state. Too bad it is so rare in practice. But then, by its nature, it HAS to be unusual — the spice of the trip. The “bread and butter” of the business is in the routine/autopilot, which is NOT a category issue, the reason the industry in general falls so far short of really reaching the shopper is because category management — essential for running a store, but is not so useful to the shopper. Obsession with category management is choking the potential for a lot of retail sales, which have always been about items. Too bad the bus you are on has run out of gas — better catch the next bus, item management! 😉

Paul Flanigan
Paul Flanigan
12 years ago

Hmmm.

I’m not sold. Many reasons in this thread, but the one that sticks out at me is the absence of environment factors on the shopper’s state of mind. The shopper state of mind changes every nano-second. The shopper may just need a some shoelaces, but has to walk by miles of products before getting to them, or surfs past pages of ads online.

I like the simplification because it’s here where we start, but we can’t discount these factors that, in many cases, will separate bricks from clicks.

Ronnie Perchik
Ronnie Perchik
12 years ago

While these three categories hold a magnifying glass to consumer behavior, the overall theory isn’t sharp enough to paint the whole picture. Shopper behavior is often complex, in the sense that different people make purchases for different reasons. Variables include price, aesthetics, social pressure, available product information, what’s in stock at the time of purchase…and the list goes on.

I do agree with the idea that a large percentage of people are on “auto-pilot.” They want to get in and out of the store quickly, and know what they want to pick up. This is where digital technology can really play a crucial role in streamlining the purchasing process, both online and offline.

But it’ll start with creating brand loyalty. And how does digital play into this? Via social media, and listening to consumers to modify your brand to suit their expectations so they’ll purchase your brand as “routinely” as possible.