Survey Says Fewer Brand Decisions Made at the Shelf

As an AdAge.com article points out, it has become common for those in consumer products to state that 70 percent of all decisions on what brand to buy are made at the shelf. A new study from OgilvyAction contends that it’s time to throw out the old number and go with a new and lower one.
According to the study, 39.4 percent number is the real number of consumers who wait until they’re in a store before deciding what brand to buy. About 10 percent change their minds while in the store and 20 percent leave a product on the shelf that they intended to buy. Nearly 30 percent of consumers wind up making a purchase from a category that they didn’t intend to buy from before walking into a store.
“That 70 percent figure we’ve all heard over the years always sounded a little high, and we all know it’s a little high,” said Peter Hoyt, executive director of the In-Store Marketing Institute. “Some think it’s a lot high. I think what the Ogilvy study does effectively is help decompose [the data]. I think it’s closer to what we can accept as statistics having some validity. … But it’s not that 70 percent of every shopping cart is made up of something people didn’t [originally] intend to buy. That’s just not real.”
The original 70 percent study was conducted in 1995 by Meyers Research Center for the Point of Purchase Advertising Institute (POPAI). In a statement, POPAI continued to support the 1995 findings. “There have been various studies that have arrived at different in-store decision rates over the years, based on unique methodologies, trade channels, and the context and location of consumer interviews. POPAI welcomes any research that helps brands, retailers and agencies understand the strategic importance of marketing at retail.”
The OgilvyAction study was based on interviews with 6,800 consumers in the U.S. (14,000 total across the globe) and covered shopping behavior in 13 categories including beverages, confectionary, hair care and household cleaning products.
While the new research failed to answer just how much advertising outside the store environment influences purchases, it did determine important factors that drive impulse purchases. Sampling and product displays ranked one and two.
“The good news for marketers is that a product display and sampling can build brand equity,” Jeff Froud, senior strategic planner for OgilvyAction, told AdAge.com. “No matter what rulebook you studied when you were studying marketing, price promotions don’t build any brand equity and in some cases can be equity destroyers.”
“More and more of our communication is moving to store,” A.G. Lafley, chairman and chief executive at Procter & Gamble, said last month at the International Advertising Festival in Cannes. “And the reason it’s moving to store is that more and more consumers are… making their purchase decisions in store. And in a period where you have a fair amount of food price inflation, we think more of that shopping list, whether it’s just in [a shopper’s] head or actually written down, is being decided in the store.”
Discussion Questions: What do the findings of the OgilvyAction study mean for consumer goods brands and retailers? Does the number of brand purchase decisions made in store, 70 percent or 40 percent, mean anything in practical terms when it comes to display and other forms of in-store communication?
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26 Comments on "Survey Says Fewer Brand Decisions Made at the Shelf"
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These numbers, although good for national brands, just do not make sense. As we have determined over the years, and the substantial growth in house brands and generic, consumers clearly change their minds and pursue other alternatives, then what they originally came shopping for. From Kirkland, to Safeway select, the tremendous investment the major retailers put into this only supports the increased revenues that they report each quarter.
Destination shopping for national branded products, outside of coupon driven and incentive shopping, is simply not a reality. The continuous growth of alternatives, as well as their increased profits, despite offering a lower cost decision, points to this. Follow the money!
I largely agree with Bill Bittner (and many other good comments here.) However, Bill said, “If the product lends itself to sampling (understanding this is a relatively expensive approach), that seems the way to go for in-store promotion.” I have been asking clients to explain to me for years how a 3-6 hour exposure on one or two days, that reaches maybe 1% of the store’s shoppers, is worth the $1000 or more that it costs the brand supplier. The economics make no sense for the brand supplier.
However, retailers love them because it makes the store a “happening place,” with a party/fair atmosphere. Like a lot of stuff that makes no sense for the brand, the retailer has them convinced it’s really good for them. Not that the brands haven’t been a willing audience.
Getting through to the consumer with your product message and features is easier and more effective at the point of purchase. The amount of clutter in more traditional media and the options of what consumers watch, read and view on the internet and cable has made effective use of advertising dollars much more difficult.
If P&G is ramping up more of their consumer advertising dollars at the shelf and point of purchase, that in itself should tell you a lot about what is most effective. I’m inclined to believe that the percent numbers in both studies may be weighted to the advantage of the researchers doing the study, but nevertheless, the most critical element in reaching the shopper is at their point of decision, and that’s the shelf.
“Me thinks” the OglivyAction study confirms that the only reliable constant in determining how and where brand selection is determined is the continued proliferation of research projects. In determining selection success, the proof would seem to be in the pudding. Thus I tend to agree with Ron that the instincts used by P&G and Art Lafley are still at the top of the research game. They may not always win but that’s still the way to bet.
Any single number (70%, 40%, whatever) is meaningless and potentially harmful. It paints a “one size fits all” picture of consumer shopping behavior, which is entirely inappropriate. The real “action” in effective retailing is to understand, capture, and learn to live with the massive variability around this number. The extent of last-second decision-making varies drastically across consumers as well as over time for a given consumer.
As Anne Howe (and perhaps others) have said above, the key is better measurement. And in conducting better measurements, our goal should not be to refine this single number to a higher level of (meaningless) precision, but to fully understand the range that it takes on and the relatively limited capabilities that managers can ever have to exploit it as much as they would like to. Much of shopping behavior should be seen, essentially, as completely random no matter how much retailers try to influence shoppers’ movements and decisions.
No matter what the actual number, retail can have a huge impact on sales. But just as advertising clutter can become a cacophony of noise outside a store, so too can in-store clutter negate effective communication. A good mix of brand building outside retail and brand reinforcement in-store is the best way to build sustainable sales.
Impulse shopping is alive and well. But the shelf is now digital. Amazon and others have pointed the way with reviews and “you might also like” recommendations. Increasing dwell time at the shelf, whether 3D or virtual, is still the name of the game. The field has moved, but the game is still afoot.
Where to start on this issue–First, there is no way an opinion polling company is getting better consumer buying behavior intelligence than P&G. I trust A.G. Lafley’s instincts (and P&G’s multi-million dollar marketing research budget) much more than any consultant or analyst. If they are putting their money in the store, others should follow suit.
Second, the article admits that the study “doesn’t answer the age-old question of the extent to which advertising outside the store ultimately influences purchase decisions consciously or unconsciously.” In addition, it doesn’t seem to address the effect of cross-marketing, how in-store marketing influences overall brand reputation, the impact of out-of-stocks and many other issues.
Finally, even if the true number is 20 percent, it is still a huge number in the hundreds of billions of dollars range. Marketers ignore this opportunity at their own peril.
Whether it’s 70% or 40%, the key point here is the immense opportunity that retailers and their suppliers have to dramatically influence consumer buying behaviors. Everyone recognizes the impact of sampling and product displays on sales.
Now, imagine if you can the impact you could make on performance if you could engage the workforce in the stores to the point that they become brand ambassadors, both for the store itself and for key products. Think about when you’re out shopping and you meet (albeit, all too infrequently) an informed, motivated sales person who capably recommends and endorses a product in the store. That product almost inevitably ends up in your cart. The staff factor is just as great, if not greater, than displays, signage and sampling.
I agree with Ben Ball–the key learning is that purchasing is a process, and marketers have the opportunity to influence that process at various points along the way. Knowing that a consumer made a purchase decision “at the shelf” may not reveal, for example, that faced with 20 different brands of a product, the consumer only considered three, and decided on one. Does that count as a purchase decision made in-store? Certainly. Did those three brands waste their out-of-store marketing dollars? Certainly not. You have to be in it to win it as the saying goes, and advertising and promotion influence the purchase process in ways both conscious and unconscious.
With retailers and brand owners fighting even harder for market share in today’s economy, it is even more important to get the in-store merchandising right. While surveys are showing more pre store searching for product information, the purchase decision will be still be heavily influenced by the in-store experience. Understanding what engages the shopper is the subject of much research and experiment, but the purchase decision is still made in the aisle.
Online research that drives product selection before going to the store is showing rapidly growing numbers. The key point might be to influence the consumer BEFORE they get to the store, reinforce that message in the store, and let those who failed to invest in the right balance see their numbers decline.
70%, 40%, 20%, it doesn’t really matter. What it all means is that marketing continues to be highly fragmented, and people are making their brand decisions in a variety of ways, in a variety of places. What about word-of-mouth? Where is that measured? And what about word-of-mouth while people are in-store? How will the iPhone and similar hand computers change the way people make their purchases in-store? These are all questions that need to be answered when developing a marketing plan for a brand. Trying to separate “in-store” versus “pre-store” is so yesterday.
No offense to P&G readers out there, but just because P&G is doing something does not make it correct. You could substitute any of our CPG giants here–Unilever, Nestle, Pepsico, etc.–and following someone’s lead in the belief they know what they are doing would be pretty silly. Worth paying attention to, surely; studying their behavior as it relates to your business, absolutely. But blindly following–I don’t think so.