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Shopper Insights: The State of the Science

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In this ebook, Copernicus’ Peter Krieg and Jeff Maloy take direct aim at the points in the shopper research process that frequently hold back the profitability and ultimate performance of shopper marketing programs.

They offer the current lay of the land in shopper insights, explaining problem areas in the research process and offering specific fixes to improve the actionability and relevance of results.

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Shopper Insights: The State of the Science

  1. 1. The CopernicusMarketing Genius Series Shopper Insights: The State of the Science By Peter Krieg and Jeff Maloy 1
  2. 2. Introduction levers today than they ever had to before. All of us are consuming media inWhile many consumer companies may have initially turned to shopper so many different ways—some people are only online, some only watch TV,”marketing as “a practical idea of the moment during a recession,” its Dina Howell, CEO of Saatchi & Saatchi X, the agency’s shopper marketingmeteoric rise in budget size and importance continues even as the economy arm, told the Wall Street Journal. “The bulk [are] somewhere in the middle,shows signs of improving. The evidence: and that’s what’s making it harder to determine what is the correct formula.” • A recent survey of over 300 marketing executives across various Factor in the emergence of “omnichannel” retailers and varying trip missions, retail and manufacturing sectors found more than 80% say shopper and shopper marketers have got themselves one tough nut to crack. marketing is vital to their brand’s long-term success. Lucky for shopper marketers they have at least one well-established practice • In many consumer companies, shopper marketing beats out working mightily in their favor as far as delivering to expectations in a very digital for “fastest growing area of marketing spending.” challenging business environment goes: grounding decisions in insights. • Annual spending on shopper marketing in 2011 totaled The Path to Purchase Institute, a leading industry organization, lists the $50–$60 billion. reliance on research and data as one of the defining characteristics ofWe’d define shopper marketing at its most basic level as activities along the shopper marketing: “Shopper marketing is the use of insights-drivenpath to purchase designed to inspire a visit to a retailer and the purchase marketing and merchandising initiatives to satisfy the needs of targetedof a manufacturer’s brand. Not surprisingly, it “emerged from the realization shoppers.” Practitioners also appreciate this embedded feature of this armthat influencing consumers when they are in a shopping mode can enhance of the marketing mix. When asked in an interview with The Hub Magazinesales and return on investment (ROI),” or so maintains Booz & Co. Of course, if shopper marketing is here to stay, for example, Tia Newcomer, generalas more and more companies increase their budgets for shopper marketing, manager, retail publishing solutions, HP, replied, “Absolutely. It’s here to staythe competition for shoppers’ feet, dollars, and hearts—not to mention the because it starts with insights — how can that go wrong?” pressure on shopper marketers to deliver those “enhanced sales and ROI”— The solid history of using research and insights to guide decision-makingratchets up more than a few notches. is most definitely one of the fuels of shopper marketing’s fire. As Booz &Of course, the explosion of digital media certainly hasn’t made it any easier Co. once put it, “shopper marketing’s potential is rooted in its focus onto answer what were already pretty challenging questions: gathering insights about consumers when they are in shopping mode • Which group of shoppers is “the best” target for programming? and applying these insights to influence their purchase decisions.” • How do you drive them to retailers? Whether it’s fine-tuning merchandising and promotions at specific store • When and how is the best way to reach and engage them to inspire a locations to appeal to a particular shopper segment as Con Agra did at purchase? campus convenience stores; designing an ecommerce website aroundIt also doesn’t help that identifying which of the exploding number of insights into the needs of the most profitable online shoppers as Underopportunities to influence purchase decisions will have the greatest Armour did; or developing a communications plan where research indicatedeffect on traffic, sales, and loyalty has become a critical and often shoppers were most receptive to the brand as Benjamin Moore did, shopperfrustratingly complex process. “The reality is marketers have to pull more marketers routinely draw on insights. 2
  3. 3. As these examples demonstrate, an understanding of which shoppers and requirements of the end-users of research from an afterthought to ato target with marketing efforts remains one of—we might even go so forethought.far as to say the—most important insights marketers need in order tolaunch successful shopper programs and expand channel relationships. As Shopper Insights:Phil Kotler, dean of American marketing professors, wrote in Ten Deadly Who on the Organization Wants—and Will Use—ThemMarketing Sins, “the first commandment of marketing is to segment the As shopper marketing has definitively moved way beyond the “first moment ofmarket, choose the best segment, and develop a strong position in each truth” at the store-level, programs involve far more elements of the marketingchosen segment.” With multiple challenges to deal with as they try to take mix and media than ever before. It stands to reason then, that shoppershopper marketing to the next level, nailing the targeting decision becomes research will need to encompass a wider set of considerations in order toall the more important. produce insights that different groups in the organization—be it the shopper marketing team, the sales team, the in-store marketing agency, the ad agency,Extracting readily useful, big picture insights such as identifying the “best” media planners, digital marketing manager, or mobile agency—can use.segment to target and where in the purchase and post-purchase processto reach them that can guide the development and ease the execution of It’s just not enough anymore, as Ron Park, a senior director at databaseshopper programs, however, is not a given by any means. In fact, if we had marketing firm Merkle, put it, “to assume that a ‘better understanding’a dollar for every time we’ve heard a shopper marketer tell us, “we can’t of customers will yield results” applicable to a variety of marketing issues.figure out how to apply the insights we have to the decisions we need to Marketers need to actively frame the discussion by getting rid of themake,” and, “it’s not clear how to use them to work better and smarter with conventional up-front meeting with a very narrow set of people to establishour retailers to drive traffic and turns,” we wouldn’t need to play the lottery research requirements, replacing it with an open forum that draws from allanymore. areas of the marketing and sales organization.“To our way of thinking,” explained our colleague Kevin Clancy, chairman To stress the essentialness of including the sales organization in aof Copernicus and winner of the Advertising Research Foundation’s Great marketing research discussion, Jeff Maloy, co-author of this chapter,Minds Award in Innovation, “a truly ‘state-of-the-science’ shopper insight is explained to a client that, “shopper marketing requires a group effortas much about its relevancy and applicability to the fundamental strategic between sales and marketing, much more so than brand marketing. Becauseand planning decisions at hand as it is about the complexity of the algorithm brands and retailers share the ability to influence consumers during theor analytical technique used to generate it in the first place.” purchase process, like it or not, marketers depend on the sales or account team to bring a retailer on board and run a marketing orTo finally put a sock in the on-going complaints about the merchandising program in stores.” When the sales team has theactionability of shopper insights and bring them up to state-of-the- opportunity to provide input on what they need or would like toscience standards, we’d suggest shopper researchers and marketers find out about shoppers that would help them with their retailalike take direct aim at the points in the research process where accounts, the insights coming out of the research are far more likelysomething isn’t happening and, as a result, it’s holding profitability to have a positive impact on channel relationships and successfuland performance back. First and foremost: converting the needs program implementation. 3
  4. 4. The same holds true for agencies and the other tactical groups that will be increasing frequency as more and more companies jump into the shopperinvolved in creating and executing programs. Unless data gets collected marketing fray.to help them better understand and identify the messages, products, and “I’ve got reams of consumer insights,” he exasperatedly explained. “Andtactics that will most effectively drive traffic and motivate a purchase, they’re I’ve got tons of shopper insights. Problem is, it’s just not clear to me which toleft to guess at what will work best. use, when, or how they can help me most effectively maximize sales of majorAn anecdote from one of our colleagues, a veteran marketing researcher brands in key categories.”in retail and consumer categories, underscores this point. He recountedto us an uncomfortable situation at a recent client meeting.His counterpart on the shopper insights side of the researchcompany they both worked for was presenting the findingsof a major study. While it was a thorough report with plenty of CONSUMERS SHOPPERSinteresting nuggets of information, our colleague had no idea FOCUS: How, When, Where, Why Consumers How, When, Where, Why Consumershow the client could use it to select a profitable target and Use/Consume the Category Shop/Buy the Categorybuild shopper programs for its retail accounts. PRIMARY Brand Marketing Team Shopper Marketing Team END USER: R&D Agencies Sales/Account Team“I just kept wondering, ‘Who [in our client’s organization] can use this? How KEY END Marketing Communications In-storeare they going to use this?’” he told us. Posing these questions and letting USES: Innovation Path to Purchase Influencers/Tacticsthe answers determine what we need to know about shoppers at thevery beginning of the process will make a tremendous difference not It’s very true that consumers and shoppers are often different groups,only in the quality of insights marketers end up with, but also to the ROI of requiring distinct marketing strategies. We’d define “consumers” as theresearch efforts. individuals who use a brand, product, or service. Whether it’s the kids who eat the breakfast cereal, the teenagers who drive the family car, or theWho to Talk to: Consumers vs. Shoppers parents who talk and text on their mobile phones during Junior’s basketballIn addition to getting input from a wider swath of the organization on game courtesy of their wireless service provider, they’re the category’swhat to find out about shoppers, the other major issue to get ironed out “consumers.” Studying them to learn more about how, when, why they usebefore the research starts is who is the research subject. It may sound a product or service; and/or asking about the perceptions they have aboutlike a straightforward enough question to answer, but choosing between brands, their attitudes, as well as the needs, problems, and pains they haveconsumers and shoppers as the key population to study is a much more that a product or service in the category could solve, can provide invaluablenuanced decision than it seems. What’s more, if it doesn’t get addressed at guidance on brand marketing strategy.the outset of the research process, marketers will run into the same problem The brand team can use the consumer insights that come out of thepresented to us by a client at a nationwide drugstore chain. We’re dedicating research to guide marketing communications efforts that build awarenessdiscussion time to it here because it’s a problem we’re hearing about with and drive purchase interest. R&D and product innovation teams can also 4
  5. 5. use the research to develop new products or services to appeal to different Segmenting Shopperssegments of consumers. This set of insights, however, isn’t necessarily going and Identifying Profitable Targets for Shopper Programsto indicate when consumers are in shopping mode and what’s going to drive To review, answering these over-arching questions will dramatically improvethem to stores when they are. the effectiveness of shopper research:“Shoppers” we’d define as consumers who go to the store/online to make • Who is going to use the research?a purchase in the category. Studying them to learn more about how, when, • What do they need to know?where, why they shop/buy in the category, what drives them into a store, • How do they need to use it (e.g., create in-store shopper programs, buyattitudes they have about the shopping experience, and what fosters loyalty media to support those programs, guide retailers on merchandising,to the brand after purchase can provide invaluable guidance on shopper assortment, etc.)?marketing strategy. When all is said and done, marketers want to reach • Which group do we study?and influence the person who does the purchasing in a category for thehousehold—they are the far more productive and helpful source from Now how about doing the same for shopper programs? For that, marketerswhich to gather shopper insights. need insights that answer the questions:Granted, identifying the purchaser in the household for any given product • Which shoppers should we target?or service category is not necessarily an easy task. It used to be that for • At which channels/retailers?most consumer packaged goods, mom was the shopping master. A March • How do we most effectively and efficiently market to them with2012 cover story in Time just confirmed what many marketers suspected: as campaigns and shopper programs?more women take on the role of primary breadwinner in the household, dad Enter shopper segmentation, one of the most powerful strategic researchis more frequently taking control of the grocery buying. Likewise, in other tools available to point shopper marketing strategy in the most profitablecategories where men traditionally did the purchasing—such as electronics direction. At a time when CEOs, CFOs, and retail partners want proof downand investment firms—women are now just as likely to do the shopping. to the penny that shopper marketing is working as effectively and efficiently In order to get insights into the mind of the shopper, as possible, segmentation research that tells a shopper marketer where to marketers have to make certain they collect data from direct resources to generate the biggest return in traffic, sales, and loyalty is the right person. Screen very carefully for “the person worth its weight in gold. responsible for doing the purchasing in the category for Regardless of the category, there are a few irrefutable facts marketers the household.” For any given category, it could be the are just going to have to accept when it comes to doing a shopper female head alone, the male head alone, or they share segmentation. the responsibility equally. The mix of male and female participants in a study will likely vary—there is no hard and Fact #1: The “best” target shopper is the one that’s most profitable fast rule for any category on the ratio of male to female for a brand’s programming. shoppers anymore. 5
  6. 6. A quick note here on one of the biggest trends in shopper marketing today: Yes, it’s human nature to want to select a certain set of variables—be theyproviding “shopper solutions.” “Shoppers rarely purchase just one item,” demographics, channel preferences, or shopping behaviors—ahead of timereported Booz & Co. “It is the combination of items, bought with a particular to feel more in control of the final outcome. Particularly if the results soundsolution in mind, which often defines a successful shopping trip.” As a result, like they’ll be cool and fun and, therefore, theoretically easier to shop aroundmarketers often want to put programs in place to sell several brands in to different business units and develop programming to appeal to, why notseveral product categories. A shopper segmentation can provide targeting just go ahead and pick one set of variables as soon as possible?guidance on the shoppers that will be the most profitable for programming If your mother ever told you, “don’t put all your eggs in one basket,” thisfor either a single brand OR multiple brands that get purchased together in is the time to take her advice. Why bet only on demographics or any otherthe same market basket. More to come on this topic in later sections. exclusive set of characteristics as the key predictors of behavior in theKeep in mind, in order to assess profitability, marketers have to include absence of any evidence that they are—investing significant time and money,profit-related criteria in the segmentation study. Measures for every not to mention personal credibility—in a shopper segmentation when yourespondent in the survey of shoppers could include: don’t have to? Instead, start by considering a wide variety of characteristics— the bigger and more diverse the list, the better—in order to find the set • current spending in the category in dollars that’s most predictive of profitability to programming. • market basket analysis • current brand share • behavior and prices paid in different channels Who is the Shopper? • price insensitivity Develop a Meaningful, Profit-Directed and Actionable Segmentation • lifetime value CREATE TEST PRODUCEThe thing of it is, like it or not, no one—no matter how well-versed in C Cshopper marketing or a category—knows for any given market whatcharacteristics and behaviors will be related to these measures of profitabilityuntil they talk to shoppers, collect some data, and do some analysis.Fact #2: There’s just NO WAY to know ahead of time before doingany data collection, testing, or screening what might be predictive of Hundereds of Variables To identify Optimal 1. Category Involvement characteristics Segmentationprofitability. 2. Attributes Desired in of people who Product Category 3. Purchase Process are profitableFact #3: Focusing on a narrow, pre-determined set of variables such as Channel Preference for your BRAND 4. Demographicsdemographics, channel preferences, or shopping behaviors dramatically 5. Links to Media Habit PanelsDECREASES the probability of identifying the shoppers that will produce 6. Links to Household Panels 7. Links to Marketing Databasesthe highest return on an investment of shopper marketing dollars. 6
  7. 7. We want to be clear here, however, that we’re not talking about putting Moving back to the segmentation process now, after collecting datatogether a totally random set of hypothetical ways to segment the market. in a large-scale quantitative survey, test the relationship between eachMarketers need to stay razor-focused on what different people in the characteristic and the profit-related criteria to find the key market drivers.organization want to know about shoppers and need to be able to do with At that point, marketers can group shoppers into segments based oninsights when the research is done as they make their list. After all, knowing their standing on the anywhere from 5–25 characterics that best predictwho the most profitable group(s) of shoppers to target with programming profitability. Tap various analytical tools such as cluster analysis to generateis, in and of itself, an incredible insight, one that can and should shape different segmentation solutions based on the characteristics.everything a marketer might do—from retailer-specific programs to media, Finally, marketers can evaluate the possible solutions in terms of managerial,to ecommerce website design and product assortment, to sales strategy statistical, and financial criteria. Ask questions such as:and promotion. Yet it’s the ability to actually do something with that information—as in track down the target shoppers in stores, online, and on • Do we see different shopping behaviors?their mobile phones—that can have a transformational effect on shopper • Different needs from products in the category?marketing. • Different in-store purchase influencers (i.e., shopper loyalty cards, POP, etc)? • Different channel preferences?We’ll talk more in a moment about building a full set of shopper-oriented • Different needs from the channel?variables that could be candidates for consideration, but certainly • Different shopping processes?establishing what databases end-users of the research access for their work— • Different levels of profitability?i.e., household panels, marketing databases, customer databases, etc.—and • Which solution is most easily understood?connecting the data that gets collected as part of the segmentation exercise • Is this approach more or less easy to execute?to them, it goes without saying, should go right on top of the list. We’d • Will the sales force be able to use it to improvego so far as to say that linking the questions between the survey used relationships with key accounts?to create segments and those used to build other media, sales, and • Can we find the segments in different databases?household panel databases is often missing from shopper segmentationexercises. Based on the answers to these questions, select the optimal solution and provide a rank order of the different shopper segments in terms of theirWith so much of the success of shopper programs riding on execution at the return on investment to clearly identify the most financially advantageousindividual store level, if a segmentation doesn’t include a way to find and group to target. Not surprisingly, not every retail partner will have locations inreach profitable targets for programming in the areas surrounding stores areas with large concentrations of the most profitable, highest ranking segment.through clear connection to a database, it’s basically worthless. Think of The full rank order provides guidance on prioritizing efforts to drive foot traffica shopper segmentation as the foundation on which to build a marketing and profits in any trade area. As we mentioned earlier, as long as links tostrategy and the EXECUTION of that strategy. It should pave the way to household and neighborhood databases were included in the segmentationmove smoothly from research, to insights, to action steps. exercise, a marketer can provide sales and account teams with a list of the “priority” stores and/or the relative mix of segments for every retail location. 7
  8. 8. To make it more manageable, additional work can be done to create a The Shopper’s “Journey”—Making a List, Checking it Twicetypology of store types based on the mix of segments across different Let’s dig into that all-important step of building that list of characteristics tolocations. The sales/account teams could offer, say, Wal-Mart, a typology of identify the people most profitable for shopper programming. Informing ahow to organize its 2500+ supercenters into 4–6 groups based on the types big part of this discussion is the strong undercurrent of dissatisfaction withof shoppers that live around them. shopper research not fully exploring the different aspects of the purchaseA case in point, a large wine maker we worked with offered a customized process that we’ve observed. Shopper research is not currently “diggingprofile of the relative mix of shoppers at every restaurant and retail account deep enough at the retail level,” agreed shopper marketing consultantsthat carried its brands. The segment profiles included a classification of our Dustin Lehner and Jennifer Butcher in their article, Retailandia.client’s and its competitor’s premium brands, preferences for promotions, To confront the situation head-on, brands and retailers need to getdisplays, and featured products. When on-site at a store location, our client’s information that clearly indicates how to engage with and motivate shoppersaccount team could assess whether a retailer adequately addressed product to go to a real or online store and buy, buy, buy. The primary objective withassortment and in-store marketing in a particular trading area and make asking all kinds of pre-, during, and post-purchase- and channel-relatedproduct mix and merchandising suggestions. Armed with a profile of the questions is to create segments that are very different in terms of shoppingrelative mix of shopper types, the sales force was able to demonstrate to behaviors and differentially reachable with shopper programs, promotions,retailers how to most effectively inspire purchases with in-store influencers and incentives. In the context of the shopper segmentation, the end-resultand enhance shopper experience at the store-level. should include a rich, big picture profile of each segment in terms major purchase influencers, in-store tactics, and more. Importantly, we think of Who is the Shopper? this kind of segment profile as being very distinct from the kind of path to Using “predictive” characteristics to define segments purchase analysis which we’ll talk about later that assesses the relative ROI of leads to clear targeting. different tactics and timing of execution for a specific target group. Likelihood to Purchase the Brand Potential ROI Dividing the “journey” into three basic stages for the purpose of % of % of Brand’s generating hypothetical ways of segmenting the market that may be 17% Shoppers Potential Business related to profitability, could look something like this: 22% Pre-shop —> Shop —> Post-Shop 11% 44% 19% In the pre-shop period, how important a shopper feels a purchase decision is in 6% the category—a.k.a., their level of involvement—could set the stage for a further 4% 16% 3% exploration of shopping behaviors. Some shoppers spend almost as much time 27% 18% weighing the merits of different toilet paper brands as others do in choosing a 10% car. Given how accessible information and reviews are for virtually any product 25% 9% or service in the digital age, to assume that involvement is a function of the 10% category—as opposed to the individual shopper—is simply incorrect. 8
  9. 9. The amount of time an individual shopper spends researching a purchase others on a regular basis. Nevertheless, many consumers will share theircould be another behavioral characteristic to investigate. The Wall Street personal experiences with using or purchasing a brand—either with a socialJournal reported recently, “It’s well known that consumers research network, by writing a review, posting a picture or short video, the list can goexpensive products like electronics online, but coming out of the recession, on and on— if prompted to do so.consumers are more scrupulous about researching their everyday With all the digital and mobile tools that most shoppers have at theirproducts such as diapers and detergent, too.” One consumer electronics disposal allowing them to broadcast their experiences with greater reach andmanufacturer we worked with discovered that the more time a shopper put speed than at any prior time in history, including questions about shopperinto reading and reviewing information about TVs prior to buying one, the behavior post-purchase in segmentation research should be a given.more open and profitable the shopper was to their brand.Determining what the key influencers are for shoppers leading up to the Including the Digital and Mobile Journeystore visit is information of exceptional importance. Prior to the store, what Which brings us to another component of shopper marketing that’s verysources do shoppers pay attention to or consult? Advertising? Friends much on the minds of marketers these days: digital and mobile media. Toand family? Retail sites? On-line circulars? Product reviews on retailer or quote Dina Howell, CEO of Saatchi & Saatchi X, again, shopper marketingmanufacturer websites? Do they seek out opinions of category “experts” “isn’t just about cardboard displays anymore—you need to accommodateand/or bloggers? Do they do a lot of on-line searches? Do they take the way shoppers behave now, and that means in stores and online.”advantage of sampling opportunities? When it comes to developing different shopper segments, there’s every reason to believe that digital and mobile usage, behavior, and engagementMoving to the shop stage, marketers should thoroughly investigate retail could be an important criterion on which to base a segmentation—it couldpartners and channels of distribution. What characteristics do they look for predict profitability to programming—and, at the very least, would bein a retailer when they’re buying in the category? Where do they do most precious descriptive information to have for each group.of their purchasing in the category and how well does the retailer—eitherbricks-and-mortar or online site—they frequent do at delivering these As a reflection of the growing role of digital in shoppercharacteristics? Do coupons, shopper loyalty cards, or other incentives marketing, Saatchi & Saatchi X reported that not even fourmove them towards one store or another? Once in-store, what do they pay years ago, a scant 10% of its in-store marketing campaignsattention to? Store circulars? Displays? QR codes? In-aisle coupons? BOGO included an online component, but virtually everything theyoffers? Live product demos? Shopper card incentives? do now has digital elements. Not to be outdone, according to a Jupiter Research forecast, spending on mobilePost-shop, what happens? Depending on the category, do shoppers register retail campaigns in 2012 will hit $15 billion globally—atheir product? Sign-up to receive product updates and news? Do shoppers 50% increase over 2011. Especially if a marketer wants atake advantage of the loyalty rewards they earned? Post-purchase advocacy segmentation to guide digital and mobile, having a fulleris also a very hot topic in marketing in general these days, and no less so digital/mobile profile of the segments will prove more-than-in shopper marketing. Intriguingly, we find most brands have very few true helpful to strategy development.advocates—consumers who love a brand and want to share their love with 9
  10. 10. To explore how shoppers use digital and mobile media along their journey, The key here is to collect this data for the brand(s) or product category(ies) ofquestions might include: interest in the same survey employed to do the segmentation and to include some of the same questions found in the survey used to create the typology. • How much time shoppers spend online? • How much time on mobile devices? One brand we worked with applied a digital typology to its shopper • What websites do they visit? segments to give their digital agency some direction on the social • Where are they most engaged? programs that could be used to engage the target groups. It found a higher • Where are they most receptive? concentration of “Connectors,” who tended to use social networks to share • What types of mobile devices do they own? information with friends and family, and “Commentators,” who take part • Where do they go on their mobile devices? in on-line discussions/forums. The digital agency could use this breakdown • Do they use mobile devices while shopping? How? coupled with an understanding of the needs and attitudes unique to the • What mobile apps do they use? segment to craft social media promotions and campaigns tied to the brand’s in-store shopper programs.Of course, no study of digital media would be complete without a closerlook at social media habits and behaviors. Recognizing that there’s a SPECTATORS CONNECTORS COMMENTATORS AUTHORSspectrum of engagement with social, at the end of the day it’d be quitehelpful for marketers to know what the distribution is within differentsegments. There are many different typologies that depict digital mediausage and engagement. The one below comes from our sister firm Carat. Know How to Reach and Engage Your Shopper Target with Social Media 11% 32% 23% 16% As part of the segmentation, capture how your targets behave Index = 104 Index = 145 Index = 180 Index = 214 in the digital environment. Index is determined as the % people in each typology with the market segment What do you do on-line, on your mobile device, etc.? divided by the % in each typology among the total sample. The Path to Purchase: Follow That Target! Once they have selected a specific target for programming, many marketers delve further into path to purchase analysis to pinpoint where target shoppers are most interested in receiving communications from the brand. l Behavior vior HIGH Leve ls of Digital Socia Given that in many categories, to echo Jim Lecinski, managing director of of Digital Social Beha LOW Levels U.S. sales and service at Google, the once linear purchase funnel “is now Neither create Read posts, Use social Take part in Write own more like a neuron, with branches that let shoppers move forward and or consume watch videos, networks, online blogs or online social listen to share/manage discussion/forums web pages backward through the process until they’re ready to make a decision,” media podcasts photos/videos charting the shopper’s journey—while not exactly simple to do—makes INACTIVES SPECTATORS CONNECTORS COMMENTATORS AUTHORS 10
  11. 11. some good sense. Our plug here is that following a specific shopper target An auto parts manufacturer we worked with wanted to use informationmakes for an even wiser investment. about the digital behaviors of the different market segments specifically during the “exploration” phase of the path to purchase to improve theFor the purpose of identifying the exact moments, messages, and effectiveness and efficiency of digital communications to shoppers. In ourcommunication tactics that will most effectively move the target toward research, we discovered that some shoppers did on-line research pre-a brand and retailer, marketers would do well to blow out the path to purchase to find the right product for their situation and needs, while otherspurchase more fully to look something like this: wanted to make sure they weren’t going to get ripped off when they went inspiration —> exploration —> consideration —> trial —> satisfaction —> advocation to make a purchase. The messages our client might deliver to address theseUsually there’s some triggering events that gets shoppers to start down very distinct drivers and influence the shopper’s decision-making processthe path. A paint company we worked with, for instance, found four basic would clearly take different forms.categories of catalytic events: Marketers are also well-aware that shoppers do sometimes drop out along 1. Noticed the room looked dingy the path to purchase. Many studies, for instance, estimate that, regardless of 2. Liked a room at friend’s house the product or service a shopper is purchasing, up to 75% of all shopping 3. Read about a room makeover in a magazine carts are abandoned before the sale is closed. It happens for many 4. Watched a room makeover on TV different reasons. In the case of shopping carts, it could be the check-out process was confusing or too long. Moving away from shopping carts,Shoppers next start doing some research. The vital information for marketers sometimes in researching products in one category, a shopper finds outto find out is where and to whom do shoppers go to get some product/ about a solution to their problem offered in another. Other times its price,service/brand guidance. It could be a retail location or a website to learn lack of availability, or a poor merchandising at a retail store that causesmore. Maybe they post a question on their twitter feed or on their wall on shoppers to jump ship. Assessing the magnitude of the problem amongFacebook, or, these days, see what might be on Pinterest. Probably after target shoppers, figuring out when it happens, and why provides guidancesome period of consideration of different options, they make a selection and for retaining shoppers and keeping them moving toward a brand.buy a brand. The hope is they’ll feel satisfied with their purchase, but if they’renot, they may seek out assistance from different sources to resolve the issues. Some brands also make it farther along the path in the considerationSome may even share experiences, reviews, or really push for a brand. set than others and for marketers it’d be helpful to know which brands survive each step. If a brand falls out pretty early in the considerationAs most marketers know, a shopper’s desire to listen to and engage with set, what are the barriers? Verifying when the target makes the branda brand doesn’t necessarily rise to a peak during the research phase and decision—before getting to the store—has many ramifications for shopperfall precipitously afterwards as they shop and buy. Isolating each stage to marketing. If the decision most often occurs before the shopper gets to adetermine where those moments of heightened openness are at every store, advertising might play a bigger role in swaying brand selection in onestage and what underlying motivations might be driving them should shape direction or another than if the decision occurs at the store, where in-storecommunications strategy. displays or features could be the primary influencers. 11
  12. 12. Post-purchase, as we mentioned before, the hot topic of the day is Mission Possible: Understanding How the Same Shopperenticing and motivating advocacy behaviors such as posting a comment Can Buy Differently, Depending on the Occasionon Facebook, writing a review, or chatting with friends. As part of its new Understanding shopping occasions benefits all key stakeholders:CoverGirl “Smoky Eye Look” makeup kit, for example, P&G encouraged a win-win-winshoppers on Facebook and through other online advertising to write reviewsof the product after their purchase. As more marketers add elements ofshopper campaigns specific to this “post-tailing” period, closely analyzing SHOPPER Better shopping experiencewhere post-purchase experiences are getting disseminated, how often,and are they positive or negative would give marketers, among many otherthings, some indication of how shoppers might like to be engaged with—or Increased brand Increased foot trafficat least apt to behave—following a shopping trip. loyalty BRAND RETAILER and market baskets Potential Profitability Along the Path to Purchase Example: Interior Household Paint Potential Profitability Marketers also might like to get a good read on which of the literally millions $80m of shopping trips that take place every week hold the most value for their $70m 1 brands and where shopper programs could be used to the greatest effect. $60m 2 To identify the right mix of products and tactics for retail and channel $50m 3 partners, many marketers extensively explore the reasons shoppers have for going to a store to make the purchase in the first place. $40m $30m 4 Given how busy most consumers perceive themselves to be, shoppers $20m 5 spend more time planning a visit to a retailer and nearly 60% of shopping 6 trips are now occasion-based—a.k.a., shoppers had a specific reason for $10m going to a store to make a purchase in the category. Ask shoppers why they 0 Inspiration Exploration Consideration Trial Satisfaction Advocation bought shampoo the last time they went to the store, for example, you’ll Stages of Path to Purchase • Rank order of opportunity 1–6 get a variety of answers. It was part of my weekly shopping trip; I was killingAt the end of the day, marketers want an analysis of the path to purchase to time before a meeting and went to the store; I just realized I’d run out; theretell them where the biggest opportunities are to influence consideration was a great sale; I wanted to pamper myself, and so on.and purchase and what the critical forms of communication and key The retailers where a shopper bought shampoo as part of a “Weekly Shop”messages are at each stage. Even just an approximation of where and how are likely different than those where the shopper went to “Splurge andan increase in a brand’s presence will have the greatest effect on store traffic, Spoil.” How they shop—the day of the week, the time of the day, and theirsales, loyalty, and advocacy would shed some light on which of the myriad behaviors along the path to purchase—also probably vary depending onways to reach and engage a customer will produce the highest return. the main driver of the shopping trip. 12
  13. 13. The ability to get a bigger picture of how the trip motivation-channelselection-behavior connection plays out would prove invaluable to Shopping Occasion Profitability Analysis for Personal Care Productsshopper marketing on many levels. Towards that end, doing shopping % of Alloccasion segmentation brings some level of organization to all the various Personal Care % of All Purchase Personal KEY CHANNELS KEY CATEGORIES Occasions Care $ Shampoo Skin Care Oral Care Fragrance Etc.reasons shoppers have for going online or to a physical store to make apurchase. The results of this kind of segmentation make it possible to build Weekly Shop 30% 14% Supermarkets ü ü Social Splurge &a typology of shopping occasions in the category that includes a highly Spoil 13% 19% Mass/Club üuseable profile for each of the, usually, 5–10 occasions. Spontaneous Browse 9% 9% Mass ü üOur best advice is to leave no stone unturned when asking shoppers about “Great Sale!” Trip 9% 9% Supermarkets üthe nitty-gritty details of the their shopping trips in order to create occasion The Drug Stop 16% 20% Drug ü ütypes that are clearly distinct from each other in terms of their: Personal Care Trip 23% 29% Mass/Drug ü ü • Sizing • Needs/drivers Marketers also need to map the ultimate destination of a shopper on a • Channels particular mission, be it a traditional or virtual retailer, offline or online • Behaviors along the path to purchase channel. To build out programs for their sales teams to take to their accounts, marketers can draw from the retailers shoppers specifically list asInquiring about how much they spent during a trip; the day of the week the the locations they visited and made purchases from to complete the trip.trip occurred; the time of day; the desirable characteristics the shopper looksfor in a store and/or specific products; what retailers and websites they went While the value of different occasions and map of destinations helps brandsto; as well as a wide variety of behaviors at different points along the path set marketing and channel priorities, the kind of insights retailers really want,to purchase to determine what kind of shopper programs will work best for however, probably have more to do with the merchandising and marketingeach occasion is the kind of comprehensive line of questioning marketers tactics that will maximize traffic and sales. We previously mentioned the bigshould think about. trend in offering several brands in several product categories with a particular solution in mind. For example, “stocking up for the week” might be a mainWhen it comes to using all the occasion data, quantifying the driver of the “Weekly Shop” occasion, but what other products besidepercentage of all category purchases a particular type of occasion shampoo make it into the market basket at the same time?represents, as well as the percentage of category dollars spentprovides a relative sense of value of each occasion. Going backto the shampoo example, as depicted in the table at the right, “...the ‘Social Splurge and Spoil’ tripthe “Weekly Shop” may happen frequently, but shoppers aren’tspending money. Meanwhile the “Social Splurge and Spoil” trip may happen much less frequentlymay happen much less frequently than the “Weekly Shop,” but than the ‘Weekly Shop’...”shoppers tend to spend more. 13
  14. 14. Shopping Occasions Segment Profile as the “Weekly Shop,” shoppers are more open and available to information WEEKLY SHOP coming from brands. In those cases, both brands and retailers could stand to get the specifics on what programs are most influential at each stage of the journey during each occasion. Taking Shopper Marketing To The Next Level Simon Moore and Marina Foxlee, of Oxford Strategic Marketing, believe that “marketers who fail to recognize and embrace the potential for shopper marketing—defined as ‘the capability to drive growth through insight-led, shopper-based demand creation and fulfillment’—will simply be gifting an opportunity to their fleeter-footed competitors.” Naturally, no one wants to miss an opportunity or get left behind, but taking the time to fine-tune research processes and tools to generate the kind of insights that inspire breakthrough ideas and support superior execution should not get overlooked in a big competitive rush.In our hypothetical case of shampoo, oral care items like toothpaste, floss, “Shopper marketing is at the same stage that digital was at in the ‘90s,” asand mouthwash all go in the cart at the same time during the “Weekly Carl Hartman, WPP global team leader, put it to AdAge. “Everyone got allShop,” though generally speaking it could be products inside or outside the hot and bothered about digital, and then it turned out to be banner ads.”category and/or even a brand’s own portfolio. One frequent offer we see ingrocery stores is a free liter of Coke with a frozen pizza. Determining what Today, he said, “Everybody knows that reaching consumers at the point oftype of products tend to end up in the shopper’s market basket at the same purchase is an important place to reach them. So you have a video screen ontime during different shopping occasions would assist brands and retailers in a shopping cart is that really the big bang? Shopper marketing really hasn’tconfiguring and merchandising multi-product/multi-brand solutions. hit that 2.0 feeling yet—but it’s about to.”We can’t emphasize enough the power of insights that indicate what Even with the changes brought on by the digitally-induced media andshopper marketing tactics will be the most effective during each step of the retail revolutions, successful shopper marketing still comes down topath to purchase for each occasion. From the brand’s standpoint, marketers understanding which shoppers, tactics, and occasions hold the mostwill find out which occasions hold opportunities for shopper programs. It’s potential profit opportunity and the ability to translate this informationeasy to conceive in some categories there’s that “last minute” occasion, for into programs that produce positive interactions and experiences atinstance, that’s mostly unplanned so there’s little pre-shopping, the shopper key moments in the purchase process. Using a profit-driven, action-focusedis in and out of the store, and there’s no post-shop activities to speak of on approach to shopper segmentation, path to purchase analysis, and occasionthe part of the shopper other than breathing a sigh of relief. There’s just no segmentation will deliver state-of-the-science insights that form the foundationopening for shopper marketing in that situation. Yet for other occasions, such to create and execute shopper programs that drive traffic, sales, and loyalty. 14
  15. 15. About the Authors Peter Krieg Recognized as one of America’s leading marketing consultants, Peter Krieg is President and CEO of Copernicus, a research-driven marketing consulting company in the business of transforming companies. He has been working with leading B2B and B2C brands to grow their brand equity and profit line for close to 30 years. He is the co-author of three books, Your Gut Is Still Not Smarter Than Your Head, Counterintuitive Marketing, and Market New Products Successfully Using Simulated Test Marketing. Jeff Maloy With a deep background in brand management, Jeff leads marketing strategy engagements that include a heavy emphasis on branding for consumer and B2B clients. A senior vice president at Copernicus, Jeff has in-line experience at many of the world’s leading consumer packaged goods companies including Kraft, and has worked across industries to help clients understand how to develop highly effective and efficient programs that maximize sales and profits.Please feel free to post this on your blog, share it with your social network, or email it to whomever you believe would benefit from reading it. Thank you! Contact: Ami Bowen, (617) 449-4179 ami.bowen@copernicusmarketing.com ©2012 by Peter Krieg and Jeff Maloy Copyright holder is licensing this under the Creative Commons License, Attribution 3.0. http://creativecommons.org/licenses/by/3.0/us 15