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Shopper Insights:The State of the Science

By Peter Krieg and Jeff Maloy

The CopernicusMarketing genius

Series

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IntroductionWhile many consumer companies may have initially turned to shopper marketing as “a practical idea of the moment during a recession,” its meteoric rise in budget size and importance continues even as the economy shows signs of improving. The evidence: • A recent survey of over 300 marketing executives across various

retail and manufacturing sectors found more than 80% say shopper marketing is vital to their brand’s long-term success.

• In many consumer companies, shopper marketing beats out digital for “fastest growing area of marketing spending.”

• Annual spending on shopper marketing in 2011 totaled $50–$60 billion.

We’d define shopper marketing at its most basic level as activities along the path to purchase designed to inspire a visit to a retailer and the purchase of a manufacturer’s brand. Not surprisingly, it “emerged from the realization that influencing consumers when they are in a shopping mode can enhance sales and return on investment (ROI),” or so maintains Booz & Co. Of course, as more and more companies increase their budgets for shopper marketing, the competition for shoppers’ feet, dollars, and hearts—not to mention the pressure on shopper marketers to deliver those “enhanced sales and ROI”— ratchets up more than a few notches. Of course, the explosion of digital media certainly hasn’t made it any easier to answer what were already pretty challenging questions: • Which group of shoppers is “the best” target for programming? • How do you drive them to retailers? • When and how is the best way to reach and engage them to inspire a

purchase? It also doesn’t help that identifying which of the exploding number of opportunities to influence purchase decisions will have the greatest effect on traffic, sales, and loyalty has become a critical and often frustratingly complex process. “The reality is marketers have to pull more

levers today than they ever had to before. All of us are consuming media in so many different ways—some people are only online, some only watch TV,” Dina Howell, CEO of Saatchi & Saatchi X, the agency’s shopper marketing arm, told the Wall Street Journal. “The bulk [are] somewhere in the middle, and that’s what’s making it harder to determine what is the correct formula.” Factor in the emergence of “omnichannel” retailers and varying trip missions, and shopper marketers have got themselves one tough nut to crack. Lucky for shopper marketers they have at least one well-established practice working mightily in their favor as far as delivering to expectations in a very challenging business environment goes: grounding decisions in insights. The Path to Purchase Institute, a leading industry organization, lists the reliance on research and data as one of the defining characteristics of shopper marketing: “Shopper marketing is the use of insights-driven marketing and merchandising initiatives to satisfy the needs of targeted shoppers.” Practitioners also appreciate this embedded feature of this arm of the marketing mix. When asked in an interview with The Hub Magazine if shopper marketing is here to stay, for example, Tia Newcomer, general manager, retail publishing solutions, HP, replied, “Absolutely. It’s here to stay because it starts with insights — how can that go wrong?” The solid history of using research and insights to guide decision-making is most definitely one of the fuels of shopper marketing’s fire. As Booz & Co. once put it, “shopper marketing’s potential is rooted in its focus on gathering insights about consumers when they are in shopping mode and applying these insights to influence their purchase decisions.”

Whether it’s fine-tuning merchandising and promotions at specific store locations to appeal to a particular shopper segment as Con Agra did at campus convenience stores; designing an ecommerce website around insights into the needs of the most profitable online shoppers as Under Armour did; or developing a communications plan where research indicated shoppers were most receptive to the brand as Benjamin Moore did, shopper marketers routinely draw on insights.

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As these examples demonstrate, an understanding of which shoppers to target with marketing efforts remains one of—we might even go so far as to say the—most important insights marketers need in order to launch successful shopper programs and expand channel relationships. As Phil Kotler, dean of American marketing professors, wrote in Ten Deadly Marketing Sins, “the first commandment of marketing is to segment the market, choose the best segment, and develop a strong position in each chosen segment.” With multiple challenges to deal with as they try to take shopper marketing to the next level, nailing the targeting decision becomes all the more important.

Extracting readily useful, big picture insights such as identifying the “best” segment to target and where in the purchase and post-purchase process to reach them that can guide the development and ease the execution of shopper programs, however, is not a given by any means. In fact, if we had a dollar for every time we’ve heard a shopper marketer tell us, “we can’t figure out how to apply the insights we have to the decisions we need to make,” and, “it’s not clear how to use them to work better and smarter with our retailers to drive traffic and turns,” we wouldn’t need to play the lottery anymore.

“To our way of thinking,” explained our colleague Kevin Clancy, chairman of Copernicus and winner of the Advertising Research Foundation’s Great Minds Award in Innovation, “a truly ‘state-of-the-science’ shopper insight is as much about its relevancy and applicability to the fundamental strategic and planning decisions at hand as it is about the complexity of the algorithm or analytical technique used to generate it in the first place.”

To finally put a sock in the on-going complaints about the actionability of shopper insights and bring them up to state-of-the-science standards, we’d suggest shopper researchers and marketers alike take direct aim at the points in the research process where something isn’t happening and, as a result, it’s holding profitability and performance back. First and foremost: converting the needs

and requirements of the end-users of research from an afterthought to a forethought.

Shopper Insights:Who on the Organization Wants—and Will Use—Them As shopper marketing has definitively moved way beyond the “first moment of truth” at the store-level, programs involve far more elements of the marketing mix and media than ever before. It stands to reason then, that shopper research will need to encompass a wider set of considerations in order to 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, media planners, digital marketing manager, or mobile agency—can use.

It’s just not enough anymore, as Ron Park, a senior director at database marketing firm Merkle, put it, “to assume that a ‘better understanding’ of customers will yield results” applicable to a variety of marketing issues. Marketers need to actively frame the discussion by getting rid of the conventional up-front meeting with a very narrow set of people to establish research requirements, replacing it with an open forum that draws from all areas of the marketing and sales organization.

To stress the essentialness of including the sales organization in a marketing research discussion, Jeff Maloy, co-author of this chapter, explained to a client that, “shopper marketing requires a group effort between sales and marketing, much more so than brand marketing. Because brands and retailers share the ability to influence consumers during the

purchase process, like it or not, marketers depend on the sales or account team to bring a retailer on board and run a marketing or merchandising program in stores.” When the sales team has the opportunity to provide input on what they need or would like to find out about shoppers that would help them with their retail accounts, the insights coming out of the research are far more likely to have a positive impact on channel relationships and successful program implementation.

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The same holds true for agencies and the other tactical groups that will be involved in creating and executing programs. Unless data gets collected to help them better understand and identify the messages, products, and tactics that will most effectively drive traffic and motivate a purchase, they’re left to guess at what will work best.

An anecdote from one of our colleagues, a veteran marketing researcher in retail and consumer categories, underscores this point. He recounted to us an uncomfortable situation at a recent client meeting. His counterpart on the shopper insights side of the research company they both worked for was presenting the findingsof a major study. While it was a thorough report with plenty of interesting nuggets of information, our colleague had no idea how the client could use it to select a profitable target and build shopper programs for its retail accounts.

“I just kept wondering, ‘Who [in our client’s organization] can use this? How are they going to use this?’” he told us. Posing these questions and letting the answers determine what we need to know about shoppers at the very beginning of the process will make a tremendous difference not only in the quality of insights marketers end up with, but also to the ROI of research efforts.

Who to Talk to: Consumers vs. ShoppersIn addition to getting input from a wider swath of the organization on what to find out about shoppers, the other major issue to get ironed out before the research starts is who is the research subject. It may sound like a straightforward enough question to answer, but choosing between consumers and shoppers as the key population to study is a much more nuanced decision than it seems. What’s more, if it doesn’t get addressed at the outset of the research process, marketers will run into the same problem presented to us by a client at a nationwide drugstore chain. We’re dedicating discussion time to it here because it’s a problem we’re hearing about with

increasing frequency as more and more companies jump into the shopper marketing fray.

“I’ve got reams of consumer insights,” he exasperatedly explained. “And I’ve got tons of shopper insights. Problem is, it’s just not clear to me which to use, when, or how they can help me most effectively maximize sales of major brands in key categories.”

It’s very true that consumers and shoppers are often different groups, requiring distinct marketing strategies. We’d define “consumers” as the 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 the parents who talk and text on their mobile phones during Junior’s basketball game courtesy of their wireless service provider, they’re the category’s “consumers.” Studying them to learn more about how, when, why they use a product or service; and/or asking about the perceptions they have about brands, their attitudes, as well as the needs, problems, and pains they have that a product or service in the category could solve, can provide invaluable guidance on brand marketing strategy.

The brand team can use the consumer insights that come out of the research to guide marketing communications efforts that build awareness and drive purchase interest. R&D and product innovation teams can also

FOCUS:

PRIMARYEND USER:

KEY ENDUSES:

CONSUMERS

How, When, Where, Why ConsumersUse/Consume the Category

Brand Marketing TeamR&D

Marketing CommunicationsInnovation

SHOPPERS

How, When, Where, Why ConsumersShop/Buy the Category

Shopper Marketing TeamAgencies Sales/Account Team

In-store Path to Purchase Influencers/Tactics

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use the research to develop new products or services to appeal to different segments of consumers. This set of insights, however, isn’t necessarily going to indicate when consumers are in shopping mode and what’s going to drive them to stores when they are.

“Shoppers” we’d define as consumers who go to the store/online to make a purchase in the category. Studying them to learn more about how, when, where, why they shop/buy in the category, what drives them into a store, attitudes they have about the shopping experience, and what fosters loyalty to the brand after purchase can provide invaluable guidance on shopper marketing strategy. When all is said and done, marketers want to reach and influence the person who does the purchasing in a category for the household—they are the far more productive and helpful source from which to gather shopper insights.

Granted, identifying the purchaser in the household for any given product or service category is not necessarily an easy task. It used to be that for most consumer packaged goods, mom was the shopping master. A March 2012 cover story in Time just confirmed what many marketers suspected: as more women take on the role of primary breadwinner in the household, dad is more frequently taking control of the grocery buying. Likewise, in other categories where men traditionally did the purchasing—such as electronics and investment firms—women are now just as likely to do the shopping.

In order to get insights into the mind of the shopper, marketers have to make certain they collect data from the right person. Screen very carefully for “the person responsible for doing the purchasing in the category for the household.” For any given category, it could be the female head alone, the male head alone, or they share the responsibility equally. The mix of male and female participants in a study will likely vary—there is no hard and fast rule for any category on the ratio of male to female shoppers anymore.

Segmenting Shoppersand Identifying Profitable Targets for Shopper ProgramsTo review, answering these over-arching questions will dramatically improve the effectiveness of shopper research:

• Who is going to use the research? • What do they need to know? • How do they need to use it (e.g., create in-store shopper programs, buy

media to support those programs, guide retailers on merchandising, assortment, etc.)?

• Which group do we study?

Now how about doing the same for shopper programs? For that, marketers need insights that answer the questions:

• Which shoppers should we target? • At which channels/retailers? • How do we most effectively and efficiently market to them with

campaigns and shopper programs?

Enter shopper segmentation, one of the most powerful strategic research tools available to point shopper marketing strategy in the most profitable direction. At a time when CEOs, CFOs, and retail partners want proof down to the penny that shopper marketing is working as effectively and efficiently as possible, segmentation research that tells a shopper marketer where to direct resources to generate the biggest return in traffic, sales, and loyalty is worth its weight in gold.

Regardless of the category, there are a few irrefutable facts marketers are just going to have to accept when it comes to doing a shopper segmentation.

Fact #1: the “best” target shopper is the one that’s most profitablefor a brand’s programming.

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A quick note here on one of the biggest trends in shopper marketing today: providing “shopper solutions.” “Shoppers rarely purchase just one item,” reported Booz & Co. “It is the combination of items, bought with a particular solution in mind, which often defines a successful shopping trip.” As a result, marketers often want to put programs in place to sell several brands in several product categories. A shopper segmentation can provide targeting guidance on the shoppers that will be the most profitable for programming for either a single brand OR multiple brands that get purchased together in the same market basket. More to come on this topic in later sections.

Keep in mind, in order to assess profitability, marketers have to include profit-related criteria in the segmentation study. Measures for every respondent in the survey of shoppers could include: • current spending in the category in dollars • market basket analysis • current brand share • behavior and prices paid in different channels • price insensitivity • lifetime value

The thing of it is, like it or not, no one—no matter how well-versed in shopper marketing or a category—knows for any given market what characteristics and behaviors will be related to these measures of profitability until they talk to shoppers, collect some data, and do some analysis.

Fact #2: there’s just NO WaY to know ahead of time before doing any data collection, testing, or screening what might be predictive of profitability.

Fact #3: Focusing on a narrow, pre-determined set of variables such as demographics, channel preferences, or shopping behaviors dramatically DEcREaSES the probability of identifying the shoppers that will produce the highest return on an investment of shopper marketing dollars.

Yes, it’s human nature to want to select a certain set of variables—be they demographics, channel preferences, or shopping behaviors—ahead of time to feel more in control of the final outcome. Particularly if the results sound like they’ll be cool and fun and, therefore, theoretically easier to shop around to different business units and develop programming to appeal to, why not just go ahead and pick one set of variables as soon as possible?

If your mother ever told you, “don’t put all your eggs in one basket,” this is the time to take her advice. Why bet only on demographics or any other exclusive set of characteristics as the key predictors of behavior in the absence of any evidence that they are—investing significant time and money, not to mention personal credibility—in a shopper segmentation when you 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 that’s most predictive of profitability to programming.

Develop a Meaningful, Profit-Directed and Actionable Segmentation

Hundereds of Variables1. Category Involvement2. Attributes Desired in Product Category3. Purchase Process Channel Preference4. Demographics5. Links to Media Habit Panels6. Links to Household Panels7. Links to Marketing Databases

To identifycharacteristicsof people whoare profitable

for your BRAND

OptimalSegmentation

CREATE TEST PRODUCE

Who is the Shopper?

C C

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We want to be clear here, however, that we’re not talking about putting together a totally random set of hypothetical ways to segment the market. Marketers need to stay razor-focused on what different people in the organization want to know about shoppers and need to be able to do with insights when the research is done as they make their list. After all, knowing who the most profitable group(s) of shoppers to target with programming is, in and of itself, an incredible insight, one that can and should shape everything a marketer might do—from retailer-specific programs to media, to ecommerce website design and product assortment, to sales strategy 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 their mobile phones—that can have a transformational effect on shopper marketing.

We’ll talk more in a moment about building a full set of shopper-oriented variables that could be candidates for consideration, but certainly establishing what databases end-users of the research access for their work—i.e., household panels, marketing databases, customer databases, etc.—and connecting the data that gets collected as part of the segmentation exercise to them, it goes without saying, should go right on top of the list. We’d go so far as to say that linking the questions between the survey used to create segments and those used to build other media, sales, and household panel databases is often missing from shopper segmentation exercises.

With so much of the success of shopper programs riding on execution at the individual store level, if a segmentation doesn’t include a way to find and reach profitable targets for programming in the areas surrounding stores through clear connection to a database, it’s basically worthless. Think of a shopper segmentation as the foundation on which to build a marketing strategy and the EXECUTION of that strategy. It should pave the way to move smoothly from research, to insights, to action steps.

Moving back to the segmentation process now, after collecting data in a large-scale quantitative survey, test the relationship between each characteristic and the profit-related criteria to find the key market drivers. At that point, marketers can group shoppers into segments based on their standing on the anywhere from 5–25 characterics that best predict profitability. Tap various analytical tools such as cluster analysis to generate different segmentation solutions based on the characteristics.

Finally, marketers can evaluate the possible solutions in terms of managerial, statistical, and financial criteria. Ask questions such as: • Do we see different shopping behaviors? • Different needs from products in the category? • Different in-store purchase influencers (i.e., shopper loyalty cards, POP, etc)? • Different channel preferences? • Different needs from the channel? • Different shopping processes? • Different levels of profitability? • Which solution is most easily understood? • Is this approach more or less easy to execute? • Will the sales force be able to use it to improve relationships with key accounts? • Can we find the segments in different databases?

Based on the answers to these questions, select the optimal solution and provide a rank order of the different shopper segments in terms of their return on investment to clearly identify the most financially advantageous group to target. Not surprisingly, not every retail partner will have locations in areas with large concentrations of the most profitable, highest ranking segment. The full rank order provides guidance on prioritizing efforts to drive foot traffic and profits in any trade area. As we mentioned earlier, as long as links to household and neighborhood databases were included in the segmentation 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.

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To make it more manageable, additional work can be done to create a typology of store types based on the mix of segments across different locations. The sales/account teams could offer, say, Wal-Mart, a typology of how to organize its 2500+ supercenters into 4–6 groups based on the types of shoppers that live around them.

A case in point, a large wine maker we worked with offered a customized profile of the relative mix of shoppers at every restaurant and retail account that carried its brands. The segment profiles included a classification of our client’s and its competitor’s premium brands, preferences for promotions, displays, and featured products. When on-site at a store location, our client’s account team could assess whether a retailer adequately addressed product assortment and in-store marketing in a particular trading area and make product mix and merchandising suggestions. Armed with a profile of the relative mix of shopper types, the sales force was able to demonstrate to retailers how to most effectively inspire purchases with in-store influencers and enhance shopper experience at the store-level.

The Shopper’s “Journey”—Making a List, Checking it TwiceLet’s dig into that all-important step of building that list of characteristics to identify the people most profitable for shopper programming. Informing a big part of this discussion is the strong undercurrent of dissatisfaction with shopper research not fully exploring the different aspects of the purchase process that we’ve observed. Shopper research is not currently “digging deep enough at the retail level,” agreed shopper marketing consultants Dustin Lehner and Jennifer Butcher in their article, Retailandia.

To confront the situation head-on, brands and retailers need to get information that clearly indicates how to engage with and motivate shoppers to go to a real or online store and buy, buy, buy. The primary objective with asking all kinds of pre-, during, and post-purchase- and channel-related questions is to create segments that are very different in terms of shopping behaviors and differentially reachable with shopper programs, promotions, and incentives. In the context of the shopper segmentation, the end-result should include a rich, big picture profile of each segment in terms major purchase influencers, in-store tactics, and more. Importantly, we think of this kind of segment profile as being very distinct from the kind of path to purchase analysis which we’ll talk about later that assesses the relative ROI of different tactics and timing of execution for a specific target group.

Dividing the “journey” into three basic stages for the purpose of generating hypothetical ways of segmenting the market that may be related to profitability, could look something like this:

Pre-shop —> Shop —> Post-Shop

In the pre-shop period, how important a shopper feels a purchase decision is in the category—a.k.a., their level of involvement—could set the stage for a further exploration of shopping behaviors. Some shoppers spend almost as much time weighing the merits of different toilet paper brands as others do in choosing a car. Given how accessible information and reviews are for virtually any product or service in the digital age, to assume that involvement is a function of the category—as opposed to the individual shopper—is simply incorrect.

Using “predictive” characteristics to define segmentsleads to clear targeting.

Who is the Shopper?

Likelihood to Purchase the Brand Potential ROI

% ofShoppers

% of Brand’sPotential Business17%

11%

6%4% 3%

25%10%

18%

9%

16%

10%

19%

27%

22%44%

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others on a regular basis. Nevertheless, many consumers will share their personal experiences with using or purchasing a brand—either with a social network, by writing a review, posting a picture or short video, the list can go on and on— if prompted to do so.

With all the digital and mobile tools that most shoppers have at their disposal allowing them to broadcast their experiences with greater reach and speed than at any prior time in history, including questions about shopper behavior post-purchase in segmentation research should be a given.

Including the Digital and Mobile JourneyWhich brings us to another component of shopper marketing that’s very much on the minds of marketers these days: digital and mobile media. To quote Dina Howell, CEO of Saatchi & Saatchi X, again, shopper marketing “isn’t just about cardboard displays anymore—you need to accommodate the way shoppers behave now, and that means in stores and online.” When it comes to developing different shopper segments, there’s every reason to believe that digital and mobile usage, behavior, and engagement could be an important criterion on which to base a segmentation—it could predict profitability to programming—and, at the very least, would be precious descriptive information to have for each group.

As a reflection of the growing role of digital in shopper marketing, Saatchi & Saatchi X reported that not even four years ago, a scant 10% of its in-store marketing campaigns included an online component, but virtually everything they do now has digital elements. Not to be outdone, according to a Jupiter Research forecast, spending on mobile retail campaigns in 2012 will hit $15 billion globally—a 50% increase over 2011. Especially if a marketer wants a segmentation to guide digital and mobile, having a fuller digital/mobile profile of the segments will prove more-than-helpful to strategy development.

The amount of time an individual shopper spends researching a purchase could be another behavioral characteristic to investigate. The Wall Street Journal reported recently, “It’s well known that consumers research expensive products like electronics online, but coming out of the recession, consumers are more scrupulous about researching their everyday products such as diapers and detergent, too.” One consumer electronics manufacturer we worked with discovered that the more time a shopper put into reading and reviewing information about TVs prior to buying one, the more open and profitable the shopper was to their brand.

Determining what the key influencers are for shoppers leading up to the store visit is information of exceptional importance. Prior to the store, what sources do shoppers pay attention to or consult? Advertising? Friends and family? Retail sites? On-line circulars? Product reviews on retailer or manufacturer websites? Do they seek out opinions of category “experts” and/or bloggers? Do they do a lot of on-line searches? Do they take advantage of sampling opportunities?

Moving to the shop stage, marketers should thoroughly investigate retail partners and channels of distribution. What characteristics do they look for in a retailer when they’re buying in the category? Where do they do most of their purchasing in the category and how well does the retailer—either bricks-and-mortar or online site—they frequent do at delivering these characteristics? Do coupons, shopper loyalty cards, or other incentives move them towards one store or another? Once in-store, what do they pay attention to? Store circulars? Displays? QR codes? In-aisle coupons? BOGO offers? Live product demos? Shopper card incentives?

Post-shop, what happens? Depending on the category, do shoppers register their product? Sign-up to receive product updates and news? Do shoppers take advantage of the loyalty rewards they earned? Post-purchase advocacy is also a very hot topic in marketing in general these days, and no less so in shopper marketing. Intriguingly, we find most brands have very few true advocates—consumers who love a brand and want to share their love with

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To explore how shoppers use digital and mobile media along their journey, questions might include:

• How much time shoppers spend online? • How much time on mobile devices? • What websites do they visit? • Where are they most engaged? • Where are they most receptive? • What types of mobile devices do they own? • Where do they go on their mobile devices? • Do they use mobile devices while shopping? How? • What mobile apps do they use?

Of course, no study of digital media would be complete without a closer look at social media habits and behaviors. Recognizing that there’s a spectrum of engagement with social, at the end of the day it’d be quite helpful for marketers to know what the distribution is within different segments. There are many different typologies that depict digital media usage and engagement. The one below comes from our sister firm Carat.

The key here is to collect this data for the brand(s) or product category(ies) of 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.

One brand we worked with applied a digital typology to its shopper segments to give their digital agency some direction on the social programs that could be used to engage the target groups. It found a higher concentration of “Connectors,” who tended to use social networks to share information with friends and family, and “Commentators,” who take part in on-line discussions/forums. The digital agency could use this breakdown coupled with an understanding of the needs and attitudes unique to the segment to craft social media promotions and campaigns tied to the brand’s in-store shopper programs.

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. Given that in many categories, to echo Jim Lecinski, managing director of U.S. sales and service at Google, the once linear purchase funnel “is now more like a neuron, with branches that let shoppers move forward and backward through the process until they’re ready to make a decision,” charting the shopper’s journey—while not exactly simple to do—makes

Index is determined as the % people in each typology with the market segmentdivided by the % in each typology among the total sample.

SPECTATORS CONNECTORS COMMENTATORS AUTHORS

11%Index = 104

32%Index = 145

23%Index = 180

16%Index = 214As part of the segmentation, capture how your targets behave

in the digital environment.

What do you do on-line, on your mobile device, etc.?

LOW Levels of Digital Social Behavior

Neither createor consumeonline social

media

INACTIVES

Read posts,watch videos,

listen topodcasts

SPECTATORS

Use socialnetworks,

share/managephotos/videos

CONNECTORS

Take part inonline

discussion/forums

COMMENTATORS

Write ownblogs or

web pages

AUTHORS

Know How to Reach and Engage Your Shopper Target with Social Media

HIGH Levels of Digital Social Behavior

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some good sense. Our plug here is that following a specific shopper target makes for an even wiser investment.

For the purpose of identifying the exact moments, messages, and communication tactics that will most effectively move the target toward a brand and retailer, marketers would do well to blow out the path to purchase more fully to look something like this:

inspiration —> exploration —> consideration —> trial —> satisfaction —> advocation

Usually there’s some triggering events that gets shoppers to start down the path. A paint company we worked with, for instance, found four basic categories of catalytic events:

1. Noticed the room looked dingy 2. Liked a room at friend’s house 3. Read about a room makeover in a magazine 4. Watched a room makeover on TV

Shoppers next start doing some research. The vital information for marketers to find out is where and to whom do shoppers go to get some product/service/brand guidance. It could be a retail location or a website to learn more. Maybe they post a question on their twitter feed or on their wall on Facebook, or, these days, see what might be on Pinterest. Probably after some period of consideration of different options, they make a selection and buy a brand. The hope is they’ll feel satisfied with their purchase, but if they’re not, they may seek out assistance from different sources to resolve the issues. Some may even share experiences, reviews, or really push for a brand.

As most marketers know, a shopper’s desire to listen to and engage with a brand doesn’t necessarily rise to a peak during the research phase and fall precipitously afterwards as they shop and buy. Isolating each stage to determine where those moments of heightened openness are at every stage and what underlying motivations might be driving them should shape communications strategy.

An auto parts manufacturer we worked with wanted to use information about the digital behaviors of the different market segments specifically during the “exploration” phase of the path to purchase to improve the effectiveness and efficiency of digital communications to shoppers. In our research, we discovered that some shoppers did on-line research pre-purchase to find the right product for their situation and needs, while others wanted to make sure they weren’t going to get ripped off when they went to make a purchase. The messages our client might deliver to address these very distinct drivers and influence the shopper’s decision-making process would clearly take different forms.

Marketers are also well-aware that shoppers do sometimes drop out along the path to purchase. Many studies, for instance, estimate that, regardless of the product or service a shopper is purchasing, up to 75% of all shopping carts are abandoned before the sale is closed. It happens for many 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, sometimes in researching products in one category, a shopper finds out about a solution to their problem offered in another. Other times its price, lack of availability, or a poor merchandising at a retail store that causes shoppers to jump ship. Assessing the magnitude of the problem among target shoppers, figuring out when it happens, and why provides guidance for retaining shoppers and keeping them moving toward a brand.

Some brands also make it farther along the path in the consideration 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 consideration set, what are the barriers? Verifying when the target makes the brand decision—before getting to the store—has many ramifications for shopper marketing. If the decision most often occurs before the shopper gets to a store, advertising might play a bigger role in swaying brand selection in one direction or another than if the decision occurs at the store, where in-store displays or features could be the primary influencers.

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Post-purchase, as we mentioned before, the hot topic of the day is enticing and motivating advocacy behaviors such as posting a comment on Facebook, writing a review, or chatting with friends. As part of its new CoverGirl “Smoky Eye Look” makeup kit, for example, P&G encouraged shoppers on Facebook and through other online advertising to write reviews of the product after their purchase. As more marketers add elements of shopper campaigns specific to this “post-tailing” period, closely analyzing where post-purchase experiences are getting disseminated, how often, and are they positive or negative would give marketers, among many other things, some indication of how shoppers might like to be engaged with—or at least apt to behave—following a shopping trip.

At the end of the day, marketers want an analysis of the path to purchase to tell them where the biggest opportunities are to influence consideration and purchase and what the critical forms of communication and key messages are at each stage. Even just an approximation of where and how an increase in a brand’s presence will have the greatest effect on store traffic, sales, loyalty, and advocacy would shed some light on which of the myriad ways to reach and engage a customer will produce the highest return.

Potential Profitability Along the Path to PurchaseExample: Interior Household Paint

Stages of Path to Purchase • Rank order of opportunity 1–6

0

$10m

$20m

$30m

$40m

$50m

$60m

$70m

$80m

PotentialProfitability

Inspiration Exploration Consideration Trial Satisfaction Advocation

1

5

2

6

3

4

Mission Possible: Understanding How the Same ShopperCan Buy Differently, Depending on the Occasion

Marketers also might like to get a good read on which of the literally millions of shopping trips that take place every week hold the most value for their brands and where shopper programs could be used to the greatest effect. To identify the right mix of products and tactics for retail and channel partners, many marketers extensively explore the reasons shoppers have for going to a store to make the purchase in the first place.

Given how busy most consumers perceive themselves to be, shoppers spend more time planning a visit to a retailer and nearly 60% of shopping trips are now occasion-based—a.k.a., shoppers had a specific reason for going to a store to make a purchase in the category. Ask shoppers why they bought shampoo the last time they went to the store, for example, you’ll get a variety of answers. It was part of my weekly shopping trip; I was killing time before a meeting and went to the store; I just realized I’d run out; there was a great sale; I wanted to pamper myself, and so on.

The retailers where a shopper bought shampoo as part of a “Weekly Shop” are likely different than those where the shopper went to “Splurge and Spoil.” How they shop—the day of the week, the time of the day, and their behaviors along the path to purchase—also probably vary depending on the main driver of the shopping trip.

Increased brandloyalty

Increased foot trafficand market baskets

Better shoppingexperience

Understanding shopping occasions benefits all key stakeholders:a win-win-win

SHOPPER

BRAND RETAILER

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The ability to get a bigger picture of how the trip motivation-channel selection-behavior connection plays out would prove invaluable to shopper marketing on many levels. Towards that end, doing shopping occasion segmentation brings some level of organization to all the various reasons shoppers have for going online or to a physical store to make a purchase. The results of this kind of segmentation make it possible to build a typology of shopping occasions in the category that includes a highly useable profile for each of the, usually, 5–10 occasions.

Our best advice is to leave no stone unturned when asking shoppers about the nitty-gritty details of the their shopping trips in order to create occasion types that are clearly distinct from each other in terms of their:

• Sizing • Needs/drivers • Channels • Behaviors along the path to purchase

Inquiring about how much they spent during a trip; the day of the week the trip occurred; the time of day; the desirable characteristics the shopper looks for in a store and/or specific products; what retailers and websites they went to; as well as a wide variety of behaviors at different points along the path to purchase to determine what kind of shopper programs will work best for each occasion is the kind of comprehensive line of questioning marketers should think about.

When it comes to using all the occasion data, quantifying the percentage of all category purchases a particular type of occasion represents, as well as the percentage of category dollars spent provides a relative sense of value of each occasion. Going back to the shampoo example, as depicted in the table at the right, the “Weekly Shop” may happen frequently, but shoppers aren’t spending money. Meanwhile the “Social Splurge and Spoil” trip may happen much less frequently than the “Weekly Shop,” but shoppers tend to spend more.

Shopping Occasion Profitability Analysis for Personal Care Products% of All

Personal CarePurchase

Occasions

% of AllPersonalCare $

KEY CATEGORIESKEYCHANNELS Shampoo Skin Care Oral Care Fragrance Etc.

Weekly Shop 30% 14% Supermarkets ü üSocial Splurge &

Spoil 13% 19% Mass/Club üSpontaneous

Browse 9% 9% Mass ü ü“Great Sale!” Trip 9% 9% Supermarkets ü

The Drug Stop 16% 20% Drug ü üPersonal Care Trip 23% 29% Mass/Drug ü ü

“...the ‘Social Splurge and Spoil’ trip may happen much less frequently

than the ‘Weekly Shop’...”

Marketers also need to map the ultimate destination of a shopper on a particular mission, be it a traditional or virtual retailer, offline or online channel. To build out programs for their sales teams to take to their accounts, marketers can draw from the retailers shoppers specifically list as the locations they visited and made purchases from to complete the trip.

While the value of different occasions and map of destinations helps brands set marketing and channel priorities, the kind of insights retailers really want, however, probably have more to do with the merchandising and marketing tactics that will maximize traffic and sales. We previously mentioned the big 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 main driver of the “Weekly Shop” occasion, but what other products beside shampoo make it into the market basket at the same time?

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In our hypothetical case of shampoo, oral care items like toothpaste, floss, and mouthwash all go in the cart at the same time during the “Weekly Shop,” though generally speaking it could be products inside or outside the category and/or even a brand’s own portfolio. One frequent offer we see in grocery stores is a free liter of Coke with a frozen pizza. Determining what type of products tend to end up in the shopper’s market basket at the same time during different shopping occasions would assist brands and retailers in configuring and merchandising multi-product/multi-brand solutions.

We can’t emphasize enough the power of insights that indicate what shopper marketing tactics will be the most effective during each step of the path to purchase for each occasion. From the brand’s standpoint, marketers will find out which occasions hold opportunities for shopper programs. It’s easy to conceive in some categories there’s that “last minute” occasion, for instance, that’s mostly unplanned so there’s little pre-shopping, the shopper is in and out of the store, and there’s no post-shop activities to speak of on the part of the shopper other than breathing a sigh of relief. There’s just no opening for shopper marketing in that situation. Yet for other occasions, such

Shopping Occasions Segment ProfileWEEKLY SHOP

as the “Weekly Shop,” shoppers are more open and available to information coming from brands. In those cases, both brands and retailers could stand to get the specifics on what programs are most influential at eachstage of the journey during each occasion.

Taking Shopper Marketing To The Next LevelSimon 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.

“Shopper marketing is at the same stage that digital was at in the ‘90s,” as Carl Hartman, WPP global team leader, put it to AdAge. “Everyone got all hot and bothered about digital, and then it turned out to be banner ads.”

Today, he said, “Everybody knows that reaching consumers at the point of purchase is an important place to reach them. So you have a video screen on a shopping cart is that really the big bang? Shopper marketing really hasn’t hit that 2.0 feeling yet—but it’s about to.”

Even with the changes brought on by the digitally-induced media and retail revolutions, successful shopper marketing still comes down to understanding which shoppers, tactics, and occasions hold the most potential profit opportunity and the ability to translate this information into programs that produce positive interactions and experiences at key moments in the purchase process. Using a profit-driven, action-focused approach to shopper segmentation, path to purchase analysis, and occasion segmentation will deliver state-of-the-science insights that form the foundation to create and execute shopper programs that drive traffic, sales, and loyalty.

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PeTer KrIegRecognized 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 MaloyWith 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.

©2012 by Peter Krieg and Jeff MaloyCopyright holder is licensing this under the Creative Commons License, Attribution 3.0.http://creativecommons.org/licenses/by/3.0/us

Contact: Ami Bowen, (617) 449-4179 ami.bowen@copernicusmarketing.com

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