Every now and again a topic stirs up a quick flurry of debate across the Millward Brown email network. This week it was the old chestnut about 70 percent of brand decisions being made in-store. Prompted by a link to this article in BrandWeek, my colleague Gordon Pincott responded, “My point of view is that 100 percent of decisions are made in store.” And, of course, he is right.
In her article, Barbara Grondin Francella reviews data from a survey conducted by Miller Zell and reports this key finding:
“While the recession has two-thirds of consumers making shopping lists before they go to the store, Miller Zell found shoppers are making brand decisions 60 percent of the time after entering the store.”
While not specifically the 70 percent figure of marketing myth, the number Barbara cites is very similar to other data on the same topic. However, at least one key point is not addressed in the article. And that is, what constitutes a decision?
To Gordon’s point, every shopper makes some sort of decision. If they didn’t, nothing would end up in the shopping cart. But that decision does not have to lead to a change in behavior. For example, a shopper might decide not to change her mind about what to buy. The simplest decision is to buy the same brand as last time. And for many marketers, that is the decision on which they should focus. What can they do to make sure that their existing users keep buying their brand?
In his presentation at the OTC National Conference a couple of weeks ago, Jeff Froud, strategic planning director at OgilvyAction, cited an overall in-store decision figure of 72.4 percent. But he then broke it down into four categories of decision, as follows:
- Decided how much to buy in the store: 52%
- Chose a brand in the store: 39%
- Bought a category they did not plan to buy: 29%
- Walked away without buying: 13%
So on a shopping trip, 72.4 percent of people made at least one of these decisions. But that is across all the food and beverage categories they bought, and refers to conscious decisions where someone actively makes a choice.
So what are the percentages for a specific category? I think it is safe to assume they are far lower than the numbers presented above. Particularly in consumer packaged goods purchases, most people do not reconsider their brand choice on a regular basis. It takes a recession, a desire for a change, an out-of-stock situation, or a really superior competitive claim to do that.
So let’s not get hung up on that 70 percent number for in-store decisions. Remember, 100 percent of purchase decisions are made in-store. Instead, let’s focus on another 70 percent number highlighted by the Miller Zell survey:
“No surprise, price tops the list of important factors when making a purchase decision: 70 percent of the consumers said price reduction influenced a planned purchase; 47 percent said they were influenced by an everyday-low-price message.”
No surprise that price is uppermost in consumer’s minds right now, and that if you don’t give people a reason to choose your brand, they will resort to using price as the yardstick. When consumers start buying a brand on price alone, then that brand enters the death spiral: prices are dropped to maintain market share, other marketing costs are cut to preserve margin, and consumers have even less reason to choose the brand. It is our job as marketers to focus attention on the value of our brands, not the absolute price.
How do you avoid the death spiral? Add value. Add tangible value if you can, intangible if you can’t. Ideally, you should add both. I know—it’s simple to say, but hard to achieve. The situation is made all the harder because most companies still separate marketing and sales functions. So rather than obsessing about what happens in-store versus in-home, maybe we ought to examine the whole path to purchase and make sure marketing and sales actually meet somewhere in the middle?
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June 29th, 2009 at 5:12 am
We have seen brands with strong equity and no major promotions doing well and in some cases even gaining share. However, having strong equity doesn’t happen overnight.
The Brandweek article it seems would make us believe that action is all at the store front. The action is surely there and there is maybe an opportunity but frequent promotions can actually drive away the core consumers & do certainly reduce the profitability.
Activation without a proper brand strategy for creating an identity is sure shot way for going downhill.
The question always is what if somebody comes and gives a better promotion or chapper than me.
July 2nd, 2009 at 3:00 pm
This whole debate is so misleading. Of course some sort of decision is made in store. And you are right that the degree to which It varies enormously by category. That is why any figure should be based on purchases not respondents. It only makes sense if you aggregate the decision to buy across all categories bought.
I always thought that the OgilvyAction study did this. I have seen those numbers broken down by categories so the questionning must be category specific.
We recently launched a study of purchasing in convenience stores. Across all the categories we looked at 25% of the purchases were “pure impulse” - that is the brand and category was decided in the store, a further 18% were those where the category was pre-planned and the brand was decided in the store and in 59% of cases both the brand and category was pre-planned. Of course it varies a great deal by category but the highest level of brand and/or category unplanned (ie some sort of impulse) was about 60%.
July 8th, 2009 at 7:55 am
I suspect the variance across consumers and categories is too wide to make any simplifying statements.
How we choose to define the heirarchy of effects let alone account for the degree of consumer involvement with the brand or the degrees of value differentiation would skew our percentages.
that being said we must also be guarded in our research that consumers are telling us what they think/feel versus what they think we want to hear.
I think (in many cases) - as long as the brand has a satisfying level of product performance - it will be included in the consideration set. But those scales can tip at the last instore moment for whatever the reason and happen to any brand - the proverbial deal too good to pass on.
The deeper challenge is the foundation upon which purchase continuity is built on and the debate between those who seek to focus on the greater efficiency and roi substantiation of behavioral versus those seeking to strike a balance of behavior+attitudinal affinity.
at least IMO
cheers
July 10th, 2009 at 6:20 am
“ought to examine the whole path to purchase and make sure marketing and sales actually meet somewhere in the middle?”
How do we do that? When we ask consumers we get huge power for touch points such as WOM and past experience. But what caused the WOM or the first experience? We can’t check the influencers of friend/family who told the consumer good things about the brand; or take the consumer down the memory lane to tell us how did he first come to try the product. By not attributing it to TV, In-store ad, Promotion, Sampling or whatever caused it, we end up underestimating their power.
We also know that misattribution to the more salient channel happens - message delivered from Press ads gets attributed to TV etc.. Won’t this compound the problem of understanding relative power of touch points and therefore the path to purchase?