Sunday, November 23, 2008

In-store Displays Are More Effective Than Price Cuts, Says OgilvyAction

As reported in Advertising Age this morning, research by shopper marketing agency OgilvyAction indicates even price cutting isn't as effective a sales tool as in-store displays (the low-tech kind, specifically, though presumably the results would apply to digital signs too). The trend is most true for impulse purchase items:
Research OgilvyAction conducted with more than 6,000 shoppers across multiple channels in the U.S. in February and March indicates far more impulse purchases are driven by tactics like those low-tech cardboard displays found at the end of aisles rather than temporary price reductions.

And while that survey came before the economy turned much worse in September, research in the past month by the agency for a snack-food brand at convenience stores had similar findings -- in fact, display drove nearly twice the number of impulse purchases as price reductions.

Specifically, OgilvyAction's research from the spring indicates that 29% of U.S. shoppers impulsively buy from categories they didn't plan to when they entered the store. Of that group, 24% said they were influenced by secondary displays (away from the product's usual aisle), 18% by in-store demonstrations, and only 17% by price promotion.

Interestingly, the report also adds some new fuel to the fire with regard to the percentage of purchase decisions affected in-store. While POPAI had touted a number near 70% based on their own research from 1995, more recent research suggested the number is more like 40%, and this report found that 31% of shoppers picked a brand in-store based on the influence of some kind of display.

Ogilvy hopes that the data will be used to encourage retailers and brands to use more merchandising instead of automatically launching price reductions at the first sign of sales trouble.  However, the firm also noted that price cuts can have hidden benefits, as during recessions consumers tend to shop just as frequently as before, but trade down to less expensive brands (which price reductions could help stop, of course).

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1 comment:

Bruce said...
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