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).

Tags: shopper marketing, advertising, shopping

In-store activities consistently rank highest in ROI study

Ad Age is trying to make the best of the bad economic situation here by taking a look at which marketing activities seem to deliver the best results and bang-for-your-buck. Not surprisingly, shopper marketing and in-store activities were ranked first by both product manufacturers and retailers, indicating that, much like my own recent guess about the value of digital signage, etc. versus other media:

A recent survey by Deloitte Consulting and the Grocery Manufacturers Association, in fact, gives shopper marketing higher marks for return on investment than most conventional media. It also found that big package-goods marketers are jumping on the shopper-marketing bandwagon fast, and players who had lingered on the sidelines are ramping up quickly. But retailers are ramping up their own shopper-marketing departments even faster, the survey found -- creating a crush for the same relatively small pool of experienced talent.

Unfortunately, while everybody agrees that shopper marketing is useful and efficient, few agree on what  shopper marketing actually means. Consequently, packaging, merchandising, trade promotion and a whole bunch of other related things sometimes get lumped into that category, and sometimes don't.  Further, it's not totally clear what role retail media networks play in today's typical shopper marketing solutions (again, sometimes they're included -- particularly if they already exist already -- and sometimes they aren't).

Tags: digital signage, retail media, shopper marketing

PRISM tries to quantify the in-store "medium"

We've heard about PRISM on-and-off for quite a while now, but for those of you not familiar with the initiative, the "Pioneering Research for an In-Store Metric," or PRISM aims to quantify shopper exposure to in-store advertising and brand messages so as to better understand shopper behavior. Born of an all-star cast including the ISMI, Nielsen (who spun out a company, Nielsen In-Store, to handle the project), major retailers like Wal-Mart and major CPG companies like P&G, PRISM has been in the works for well over a year now.

At the In-Store Marketing Expo in Chicago a few weeks ago, ISMI's Peter Hoyt shared the first findings from the group's "phase 2" research trials with a packed house. The video of his presentation can be found here. While the findings they discussed were fairly broad, the power of the data collected by PRISM is clearly starting to become better understood. For example (from this summary):

• "In some food stores, the heaviest traffic flow is not through the carbonated beverage and snack aisles -- which might be the conventional wisdom based on sales rates -- but through the yogurt and eggs section of the store." This isn't exactly earth-shattering, but using this data we might be able to draw certain conclusions about shoppers who exhibit this behavior. For example, they might be more prone to purchase other healthy foods and veggies, and less likely to buy soft drinks, chips and cookies.

• "There are significant numbers of shoppers who browse aisles but don't buy anything." Again, it's not a stunning revelation until you realize that it's pretty darned hard to track people who don't buy anything. There are no register receipts, no loyalty cards swiped, and no coupons redeemed. Consequently, the ability to isolate browsers, understand their behaviors and optimize in-store media and promotions to target them could have a significant impact on their conversion rates.

• "Closure rates vary significantly by category, by channel and even by retailers within a channel. Calhoun noted that the salty snack aisle has a closure rate of 66% in supermarkets but 17% in drugstores (where closure rates for food categories are lower in general)." Again, knowing which stores are likely to follow this trend means that marketers can adjust their campaigns to work differently on different kinds of shoppers.

Amazingly, according to Nielsen's CEO David Calhoun, "the average number of marketing stimuli in a grocery store is about 3,500 and larger store formats, such as mass merchandisers, have
over 5,000 stimuli. A typical drugstore has roughly 2,300 marketing stimuli." Clearly it's no longer impossible to simply throw more stuff into the store and hope that shoppers notice and act on it. We're now at a point where optimization is the new name of the game, and PRISM's approach starts to provide us with the data we need to make our messages more relevant, more targeted, and thus theoretically more effective than before.

Tags: PRISM, marketing at retail, shopper marketing