Survey Says Fewer Brand Decisions Made at the Shelf

Discussion
Jul 29, 2008
George Anderson

By George Anderson

As an AdAge.com article points out, it has become common for those in consumer products to state that 70 percent of all decisions on what brand to buy are made at the shelf. A new study from OgilvyAction contends that it’s time to throw out the old number and go with a new and lower one.

According to the study, 39.4 percent number is the real number of consumers who wait until they’re in a store before deciding what brand to buy. About 10 percent change their minds while in the store and 20 percent leave a product on the shelf that they intended to buy. Nearly 30 percent of consumers wind up making a purchase from a category that they didn’t intend to buy from before walking into a store.

“That 70 percent figure we’ve all heard over the years always sounded a little high, and we all know it’s a little high,” said Peter Hoyt, executive director of the In-Store Marketing Institute. “Some think it’s a lot high. I think what the Ogilvy study does effectively is help decompose [the data]. I think it’s closer to what we can accept as statistics having some validity. … But it’s not that 70 percent of every shopping cart is made up of something people didn’t [originally] intend to buy. That’s just not real.”

The original 70 percent study was conducted in 1995 by Meyers Research Center for the Point of Purchase Advertising Institute (POPAI). In a statement, POPAI continued to support the 1995 findings. “There have been various studies that have arrived at different in-store decision rates over the years, based on unique methodologies, trade channels, and the context and location of consumer interviews. POPAI welcomes any research that helps brands, retailers and agencies understand the strategic importance of marketing at retail.”

The OgilvyAction study was based on interviews with 6,800 consumers in the U.S. (14,000 total across the globe) and covered shopping behavior in 13 categories including beverages, confectionary, hair care and household cleaning products.

While the new research failed to answer just how much advertising outside the store environment influences purchases, it did determine important factors that drive impulse purchases. Sampling and product displays ranked one and two.

“The good news for marketers is that a product display and sampling can build brand equity,” Jeff Froud, senior strategic planner for OgilvyAction, told AdAge.com. “No matter what rulebook you studied when you were studying marketing, price promotions don’t build any brand equity and in some cases can be equity destroyers.”

“More and more of our communication is moving to store,” A.G. Lafley, chairman and chief executive at Procter & Gamble, said last month at the International Advertising Festival in Cannes. “And the reason it’s moving to store is that more and more consumers are… making their purchase decisions in store. And in a period where you have a fair amount of food price inflation, we think more of that shopping list, whether it’s just in [a shopper’s] head or actually written down, is being decided in the store.”

Discussion Questions: What do the findings of the OgilvyAction study mean for consumer goods brands and retailers? Does the number of brand purchase decisions made in store, 70 percent or 40 percent, mean anything in practical terms when it comes to display and other forms of in-store communication?

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26 Comments on "Survey Says Fewer Brand Decisions Made at the Shelf"


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Herb Sorensen
Guest
12 years 2 months ago
“The OgilvyAction study was based on interviews with 6,800 consumers in the U.S.” Asking shoppers what they do is very unreliable in determining what they do. How many shoppers report that they read labels? And yet, actual point of focus eye tracking shows that a typical shopper reads about 10 words in a 20 minute trip. The reality is that for CPG, since most people buy the same 150 items over and over, week after week, month after month, and take 1-10 seconds to make a purchase, most of the purchases are probably instinctual, not decisional. This means that the real decision was probably made months or years ago. Perceiving the shopping process as a highly organized, thought driven process is sheer bunk, regardless of what people fervently believe about their own behavior. In addition to the instinctual vs. decisional axis, there is another axis–planned vs. opportunistic. A very large number of purchases occur solely because by chance the shopper and the product intersected, most likely on an endcap or other secondary display.
Kai Clarke
Guest
12 years 2 months ago

These numbers, although good for national brands, just do not make sense. As we have determined over the years, and the substantial growth in house brands and generic, consumers clearly change their minds and pursue other alternatives, then what they originally came shopping for. From Kirkland, to Safeway select, the tremendous investment the major retailers put into this only supports the increased revenues that they report each quarter.

Destination shopping for national branded products, outside of coupon driven and incentive shopping, is simply not a reality. The continuous growth of alternatives, as well as their increased profits, despite offering a lower cost decision, points to this. Follow the money!

Mike Spindler
Guest
Mike Spindler
12 years 2 months ago
40-70% (and probably higher in some categories) is a big darn number. Now…knowing that, what do we DO with it? If we cannot predict that decision process with some certainty then we have gained very little. First, we have to figure out THAT a decision was made and then WHY. For instance, if our olives with blue cheese “spot-decision maker” had not gone down that aisle…no decision. If he went down the aisle but the product or the product in the brand he likes was out of stock…is that a decision–or the result of poor operations execution? If the olive company was running some big promotion or POP to stimulate the sale of olives to our buyer…did he/would he have decided differently…oh, and did the promotion or POP actually get implemented in his store? There are a series of measurements that need to be systematically in place in order to understand this decision process. This work has been started by the P.R.I.S.M movement and by the I.S.I ShareGroup and other store execution groups. But those… Read more »
Herb Sorensen
Guest
12 years 2 months ago

I largely agree with Bill Bittner (and many other good comments here.) However, Bill said, “If the product lends itself to sampling (understanding this is a relatively expensive approach), that seems the way to go for in-store promotion.” I have been asking clients to explain to me for years how a 3-6 hour exposure on one or two days, that reaches maybe 1% of the store’s shoppers, is worth the $1000 or more that it costs the brand supplier. The economics make no sense for the brand supplier.

However, retailers love them because it makes the store a “happening place,” with a party/fair atmosphere. Like a lot of stuff that makes no sense for the brand, the retailer has them convinced it’s really good for them. Not that the brands haven’t been a willing audience.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
12 years 2 months ago
Wouldn’t you know that I’d quote the apparently outdated 1995 70% figure in earlier comments today, only to find this new figure of 39.4%? Ah, well, let’s see how it shakes out. I think the number is actually somewhere between the two figures (brilliant prediction, right?). Personally, I never go to the store to buy olives stuffed with blue cheese, but I always come home with them. The OgilvyAction report simply opens the door for more examination. I and many of the commentators and readers of RetailWire will question the nature of the research, which was interviews. We all know the weakness of this style of research, which hinges on the fact that shoppers being interviewed want to appear more prepared, savvy, and intelligent than they actually are. This causes them to claim that they make purchase decisions based on personal research and experience and shop from a list. Yeah, right. And I’m Queen Of The May. It’s time for real number crunching purchase behaviorists like DemandTec and Revionics to get involved in this type… Read more »
Dan Nelson
Guest
Dan Nelson
12 years 2 months ago

Getting through to the consumer with your product message and features is easier and more effective at the point of purchase. The amount of clutter in more traditional media and the options of what consumers watch, read and view on the internet and cable has made effective use of advertising dollars much more difficult.

If P&G is ramping up more of their consumer advertising dollars at the shelf and point of purchase, that in itself should tell you a lot about what is most effective. I’m inclined to believe that the percent numbers in both studies may be weighted to the advantage of the researchers doing the study, but nevertheless, the most critical element in reaching the shopper is at their point of decision, and that’s the shelf.

Ben Ball
Guest
12 years 2 months ago
What the Ogilvy study highlights is that consumers have a decision making PROCESS. Different levels of “the decision” are made at different points in the purchase cycle. Some are fixed replenishment decisions that almost never change. “I use Crest regular toothpaste and buy the pump…” is a decision largely made without additional thought. Other decisions are more fluid, usually driven by the degree of familiarity and conviction the consumer has developed around a particular purchase. For some folks who drink Diet Coke, the price of Diet Pepsi will never matter. For those who drink “diet cola,” the decision of which brand to purchase is totally fluid (sorry) until they reach the shelf. Rather than worrying about a precise measurement of how many decisions are made where, we should concentrate on learning how receptive the consumers of OUR category and brand are to various messages. Are they vested enough in this purchase to be influenced by compelling advertising messages to the point of “no switching considered” when they hit the shelf? Or do we know that… Read more »
Gene Hoffman
Guest
Gene Hoffman
12 years 2 months ago

“Me thinks” the OglivyAction study confirms that the only reliable constant in determining how and where brand selection is determined is the continued proliferation of research projects. In determining selection success, the proof would seem to be in the pudding. Thus I tend to agree with Ron that the instincts used by P&G and Art Lafley are still at the top of the research game. They may not always win but that’s still the way to bet.

Nikki Baird
Guest
Nikki Baird
12 years 2 months ago
I agree with Ron–interviews aren’t really going to get you the best answer. And while I like the 3-D “Second Life” type models of stores where consumers can shop virtually and marketers can collect data on their shopping behavior better than straight interviews, even those run into “Second Life Syndrome”: where consumers’ behavior in the virtual world is a little less inhibited than it is in the real world–so you don’t necessarily get good results there either (no one thinks about virtual calories when adding goodies to a virtual shopping cart). However, that said, I do agree that the attempt was worthy. I think the challenge is in summing up the data into any reasonable rule of thumb. There are category decisions, product decisions within categories, and brand decisions within products. And people may brand-switch for less than rational reasons–my favorite study that underscores this particular lesson is the one that showed that consumers shaped their perception of a retailer’s in-stock position based on whether they could find the product–not whether the retailer had inventory.… Read more »
Peter Fader
Guest
12 years 2 months ago

Any single number (70%, 40%, whatever) is meaningless and potentially harmful. It paints a “one size fits all” picture of consumer shopping behavior, which is entirely inappropriate. The real “action” in effective retailing is to understand, capture, and learn to live with the massive variability around this number. The extent of last-second decision-making varies drastically across consumers as well as over time for a given consumer.

As Anne Howe (and perhaps others) have said above, the key is better measurement. And in conducting better measurements, our goal should not be to refine this single number to a higher level of (meaningless) precision, but to fully understand the range that it takes on and the relatively limited capabilities that managers can ever have to exploit it as much as they would like to. Much of shopping behavior should be seen, essentially, as completely random no matter how much retailers try to influence shoppers’ movements and decisions.

Max Goldberg
Guest
12 years 2 months ago

No matter what the actual number, retail can have a huge impact on sales. But just as advertising clutter can become a cacophony of noise outside a store, so too can in-store clutter negate effective communication. A good mix of brand building outside retail and brand reinforcement in-store is the best way to build sustainable sales.

Liz Crawford
Guest
12 years 2 months ago

Impulse shopping is alive and well. But the shelf is now digital. Amazon and others have pointed the way with reviews and “you might also like” recommendations. Increasing dwell time at the shelf, whether 3D or virtual, is still the name of the game. The field has moved, but the game is still afoot.

Ron Margulis
Guest
12 years 2 months ago

Where to start on this issue–First, there is no way an opinion polling company is getting better consumer buying behavior intelligence than P&G. I trust A.G. Lafley’s instincts (and P&G’s multi-million dollar marketing research budget) much more than any consultant or analyst. If they are putting their money in the store, others should follow suit.

Second, the article admits that the study “doesn’t answer the age-old question of the extent to which advertising outside the store ultimately influences purchase decisions consciously or unconsciously.” In addition, it doesn’t seem to address the effect of cross-marketing, how in-store marketing influences overall brand reputation, the impact of out-of-stocks and many other issues.

Finally, even if the true number is 20 percent, it is still a huge number in the hundreds of billions of dollars range. Marketers ignore this opportunity at their own peril.

Anne Howe
Guest
12 years 2 months ago
I applaud efforts to update the in-store decision statistics that are widely used in our industry. That said, however, all marketers should explore and understand these kinds of measures for their individual categories among core shopper segments in the key accounts that drive their most profitable volume. That way, the marketing activity that is intended to enhance purchase opportunity can be placed effectively when and where the decision is being made specifically for the products they are selling. Salad dressing could be dramatically skewed more toward the shelf set versus frozen meal solutions, digital equipment and toys could skew toward pre-store visits online. The point is that you have to do the work to understand the shopper’s journey, and act on what you learn. The generalized “stats” are good for getting the discussion going and we need industry discussion to keep the ball rolling forward. But this is very much like another issue we face–measurement. Everyone wants it, but no universal standard will surpass each company’s unique and proprietary method of getting to the “holy… Read more »
Kevin Graff
Guest
12 years 2 months ago

Whether it’s 70% or 40%, the key point here is the immense opportunity that retailers and their suppliers have to dramatically influence consumer buying behaviors. Everyone recognizes the impact of sampling and product displays on sales.

Now, imagine if you can the impact you could make on performance if you could engage the workforce in the stores to the point that they become brand ambassadors, both for the store itself and for key products. Think about when you’re out shopping and you meet (albeit, all too infrequently) an informed, motivated sales person who capably recommends and endorses a product in the store. That product almost inevitably ends up in your cart. The staff factor is just as great, if not greater, than displays, signage and sampling.

James Tenser
Guest
12 years 2 months ago
Are we debating the number of purchase decisions that can fit on a pin head? It seems self-evident that shoppers don’t fully complete the product preference decision sequence while standing in front of displays. The old 70% statistic tells me that final item choice is situational–influenced sometimes by price, promotion, packaging, preconception, visibility and availability of product, sampling, whining children, a remembered commercial, or the amount of cash in the wallet on a given day. So the smart folks at OgilvyAction have broken the 70% number into its several components. Finally we have empirical evidence to confirm what we already knew–product purchase choice is complex and cannot be controlled with any certainty through media advertising–or any single marketing message. P&G recognizes that the store shelf is the focal point of the entire message cloud that it funnels in support of its brands. If Mr. Lafley is moving big bucks to the stores, we’d best pay attention, because he’s got $ billions at stake and he’s not fooling around. We can debate whether price promotions are… Read more »
Phil Rubin
Guest
12 years 2 months ago
Whether in-store and POS is a 70% or 40% factor, the challenge with research such as Ogilvy’s is that it is measuring what consumers SAY about what they DO, rather than purely measuring what they do. Past behavior is the best predictor of future behavior and while there are times when shopping behavior can be changed, inertia is often the most powerful force. As others in this thread have referenced, the measures need to change and be more focused on behavioral driven research versus conscious consumer opinions. As marketers and merchants we all want to think we are eminently capable of affecting what consumers do, and through a variety of media. While there are numerous factors (e.g., category, product, economic climate and a host of others) that influence consumers, most decisions are made out of habit, based on past experience and unconscious behavior. Given consumers increasingly short attention spans, the 5,000+ messages a day tend to blend in, whether we see them in-store, online, on TV or even on a mobile device (much less an… Read more »
Jeff Weitzman
Guest
Jeff Weitzman
12 years 2 months ago

I agree with Ben Ball–the key learning is that purchasing is a process, and marketers have the opportunity to influence that process at various points along the way. Knowing that a consumer made a purchase decision “at the shelf” may not reveal, for example, that faced with 20 different brands of a product, the consumer only considered three, and decided on one. Does that count as a purchase decision made in-store? Certainly. Did those three brands waste their out-of-store marketing dollars? Certainly not. You have to be in it to win it as the saying goes, and advertising and promotion influence the purchase process in ways both conscious and unconscious.

Anne Bieler
Guest
Anne Bieler
12 years 2 months ago

With retailers and brand owners fighting even harder for market share in today’s economy, it is even more important to get the in-store merchandising right. While surveys are showing more pre store searching for product information, the purchase decision will be still be heavily influenced by the in-store experience. Understanding what engages the shopper is the subject of much research and experiment, but the purchase decision is still made in the aisle.

Bill Bittner
Guest
Bill Bittner
12 years 2 months ago
This study faces the same difficulty as so many others. There are too many moving parts to attribute results to simple customer entry and exit polls. Every one knows that consumers very rarely do what they say they will and actions are the result of many factors, including the banners being surveyed, the neighborhoods being polled, and the competitive actions at the time. Intuitively, no one expects a shopper to change cigarette brands because of any type of in-store promotion (although they might take a sample to give away). On the other hand, I don’t think anyone would be surprised to learn that consumers are willing to change paper towel brands. So category is a huge factor in determining the impact of in-store promotions. I think the one obvious factor is that consumers are becoming much more diverse in their “out of store activities.” It is becoming much more difficult (and expensive) to reach consumers “where they play.” But usually (the internet aside), consumer goods shoppers will end up in the store. So from a… Read more »
Sid Raisch
Guest
Sid Raisch
12 years 2 months ago

Online research that drives product selection before going to the store is showing rapidly growing numbers. The key point might be to influence the consumer BEFORE they get to the store, reinforce that message in the store, and let those who failed to invest in the right balance see their numbers decline.

Joel Warady
Guest
Joel Warady
12 years 2 months ago

70%, 40%, 20%, it doesn’t really matter. What it all means is that marketing continues to be highly fragmented, and people are making their brand decisions in a variety of ways, in a variety of places. What about word-of-mouth? Where is that measured? And what about word-of-mouth while people are in-store? How will the iPhone and similar hand computers change the way people make their purchases in-store? These are all questions that need to be answered when developing a marketing plan for a brand. Trying to separate “in-store” versus “pre-store” is so yesterday.

Dr. Stephen Needel
Guest
12 years 2 months ago

No offense to P&G readers out there, but just because P&G is doing something does not make it correct. You could substitute any of our CPG giants here–Unilever, Nestle, Pepsico, etc.–and following someone’s lead in the belief they know what they are doing would be pretty silly. Worth paying attention to, surely; studying their behavior as it relates to your business, absolutely. But blindly following–I don’t think so.

JEFF FROUD
Guest
JEFF FROUD
12 years 2 months ago
Helping marketers understand how to convert shoppers into buyers when they are in the store is the primary objective we set for ourselves when conducting the global shopper study that featured in Ad Age this week. The study is appropriately titled “Shopping Decisions Made In Store” (SDMIS) because to truly understand what shoppers are actually doing we believe you have to get to the store, so that you can understand a shoppers planned behavior and then how it can sometimes differ versus what they actually purchase. This is what we did across the globe and in particular here in the US where we interviewed 6,800 shoppers as they entered and exited Supermarkets, Mass Merchants, Convenience Stores, Warehouse Clubs, Drug Stores and Discounter stores in 10 different regional markets. The widely used statistic that 70% of purchase decisions are made in store, we feel never went far enough to be useful to marketers. The OgilvyAction study dug deeper into a shoppers behavior by breaking down shoppers purchase decisions to uncover four key behaviors: 1) Are shoppers… Read more »
Scott King
Guest
Scott King
12 years 2 months ago
This study is a positive reflection of how important it is to continue putting your dollars toward in-store marketing. With displays being the #2 influencer after sampling, it illustrates that a great brand is about great products. If a consumer tries it and likes it, and it lives up to its promise, they will continue to be loyal to that product and more apt to try other products from that brand as well. This supports why displays are effective in getting consumers to try or “sample.” The in-store environment is where the true dollars are measured. We’ve seen this before in our industry, when the economy slows, ad spending drops, but in-store picks up. It is not a matter of one over the other. Great brands are built over time by carefully delivering on the promise at every touch point with their current customer and winning consumers over with reputation that is built with a well-rounded marketing strategy. It’s not just a display, but your in-store marketing strategy should be as well thought out as… Read more »
John Morgan
Guest
John Morgan
12 years 2 months ago
The 1995 POPAI study defined four types of purchases: 1) Specifically planned – planned a particular item and brand. 2) Generally planned – planned a particular item but did not have a brand in mind. 3) Substitute product or brand – planned to buy type of item or brand and bought another type of item or brand instead. 4) Unplanned – bought an item that was not planned prior to entering the store. The “In-Store Decision Rate” was made up of decision types 2, 3 and 4 with 6%, 4% and 60% respectively According to the press release from OgilvyAction: ” –Nearly 30 percent of shoppers around the world wait until they’re in the store to decide which brand they will buy.” This sounds a lot like a “Generally planned” purchase to me. ” –In addition, one in ten shoppers simply change their minds in store and buy a different brand than what they had planned.” I would equate this with a “Substitute product or brand” decision. ” — Perhaps most significant is that almost… Read more »
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