Consumer response to distribution programs

1. Consumer response to distribution programs

2. Outline • In-store shopping behavior • The retail environment • POP marketing

3. In-store shopping behavior a 1995 study of over 4000 US consumers by POPAI found that many purchases in supermarkets and at mass merchandisers were not planned in advance; purchases fell into the following categories: • purchase specifically planned before entering the store (30/26 percent); • purchase planned in general at the product class level, but no intention to buy a specific brand (6/18 percent); • intended purchase substituted with a related product or different brand (4/3 percent); • purchase unplanned and entire decision process enacted in the store (60/53 percent);

4. In-store shopping: Supermarkets • Highest in-store decision rates: % • First aid 93 • Toys, sporting goods, crafts 93 • Houseware/hardware 90 • Stationary 90 • Candy/gum 89 • Lowest in-store decision rates: • Produce 33 • Meat, seafood 47 • Eggs 53 • Coffee 58 • Baby food/formula 58

5. In-store shopping: Mass merchandisers • Highest in-store decision rates: % • Apparel accessories 92 • Foils, food wraps 91 • Hardware, electric, plumbing 90 • Infant/toddler ware 90 • Garbage bags 88 • Lowest in-store decision rates: • Disposable diapers 35 • Baby food 35 • Eyedrops and lens care 52 • Prerecorded music, videos 54 • Coffee, tea, cocoa 55

6. The retail environment • store design and ambience: exterior design such as architecture, entrances, and display windows, and interior design such as color, lighting, and sound; • store layout: grid, free-flow, and boutique layout; • merchandise presentation: allocation of space to departments, categories, and items, as well as displays and in-store media;

7. A model of store atmosphere(Donovan et al.) based on Mehrabian and Russell’s (1974) environ-mental psychology model, store atmosphere was conceptualized in terms of certain emotional states that intervene between in-store environmental stimuli and approach/avoidance behaviors: in-store environmental stimuli emotional states pleasure arousal dominance approach- avoidance behaviors

8. A model of store atmosphere (cont’d) • three emotional dimensions (the so-called PAD model): • pleasure: valence of feelings (e.g., happy-unhappy, satisfied-unsatisfied, pleased-annoyed, etc.); • arousal: intensity of feelings (e.g., wide awake-sleepy, excited-calm, aroused-unaroused, etc.); • dominance: feeling of being unrestricted and free to act in a variety of ways (controlling-controlled, influential-influenced, dominant-submissive, etc.); • approach-avoidance behaviors include enjoyment of shopping, time spent browsing, willingness to talk to store personnel, and likelihood of returning to the store;

9. A model of store atmosphere (cont’d) • in one study, students visited and rated retail environments on the PAD dimensions and indicated their intentions to engage in different shopping-related behaviors; the results indicated that pleasure was the major determinant of shopping-related intentions and that arousal influenced intentions in pleasant environments; • in another study, female shoppers at two discount department stores provided ratings of pleasure and arousal and the researchers measured how much time they spent in the store and how much money they spent; the findings showed that pleasure was a significant determinant of extra time spent in the store and unplanned spending, and arousal tended to depress unplanned spending in unpleasant environments;

10. In-class exercise: Store atmosphere Go to a Victoria's Secret store and analyze what the company does to create a certain store atmosphere that might induce shoppers to stay in the store longer and engage in impulse purchasing.

11. Using background music to affect the behavior of supermarket shoppers (Milliman) • during a nine-week period, supermarket shoppers were exposed to one of three background music treatments: • slow tempo music (72 beats per min or fewer); • fast tempo music (94 beats per min or more); • no music; • the dependent variables of interest were: • pace of in-store traffic flow; • daily gross sales; • awareness of background music;

12. sign. sign. Using background music to affect the behavior of supermarket shoppers (cont’d) • pace of in-store traffic flow: no music 119.86 sec slow music 127.53 sec fast music 108.93 sec • daily gross sales: no music ? slow music $16,740 fast music $12,113 • no significant differences in awareness of background music;

13. Shelf management and space elasticity (Drèze, Hoch, and Purk) • investigation of the sales and profit potential of micromerchandising (store-level shelf management); • space to movement (STM): customization of product allocations in proportion to market share based on historical sales in demographic-based store clusters; specifically, separate planograms were designed for urban and suburban stores that resulted in changes in facings, deletion of slow-moving items, changes in shelf-height, and some changes in product positioning (e.g., more automatic dish detergent in suburban stores); • product reorganization: cross-merchandising (putting toothbrushes at eye level and moving toothpastes to the upper shelf) and ease of shopping (alphabetical organization of condensed soup flavors; making intra-brand price comparisons more difficult by displaying brands by package size );

14. Shelf management and space elasticity (cont’d) • category-level results: • modest but nontrivial gains to implementing customized STM planograms (e.g., average sales increase of 3.9% across 8 product categories); • significant sales and profit increases as a result of complementary merchandising (e.g., increase in brush and paste profits of 6%); • mixed results for ease of shopping (e.g., alphabetized soup sales decreased by 6%); • brand-level results: • in terms of vertical location, eye level is the best position, but no consensus on whether it is best to be located on the edges or in the center of a set; • more shelf space is better, but usually only up to some point (in many cases the returns on investment in shelf space were low);

15. POP materials • types of POP materials: • permanent POP displays (to be used for six months or more); • temporary POP displays (to be used for fewer than 6 months); • in-store media (advertising and sales promotion materials such as POP Radio, ActMedia Carts, ShelfTalk, etc.); • POPAI studies show that POP materials can sub-stantially lift brand sales (e.g., in a joint study with Kmart and P&G, displays for paper towels and coffee increased sales more than fourfold);