Tuesday, January 13, 2009

Wharton questions in-store marketing assumptions

The Wharton School of Business has published a study by one of their faculty, together with a couple European academics, that calls into question the long-held idea that most purchase decisions are made in the store. If this is the case, then perhaps the huge shift of marketing funds from traditional media to in-store promotion is less justified than thought.

Among the findings, which were based on a study of purchasing in the Netherlands:
  • Young, unmarried adult households with higher incomes do 45% more unplanned buying.
  • Households led by an older person and those that have larger families do 31% to 65% less spontaneous purchasing.
  • There is 25% less unplanned buying among shoppers who mainly use newspaper ads for price information.
  • People who consider themselves very "fast and efficient" shoppers are far less likely to make impulse buys -- 82% less than the average.
  • If the purpose of a shopping trip is "immediate needs or forgotten items," the rate of buying in unplanned categories falls by 53%.
  • Unplanned purchasing goes up by 23% if the shopping trip itself is unplanned, but it goes down by 13% if it's a major or weekly trip.
  • If a shopping trip includes stops at multiple stores, there is 9% less unplanned buying at the second or third store.
  • Unplanned purchasing goes up by 44% if the shopper goes to the store by car instead of on foot.

Some of these items are intuitive, especially the first and the last. It's hardly a surprise that people with greater disposable income are more likely to buy on impulse. Nor is it surprising that people who have to lug shopping bags home are more likely to limit their purchases.

The last item particularly calls into question the study's applicability to the US market, where shopping is done almost universally by car, except in highly urbanized areas. A difference of 44% in buying patterns is pretty substantial.

Nonetheless, it's valuable to have basic assumptions questioned, and it would be good to see if further studies would show similar results. Perhaps this is just one of those ways in which US and European buying habits differ; perhaps this has valuable lessons, but only as applied to a limited (but important) area of the US market; or perhaps it calls into question some of the most important trends in recent consumer marketing.

It's important to note, though, that in-store marketing has grown not only because of in-store purchase decisions, but because the store is an effective medium, especially in light on the fragmentation and accelerating decline of traditional media.

It's also important to note that, regardless of the outcome of studies, suppliers and retailers should rely, in making promotion decisions, on analysis of their own results -- when you promote in-store do you get lift, and is that lift profitable? If so, keep doing it. If not, change things.

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