Maximizing Profits through Shopper Insights in Convenience

This is the presentation I recently gave to the Canadian Snack Food Association - with a the juicy bits cut out.

Maximizing Profits through Shopper Insights in Convenience (CSFA Presentation)

View more presentations from Environics.

Stretching “Experiential” Brands

I’m baaaack.

Have been a tad busy wrestling with Convenience Shopper Canada which is now the definitive study of convenience shopping in Canada.

In the meantime, Starbucks launched instant coffee. Does anyone know why? I am not sure.

But whatever the reason I guess they thought that their brand was strong enough and could certainly stretch into that category. Despite their recent troubles there is no doubt Starbucks is a strong brand in terms of consumer equity. And you would think it would be no problem to stretch it into so relevant a category.

But I think they face a challenge.

The reason is that the Starbucks brand is firmly rooted in the in store experience. Fine. That has been their strategy. But that position limits their ability to stretch it in the way that a packaged goods brand or even another retail brand can stretch. If they were they would need to leverage the positive associations with the in store experience as these are the strengths of the brand. The instant product does nothing of the sort as far as I can see.

It made me wonder whether as brands become more rooted in their design or experience and move to a "post brand image” world they become more limited.

Do One Thing Really Really Well

"Do One Thing Really Really Well" is the slogan of Ontario's Steamwhistle Brewery

It is one of the keys to brand authenticity (not the only one and not always the main one).

I guess these guys (above) are not trying that approach.

Wal-Mart In Store Media and PRISM

I believe that this is one of the reasons Wal-Mart pulled out of PRISM

This isn't shopper marketing. It's a powerful retailer grabbing money from its suppliers. Their intention is not brand building.

At a recent meeting a marketing director of one of our packaged goods clients told me "I have never met a retailer that was interested in building brands".

Maybe he's right. In which case can shopper marketing exist beyond the retailer? What is it?

The Future of Retail is not about the Stuff

What happens to non big-box retailers in the wake of the advance of the big box?

What is their reason to exist?

Obviously competing on price or product range is not going to cut it.

Well, PetSmart probably have one answer: Expertise and Services.

There is a specialist cycle shop near me that has a comparison chart on the wall showing the price of a bike at a big box store (about 20% less than their price) but below that we see a list of things (fitting it to the rider, tuning the bike etc.) listed as “free” for their offering but with a price attached for the big box. And the result is of course their offering is cheaper. Judging by the crowds at that store it is persuasive. The value of buying some someone who knows, who you trust, who you can chat with and who supports your choice is common across categories: video games, clothing, food. The services are an extension and support for that value.

Additional to that is the emotional pleasure of buying from someone who is passionate about the same thing you are. And people are certainly passionate about pets.

Good luck PetSmart.

Synovate Aztec + Safeway + Canada

Why are so many people from AC Nielsen entering these words into Google these days?

Canadian Shopper Behaviour and The Recession

In the words of The Onion's Jim Anchower, it's been a while since I rapped at ya. I have been too busy reports from with Convenience Shopper Canada and World of the Shopper.

The later gives us some insight into changing shopper behaviour in the recession. As I mentioned below, Canadians are far less likely to have changed behaviour than Americans. We certainly are not seeing dramatic channel shifts.

We do see some changes though.

Primarily we are seeing a change in the “stock up trip”. It has increased in value primarily due to increased spending per trip (which has not occurred for quick trips). The triggers are now more likely to be a combination of non-perishables and perishables. There is also increased pre-planning and checking flyers prior to the visit.

Final interesting thing - a decline of the male quick trip. As households pre-plan and consolidate their trips that last minute ingredients grab drops

Recessionary Shopper Behaviour a Non-Story in Canada. Sorry.

We're desperate to report some news on how shoppers are making dramatic changes to their their shopping habits because of the recession.

Problem is that they haven't here in Canada.

Sure there are some changes but we are not seeing the kind of channel shifts to supercentre and dollar stores that they see at the moment in America.

We just completed our 2009 World of the Shopper research and do not see dramatic changes to channel choice. We see some more pre-planning (flyer checking has increased) and shifts in trip triggers. We can see some greater focus on pricing and we also see a higher value stock up trip while quick trips remain flat.

Oh, and by the way, in the last issue of Canadian Grocer Nielsen is reporting that that private label is not disproportionately growing here either.

Sorry. I know everyone wants some news about the recession. And I know journalists are trying to fill pages with anecdotal stuff about 'recessionistas' but the fact is that we haven't changed much. When people are skeptical I ask them simply "what have you changed?". Usually there is some micro and in store behaviour but not major shifts.

Do you plan to increase or decrease your spending on single serve beverages in the year 2011?

I think one of the most potentially misleading questions that we can ask in a survey is “do you plan to increase/decrease your spending on [blank]” for household items and packaged goods. I honestly think that the responses given to these kinds of questions have a very tenuous relationship with actual behaviour.

One of the reasons for this is because these questions do not take into account the mental accounting that people use to budget. People do not think of their spending by individual items – unless it is cars or holidays or large ticket items. They group things together. Within these groups they subsititute. And the groups themselves are dynamic. For example – people are unlikely to plan their future expenditure on ice cream. They are likely to consider “groceries” and there are a myriad of ways in which they could calculate their spending on that – by month, by trip etc. Research we conducted on alcohol found that young adults simply exclude beer from mental budgeting! Of course when prompted they may give a response that they plan to cut back but the fact is they hadn’t really considered it until we asked the question.

So when a research asks “do you plan to increase/decrease your spending” on an individual item this may be the first and only time they really think about it. The fact is they have no “plans” regarding this item. This is especially true if we are asking about their plans for the future. I do not believe that a consumer can accurately tell us what he or she plans to do about spending on alcohol or ice cream or paper towels “after the recession”. And even if they do I do not think their response reflects what might happen – which can depend on their ‘mental accounting’ and where that category fits into their budget as well as a myriad of other changes – channel preference, occasions etc.

The right way to do this is to understand their mental accounting process, the heuristics they use for budgeting and which bucket the category falls into. And of course you need to also understand circumstances such as changes in channel choice and occasions. He problem is of course this requires a lot more questioning that “do you plan to …”. But hey, if you want to get it right

Americans and Private Label

I am getting a little bored with the coverage of the success of private label in the US. No offence to them. I am sure it is big news there.

But the rest of the Western world has been through it. Private label penetration in Europe is almost double that of the US. Retail brands are trusted. Often they are not value options but in the case of Tesco's Finest or Marks and Spencer considered better quality. Partly because retailers have been far more consolidated in those markets and were able to build their brands.

I read today that dollar stores is the one channel in the US that brands are not facing private label competition. Cold comfort really. I recall in the early 1990's before I left the UK you could go slumming and buy national brands at discount grocery stores or you could get quality private label at the national retail chains. Not a great position for brands to be in.

American brands need to face up to a new reality. This will not go away with economic recovery. Why should it? They need to start thinking about their value.

The Problem with Researching Green Consumerism

There is probably more rubbish market research data available on green consumerism than any other topic.

Each year, on Earth day Joel Makower rounds it all up, questions its validity and wonders what the heck it all means. See his 2009 summary here.

He quite rightly questions the enormous overclaim in the responses to these surveys. Stuff like 36% of Americans "always or regularly buy green products" from Mintel.

What does that mean?

It is certainly not reflected in the market shares of green products in the US which represent a fraction of total products bought. I suspect it is a combination of consumers wanting to buy green stuff, not really knowing what it is and occasionally buying something greenish. Easy them to say you "buy green".

The problem with research on green consumerism is in some respects the problem with the concept itself. The elephant in the room is that consumerism (as an ideology) and sustainability pull in opposite directions.

Environics social values research identifies about a quarter of Canadians as being "green" - in terms of agreement with willingness to pay more and discriminate green products. A large number of this group are established baby boomers concerned with their legacy, who use consumerism as a means to affect change. But they do not really know how to do it. This group tend to be very enthusiastic consumers. When we look at their attitudes to shopping, they enjoy it very much. They are more enthusiastic than the general population. The other largest group are younger liberal progressives. They are not enthusiastic consumers and they actively dislike shopping. We did a recent survey for Bullfrog Power (where people pay a premium on their electricity bill for renewable energy). This is pure "green purchase" with no benefit of status or joy of consumption. Their customers (real "green consumers") were overwhelmingly liberal progressive.

The current problem with research on green consumerism is that these groups are not differentiated. The established boomers will buy some organic granola and Method brand hand soap and happily check the box that says they "usually" buy green products. This does not reflect reality.

This is one area where asking about attitudes, intention and general reported behaviour is worthless and even potentially very misleading. A record of actual behaviour or very specific questionning on actual behaviour is the only way to understand the topic.

Power of the Brand in Convenience Channels

It is often said that convenience stores are hotbeds of impulse purchasing.

According to our Convenience Shopper Canada study, among those who buy soft drinks in those channels, 66% had made up their mind on category and brand before entering the store.

Granted, 13% knew they would be buying a soft drink and decided brand in store and 21% decided to buy the category in the store.

But that's an awful lot of power from out of store communication.

The Case Against "Why" - Part 2

My last post was about how market researchers’ constant questioning of respondents on why they do things can provide misleading responses.

By coincidence, I have read two experiments that show us just how much of a mistake it can be.

These experiments by Tim Wilson, professor of psychology at University of Virginia show how asking people to focus on why they do something actually causes them to make choices that do not reflect their true preference.

He conducted two experiments. In one he asked students to rate different brands of jam in terms of their preference. One group was asked to do so and list the reasons, the other was not asked to list the reasons.

The outcome of the experiment is described here as follows:

Wilson and Schooler found that subjects in the control group, who had not been required to list reasons for their opinions about the jams, gave evaluations that were very close to those given by the trained experts. Both the subjects and the experts agreed on which jams were best, and which were worst. The subjects in the experimental group, who had been required to explain their preferences, subsequently evaluated the jams in line with the reasons they gave …Their evaluations, however, did not correspond well with the evaluations of the experts. The jam the experts had rated as the best and the jam the experts rated the worst were both regarded by the experimental subjects as being rather mediocre.

Basically, those who were asked ‘why’ had to engage their pre-frontal cortex, come up with ‘reasons’ and align their stated preference to those reasons. When they did this they picked the worst jam.

The second experiment concerned posters. Students were asked to choose from a range of posters that they could keep – some of famous paintings others photographs of animals. Again, they were split into two groups. One group had to give reasons and the other did not. The group that had to give reasons was much less likely to select the paintings. They tended to select cute animals. And when the two groups were re-contacted a few weeks after the experiment, that group was far less satisfied with their choice.

The conclusion is summed up here:

When people think about reasons, they appear to focus on attributes of the stimulus that are easy to verbalize and seem like plausible reasons but may not be important causes of their initial evaluations. When these attributes imply a new evaluation of the stimulus, people change their attitudes and base their choices on these new attitudes. Over time, however, people's initial evaluation of the stimulus seems to return, and they come to regret choices based on the new attitudes.


These experiments teach us a lot about how to conduct and how to evaluate market research. Firstly, it supports the notion that ‘first view’ responses to product concepts and brand preference questions are the only valid ones. But it also brings into question all of the responses from focus groups and questionnaires after that ‘first view’. By asking respondents to utilize their ‘reason’ are we in fact making them state preferences that do not reflect reality? Ones that could in fact be the opposite?

We know from neuroscience that many purchase decisions use very little ‘reason’ as the pre-frontal cortex is hardly active. So when we encourage respondents to use it by asking ‘why’ we could indeed me encouraging responses that are nonsense – not just in terms of the reasons that are given but the actual preference to which those reasons allegedly lead.

Less "Why" and more "How"

I spent last Friday afternoon listening to advertising planners, designers and some people who, to be honest, I have no idea what they do (but I think the words “digital” and “experience” are involved). It was a rare and enjoyable event here in Toronto - the initiation of meeting of Toronto Planners Unite.

The courier bag carrying, black plastic rimmed glasses and ironic western shirt wearing crowd is a cultural world away from the store managers and sales managers that populate the kind of retail conferences I sometimes go to. Retailers and salespeople tend to give presentations with 90’s clip art rather than big black backgrounded slides with only the words (in a unique and cutting edge font) “Crisis is the crucible of innovation” or some passage from the Tao Te Ching.

However, a conversation afterwards with an account planner for a mutual restaurant client pulled it together for me. The commonality for a researcher are that both of these crowds need to understand “how” people are behaving and get limited value from the endless “why” questions that make up our surveys. He was suggesting a better way of developing a strategy to position new products was to first understand how consumers are using them and then develop positioning around that – rather than push out a pre-defined positioning. This is putting consumers (or “people”) are the forefront of communication and marketing rather than seeing them as recipients of the messages marketers wish to broadcast.

To me what we call “shopper insights” are the means of doing exactly this for packaged goods. Let’s understand how people buy and consume. Let’s not ask them too many questions why or what they intend to do. Most of the time they do not know what they going to do or why.

I am preparing the first report from our newly launched Convenience Shopper Canada study. The richness of the information is beyond anything from any usage and attitude study. The questionnaire is 10 minutes and simply records behaviour in past 24 hours. It is 90% reported behaviour (how) and 10% attitude (why).

Market research has traditionally focused on the attitude and has delivered the opposite – 90% why and 10% how. The technology we have now allows us to measure and observe what people are actually doing like never before. The value of what we produce will be increased for all our clients – whether they work in a downtown agency or manage a chain of convenience stores – if we what we deliver is more of the “how” and less of the endless and often misguided “why”.

Millward Brown's Nigel Hollis attacks "voodoo" research

Research has come under attack recently. People have been citing neuroscience, cognitive psychology and behavioural economics learning that suggests much of what we do is rubbish.

Who will defend the status quo?

Who better than that standard bearer of normative data, that bete noire of every shaven headed, trendy spectacle wearing, Mark Earls reading account planner? Step forward Nigel Hollis of Millward Brown.

His latest post here attacks "Voodoo" research and defends the tried and er pre-tested (a little MR humour). And this is about as direct as a genteel and collegiate British researcher gets. Attacking the journalist but taking indirect aim at the Advertising Research Foundation.

I posted below that Joel Rubinson of the ARF had gone outlaw like Waylon and Willie. Millward Brown is the Grand Ole Opry and Mr. Hollis our Porter Wagoner.

OK, the country music analogy is probably done now. But what's important is that it's on.

Is Martin Lindstrom for Real?

I was alerted to this guy by his very disappointing book Buyology.

Now he appears again telling us about some more groundbreaking research. Yes, it's the first time the brain has been monitored while shopping! Well, except this time maybe.

So I guess you are all excited to find out the earth shattering insights that this groundbreaking experiment uncovered.

Let's see ....

1. Discounts make shoppers change their minds
2. Emotions sometimes outweigh 'rational' price considerations.
3. Freshness is important

Am I on candid camera?

Digital Social Shopping and "Reason"

The topic of online shopping is so vast I have been kind of avoiding it. Partly because nothing I have to say about it fits into a blog post.

But one aspect of online shopping has been getting a lot of attention recently – the use of it as a mechanism for seeking discounts. Here is a survey that reports that 40% of Americans are spending more time comparing prices online.

Of course there is plenty of online price checking, discount seeking and reading of customer reviews to gain reassurance on purchases. These activities lead to the general perception that the Internet provides the discipline of computerized “reason” to our irrational and emotional urge to buy.

This thinking can be misleading for a number of reasons.

• Firstly, the idea that online shopping or investigating purchases online sits in contrast to ‘impulse purchasing’ is not necessarily true. Of course it is possible to impulse purchase online. My wife constantly impulse downloads 80’s tunes from iTunes that she runs across.
• And while the bulk of online activity may be about saving / reassurance some is also about indulgence. Consider the difference between the kind of social shopping sites that consumers use to compare prices with ThisNext. This site is the ultimate social shopping forum for those who are not looking for bargains but are looking to share enthusiasm to consume. The goals of users of ThisNext (who are 80% female) are hardly comparable with the users of Red Tag Deals or even Epinions.

We found that two groups of Canadian shoppers are the heaviest users of flyers – the most price sensitive and the least price sensitive. The former are looking for deals. And the latter are looking to enjoy consuming and the flyer was a means of doing that. It is wrong to assume that flyer use or online comparison or digital social shopping is motivated by a strictly ‘rational’ urge to seek discounts.

Related to this is the idea that even if consumers are using online tools to make “better” shopping decisions a recent post by Jonah Lehrer questions whether they are achieving their goal. He points to a published paper in the Journal of Consumer Research by Leonard Lee, Dan Ariely, and On Amir regarding decision-making implies that the slow rational, deliberate approach to decision making that you might use if you are shopping on-line does not produce “better” decisions than the fast, emotional, instinctive approach that you might use in a store.

Recession turns Americans into Canadians

Cautious, risk averse, dismissive of ostentatious consumption and luxury, distrustful of big business, cynical about individual success, collectivist, accepting and even grateful for government intervention and regulation.

One result of this recession is that it may start making Americans look like Canadians.

Shopping Trip Type Influences Price Sensitivity

Part of the Environics Mental World of the Shopper study looked at the difference in attitude and behaviour to price for certain categories based on last purchase. We also asked on what kind of trip that purchase occurred.

Notable is the fact that sensitivity to price differs according to trip type for some categories. Coffee is most likely purchased on a stock up trip - but about a quarter of coffee purchases are on quick trips. The table above shows considerable differences in sensitivity to price depending on this context.

Thing is that it is not consistent between categories. Those buying frozen meals are more sensitive to price on a quick trip for example. Intuitively that makes sense. A frozen meal on a quick trip is probably the trigger and a focus of the mission. On a stock up trip it might be impulse at the end of the shop.

And adding to the complexity, it differs by demographics. Males buying potato chips on a quick trip are the least price sensitivity.

As far as I am concerned this supports the notion that researching pricing or even concept testing without understanding the context and process of purchasing the product is misleading. If you are asking discrete choice questions or purchase intent questions with no knowledge of the purchase process you are missing half the picture.

Is more rubbish research one of the consequences of the recession?

Is it just me or is anyone else finding that every day there is a press release on some new banal and useless research findings about consumer behaviour in the recession?

I just put down a marketing magazine that provided on page 10 such insights as - "Cool" scored lower than "cheap" and "inexpensive" in what kind of message would make 13 to 29 year olds pay attention to an ad.

Question: Has "cool" been rated more important than "cheap" or "inexpensive" by consumers in any survey ever? No. So why report it?

The same magazine tells me on page 35 that 95% of Canadians believe that "better value for money" is important when buying products.

And then some blather on "austerity chic" on other pages.

It is bad enough that the recession slices our savings in half, puts our jobs in jeopardy without also subjecting us to this rubbish.

Message to my fellow researchers: I know it's nice to see your name in a magazine but please stop putting out this stuff. It makes people think we're...well, useless.