The Science of Buying

R E TA I L & CON SUMER GOODS

The Sc ience of BuyingS O C I A L I N N O V A T I O N P L A Y B O O K S E R I E S

eden strategy institute

Have you noticed how some places have a recognizable, distinct aroma?

eden strategy institute | 2

Wondered why only some shops make price comparisons transparent?


4

Or asked yourself why some places are just designed more thoughtfully for users?


5

Who are the real purchase decision‐makers in a shop?


How easy is it for them to reach the products?


Are there insights that user improvisations & adaptations can reveal?


Strategy

Marketing Strategy

Marcoms Category Marketing

Retail Marketing

P2P Marketing

Shopper Science

Branding, Advertising, Media strategy, Slogans

Cross brands, Product bundling, quantitative surveys, focus groups, in‐depth interviews

Location / Layout, Shelf space management, Inventory planning, Merchandising, POS data

Influence marketing, Evangelism, User Generated Content, Consumer advocacy

Customer experience, Emotions, Behavior,

Preferences/Perceptions

Competitive Advantage, Industry Attractiveness, Profitability, Organization, Operations, Marketing, Strategic Alignment

Market size, Segmentation, Marketing mix

Shopper Science joins the sub‐fields of today’s Marketing practice to deliver more robust consumer insight


To understand shopper behavior, most market research firms use interviews, focus groups, surveys, and retail audits that aim to access subconscious themes

Projective methodologies are inspired by psychological techniques such as the

“When you drink our soda, which famous person do you think of?”

genesisRorschach Inkblot and

Thematic Apperception Tests

utilityUseful to learn presumably unreachable beliefs, attitudes, values, motivations, personality, & behaviors

Low fatigue due to relatively minor cognitive demands placed on respondents

Not dependent on having a highly educated sample nor limited by cognitive ability

Main function to generate, supplement, and verify hypotheses

?


However, peer‐reviewed studies have demonstrated many limitations in such approaches

Associations Personification, word association, metaphors, personification

Completion tasksSentence completion, story completion, arguments

Construction tasks Third person questioning, Speech bubbles

Expressive tasks Role play, acting, psycho‐drawing, collages, mood boards

× Even psychologists require weeks – not minutes – to truly understand the personality and perspectives

× Social Desirability bias still surfaces in self‐reporting method

RESPONSES

× Unclear which aspects of the imagery actually drive purchases

× Retail audits do not provide insights on subconscious motivators nor on lost business

× Low test‐retest reliability; affected by emotional state and thoughts at the moment

× Teamwork‐based exercises compromise individual attitudes

× Consumers see themselves as rational buyers, and may not provide rich emotional or imaginative insights

× Hypotheses generated are difficult to verify

× Not always easy to achieve concrete marketing actions as a result

OUTCOMES× Low inter‐rater

reliability due to subjectivity

× Most market researchers are untrained in psychology or personality assessment

INTERPRETATION

SOME LIMITATIONS OF PROJECTIVE TECHNIQUES

eden strategy institute | 10Sources: Qualitative Market Research: An International Journal Vol. 10 No. 3, 2007, pp. 300 – 309; International Bulletin of Business Administration ISSN: 1451‐243X Issue 5 (2009)

Yet, marketers continue to invest in buying qualitative research studies, despite a lack of measurable brand impact

Percentage of trustworthy brands

Source: Young & Rubicam BrandAsset Valuator

% of consumers who could name one of the top 50 products launched that year

Source: Datamonitor

52%

22%

0%

20%

40%

60%

1997 2008

$‐

$2

$4

$6

2007 2011

Global investment in qualitative research

USD3.95b

USD5.36b

$260

$280

$300

2005 2006

Global advertising spend

USD271b

USD285b

Source: Datamonitor

Source: ESOMAR

43%

19%

0%

25%

50%

75%

100%

2005 2006

LEAD

ING TO

SUPPORTED BY


THOUGHTS, DECISIONS, AND

ACTIONS

REFLECTIVE SYSTEM (Thinking)

REFLECTIVE SYSTEM (Thinking)

AUTOMATIC SYSTEM

(Impulsive)

AUTOMATIC SYSTEM

(Impulsive)

• People are rational• Driven by self‐interest• Maximize utility

• People are emotional• Driven by social influence• Averse to loss

The human brain is complex; neither mining unconscious desires nor focusing on rational responses is sufficient to understand true purchase drivers and drive practical marketing


Shopper Science provides tools to analyze and influence both the automatic and the reflective systems of the brain


EthnographyEthnographyNeuromarketingNeuromarketing

Big DataBig Data

Marketing AnalyticsMarketing Analytics

Behavioural EconomicsBehavioural Economics

Shopper ScienceShopper Science

Neuromarketing introduces neuroscience technologies to gauge the precise brain regions that are actually stimulated by brand experiences

ToolsEEGfMRI

Face CodingGalvanic BraceletsVoice Fluctuation

To Help Understand Information Processing

AttentionLearning MemoryLanguageEmotion

Development

In Order to …Predict how

consumers thinkAND

Understand what parts of the brain tell consumers how to act


HIGHER COGNITIVE STIMULI

Shopper Scientists shape cognitive input to achieve different desired responses at the stimuli spectrum

LOWER COGNITIVE STIMULI

Basic fonts are easy to readUnlike complicated ones

Surprise!

Multi‐sensory

Simple slogans

Right cortex processing

Gestalt processing Warmth & openness

Conventional layouts

LemoNaDe 25c

Mental white space

Learning

eden strategy institute | 15Note: All images not proprietary to Eden are reproduced courtesy of Wikipedia

LOWER COGNITIVE EFFORT WITH

AUTOMATIC SYSTEMS

HIGHER COGNITIVE EFFORT WITH

REFLECTIVE SYSTEMS

… and guide purchases by framing consumer choices that require higher or lower cognitive effort at the decision spectrum

Automated online donations to give by default each month

Pairing options make multiple purchases much easier

Limited options allow easy choices

Better‐than‐real feedback to encourage purchases

Luxury car as a status symbol to impress

Hybrid cars appeal to the environmental consciousness of customers

Sponsoring a specific child maintains donor commitment

Visualising the unhealthy intake of soft drinks nudges consumers to healthier alternatives

Pricing later models higher gives existing customers the impression of getting a bargain

Cause marketing helps socially conscious customer segments self‐select

Incentives

Feedback

Difficulty

Pain of Purchase

Commitment

e.g. charity donation

e.g. F&B choices

e.g. car purchase

e.g. buying electronics

e.g. new outfit

eden strategy institute | 16Note: All images not proprietary to Eden are reproduced courtesy of Wikipedia

Effective Shopper Segmentation needs to go beyond basic demographic archetypes

SEE‐ Color‐ Peripheral vision‐ Brightness‐ Acuity

WALK‐ Accompaniment‐ Pace, Speed‐ Route‐ Attire

REACH‐ Height‐ No. of free hands‐ Volume of grasp‐ Strength of grasp

ITEMS‐ Relationships between and no. of items‐ Weight‐ Requirements for bag rest , baskets‐ Purchase value

THINK‐ Cognitive effort‐ Independence level‐ Embarrassment‐ Contraditions

FEEL‐ Sensorial stimulation‐ Emotional dis/engagement‐ Body language‐ Personality, shopping style

SIGNAGE USAGE‐ Traffic approach vs. facing ‐ Height, Size‐ Font, Imagery, Message‐ Degree of actual utilization

SHELF INTERACTION‐ Display touchability‐ Informativeness‐ Depth of shelf‐ Height / eye‐level accessibility

(e.g. for kids, aged, obese)

NEEDS‐ Desires and need states‐ Interactions‐ Frustrations‐ Decision pathways


… and lead brands towards in‐store Shopper Ethnography that analyses hundreds of unarticulated but actual purchase drivers & barriers

SecurityStore displays

Self‐service kiosks

Counters

Promo baskets

Shelves

Store room

Shelves

Sample booths

Store displays

Distance between sections?

Aisle width?

Aisle length?

Shelf m

erchan

dising

?

Shopper density?Shopper mix?

Ethnographer/s

Field of vision?

Queue format / length / time / slope?

Clerk’s focus?

Availability / maneuverability of trolleys / baskets?

No. of queue lines?

Impulse buys?

Clerk interception rate?

Footfall? Population composition of neighborhood?

Access to car parking?

Competing / complementary stores in vicinity?

Nearby events / weather conditions?

Transition zone?

View of store?

Obstacles?

Route?

Inventory range and availability?

Interaction with goods?

TYPICAL STORE FORMAT

Traffic seasonality?

Usage behavior? Queues?

Fitting rooms

Lost shopper?

Shopper interaction?

Search ease?

Cleanliness? Noise levels?

Stress levels?

Knowledge adequacy?

Vigilance?

Tardiness?

Shelves

Shelves

Attractiveness? Relevance? Buying persuasiveness?


Store staff

Shopper

LEGEND

Appropriate mannerism, distance, tone, or volume of speech?

… such as service interaction relationships of dominance, emotion, or professionalism in an academic setting

… or not exactly engaged in class?

… or campus lifestyle with seniors?

Better attendance for the introductory lecture on academic subjects or the session on career prospects?

Discussing finances with counselors…

Actively taking notes and filling out forms…


CUSTOMER SATISFACTION ERGONOMICS CUSTOMER CONCERNS

Elbow leaning for support

Backrest too straight

Seat depth too wide

Irate customerConfused staff

• Reasonable scope of customer demand?• Decision‐rights of service staff?• Lack of coordination?• Standardization vs. customization?

POSSIBLE INTERPRETATIONS

• Confidence training?• Assertiveness?• Inventory management?• Communications skills?

POTENTIAL IMPLICATIONS

• Physical comfort affect state of mind?• Customer experience?• Desired length of customer stay?

• Restaurant workflow?• Human factors design?• Engineering desired patron behaviors?

• Damage to item?• Premise cleanliness?• Security of belongings?

• Personalized spaces?• Pre‐empting concerns?• Reassurance?

… or to identify “Thoughtless acts” in an F&B setting


STAFF EXHAUSTION SELF‐ESTEEM TECHNOLOGY UTILISATION

Portable barcode scanner

• Leaning against furniture for back support?


• Attrition due to working conditions?• Operating hours?


• Power relations?• Subservience?

• Role playing for empathy?• Negotiation skills?

• Mobility requirements?• Technological readiness?• Change management?

• Capital input to productivity?• Labor input to productivity?

… in Retail


REST POINT WAITING ROOMS PHONE BOOTHSMISSING BENCHES



• People using facilities for a siesta

OBSERVATIONS

• Visitor reading papers while waiting outside privacy rooms for her queue number to be called

• Visitor taking a call, standing on one leg and leaning on a beam for support

• Visitors using main entrance steps as seats

• Consider designing for the needs of local communities

• Possible boredom being stuck waiting

• Can waiting itself be eliminated?

• Visitor fatigue • Visitors may need to engage in private discussions before and after visiting MND premises

• Opportunity to showcase user‐friendly built environments?

• Provide entertainment? (e.g. information, food, tours, kids areas)

• Personal alert systems allow visitors to go elsewhere while waiting?

• Meetings scheduled by appointment to eliminate downtime?

• Include call booths for visitors to consult external parties during a transaction?

• Incorporate benches for visitors to rest, possibly with privacy screens?

… for Amenities


EDUCATIONAL POSTERS UNWIELDY DISPLAYS ENGAGING THE UNINTERESTEDDISPLAY INTERACTIVITY



OBSERVATIONS

• Visitors struggling with large maps / blueprints

• Not all visitors will be naturally drawn to various exhibits

• Interactive displays need to finish playing a clip before resetting

• Displays may be too large for easy physical manipulation

• Traffic flow to exhibits are structured on a pull basis

• Resetting protocol in displays may be perceived as delayed response time and cause impatience among viewers

• Interactive digital displays? • Channel visitor traffic such as with corridors / passageways to keep visitors engaged?

• Calibrate interactive display controls according to visitor flow?

• Posters messily pasted in AVA reception

• Ineffective use of posters• Unprofessional corporate identity

• Replacing posters with interactive digital games that provide feedback on campaign effectiveness?

… in Information Interaction


WORKING DESKQUEUE MANAGEMENT UNINSPIRING TOUCHPOINTS SERVICE ATTITUDE



OBSERVATIONS

• Visitors confused about which queues to join and forms to fill

• Applications counter is essentially a hole‐in‐the‐wall

• Aggressive service attitude observed at reception

• Instructions may not be clear/intuitive esp. to non‐English readers

• Uninspiring environment and closed posture at dissonance with the stated premium standards of this professional body

• Role conflict between regulator and industry promoter?

• Are high counters barriers to communication?

• Cross‐agency concierges to usher visitors to the right queues and provide guidance on logical sequence of forms to fill before being attended to?

• Encourage online self‐service tools?

• Well‐lit, furnished reception area to communicate a sense of pride among engineers?

• Open layout to convey sense of engagement?

• Can barrier‐free communications with arm‐chair layouts improve customer service attitudes?

• How can we transform the mindset of staff to see themselves as advisors or hosts?

• Visitor using displays as table

• Lack of workspace for visitors

• Individual workspaces for visitors?

… in Service Provision


Insights analysed with various data streams can then create fresh value propositions

Target Development


• Sensors, video, POS data, lucky draws, refunds, Likes

• Demographic, Attitudinal, Behavioral, Habit Segmentation

• Shopper baskets & trip mission

• Visits per shopper

• Dwell time

• Shopping companions

• Brand affinity & loyalty

• Customer lifetime value, etc.

Decision Support

• Channel data, competitive intelligence data, customer focus groups, cost data

• Trade promotion effectiveness (e.g. coupons, cross‐selling, upselling)

• New products to launch

• Store assortment & space optimization

• Marketing mix

• Sales force management

• New stores, new geographies, new businesses, new part of value chain, etc.

Shopper Analytics

• Store ethnography, street intercepts, trade interviews

• Baseline visits, store area, location, shops in vicinity, footfall, time, duration, same store benchmarks

• Conversions, time to pickup, Leakage, Bounce rate, Dwell time, Product traction

• Product interaction & cannibalization

• Category score

• Best practice identification, etc.

i. Cross‐sell targeted products in line with changing life stages

• Segmentation

• Leakage

• Product interaction

ii. Improve promotions to increase margins

• Pricing

• Ad recall

• Seasonality

iii. Launch new products with reduced distressed inventory

• Category score

• Inventory turns

• Production cycle times

iv. Stock high turnover products to optimize space

• Margins

• Product traction

• Store area

v. Identify influencers who can help drive sales

• Shopping companions

• Brand affinity

• Multiple purchases

FROM BIG DATA

TO BUSINESS INTELLIGENCE

Frame consumer

choices with Behavioral Economics

Traditional retail audit, in‐depth

interviews, and brand surveys

Data‐driven Marketing Analytics to confirm Decision Dynamics

Neuroscience and

Ethnography to understand Shopper

Psychology

In summary, the automatic and reflective systems need to be considered using both quantitative and qualitative data in order to truly understand the Science of Buying


What we do. Eden Strategy Institute approaches the global issues of disease, poverty, illiteracy, and exploitation head‐on, by formulating strategies, models, processes, products, and designs that help our clients create, realize, and sustain quantum profit in addressing these issues. We focus exclusively on empowering business strategies with Social Innovations that create enduring financial impact, such as Emerging Markets Shopper Science, Silver Hair Marketing, identifying Bottom‐of‐Pyramid segments, creating Ethical Supply Chains, Socially Responsible Investing, Policy Planning and Advocacy, and so on.

Our Retail & Consumer Practice. Eden is experienced in Fast‐Moving Consumer Goods, White and Brown durables, Lifestyle and Luxury products, Travel and Hospitality, Wholesale and Retail Trade, as well as Food and Beverages. Our work in this sector ranges from training and incentives for Trade Marketing; footfall and shelf space management for Retail Marketing; store layouts and need states for Shopper Marketing; to decision‐making and Net Promoter Scores for Consumer Marketing.

Using a mix of business‐to‐business, consumer, quantitative, qualitative, ethnographic, neuromarketing, and analytics methodologies, we help our clients identify future trends and micro‐segments, develop product pipelines, manage categories, build brands, create emotions, gauge advertising effectiveness, devise retail strategies and in‐store programs, and model pricing analytics, customer loyalty, and store locations. These apply not only to department stores, designer shops, and supermarkets, but also to airports, hotels, libraries, museums, theatres, and trade shows – everywhere people make purchase decisions.

We advise brand stewards on how to inspire trust and advantage with responsible labeling and reporting, discover new purchasing drivers such as healthy living or life fulfillment, infuse computational analytics in their strategic marketing decisions, differentiate their brands with cause marketing, relook at the promise of “mom & pop” channels, and redefine entire user experiences such as with ecotourism or connoisseurship.

Our philosophy. We believe in the power of ideas to positively shape our world, one client at a time. Our focus is unparalleled in bringing to bear our entire senior management team, as well as the world’s foremost experts, on our clients’ most pressingsustainability issues. In turn, we elect to only collaborate with clients who are seriously committed to creating value together.

27edenstrategyinstitute.com

Eden Strategy Institute. Asia’s leader in Social Innovation Consulting

eden strategy institute

Contacts: Calvin Chu Yee Ming, PartnerJessica Louw, Summer Business Analyst

Eden Strategy InstituteT: +65 9751 5817E: [email protected]

Thank you!

Date post:	22-Jan-2017
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