Most organizations we’ve surveyed don’t do much in-store activity evaluation. Those that do typically evaluate activities based on sales uplift. Arguably better than nothing, but it does miss out a key point. To understand the value of shopper marketing or in-store activity, we need to understand the impact of that activity not just on sales, but on consumption too.
Activity evaluation must recognize that shopper marketing value comes from changing consumption
Yes. We all like a sales uplift. And yes, it does help hit those monthly targets. And yes, those monthly targets are important. But if there is little change in consumption behavior, or the change in consumption behavior is not sustained, then the returns from the shopper marketing activity may be small, or negative.
Understanding why understanding consumption is key to shopper marketing activity evaluation
To unpack this a little, let’s consider a fictitious example. Four shoppers walk into a store. Each buys two packs of a cereal which are promoted, let’s say with a ten percent discount. Sales are usually three packs in total – this week we have eight – so as a brand owner we’re seeing a substantial uplift. Probably we have a very happy team! Targets will be hit this month!
Activity Evaluation – How valuable is that uplift?
First things first, let’s understand the change in shopping behavior. The first three shoppers usually buy the brand in question, and were planning on buying one pack. They saw the deal and thought it was good value, so bought two each. Shopper four usually buys a different brand, but liked the deal on this brand so picked this one up. Never tried it before but friends have recommended it, so they bought two packs.
What is the value now? One could argue at this point that the purchase by shopper four is much more valuable as we’ve created trial AND extra volume. A shopper marketer might argue that the sales uplift is still good (it is). A smarter shopper marketer however might worry that three quarters of the product has been bought by regular shoppers, at a discount, and now ask the next massive question. When will they buy next?
This is because the true value of the promotion depends not just on the impact it has on the purchaser (in this case, which purchaser and what they do), but also on the impact it has on consumption. Let’s extend our theoretical exercise one more step.
Activity Evaluation – Consider consumption behavior as well as shopper behavior
Shopper one usually eats the same cereal every day. Consumer marketers would call him a loyalist. Now that he has bought two packs at a discount, he continues to consume the same amount of cereal, every day. Now how do we feel about the value? Over an extended period of time this shopper will buy the same amount of cereal because his consumption behavior won’t change. But he’s paid ten percent less for it. This month sales are up, but over a longer period of time, revenues are down.
Shopper two is also a loyal consumer, and consumer every day like shopper one. She carries on eating every day, but decides to use some of the extra cereal to make some chocolatey treats for the kids at the weekend. They use up a whole packet of cereal (the extra one she bought), but the kids weren’t keen so she decides not to make them again. In this case, the extra purchase has led to extra consumption in the short term. Because the promotion drove extra consumption, there is no cannibalization of future sales, and this shopper will continue to buy on her usual schedule. This is a genuine incremental sale, therefore, because the extra product got consumed in addition to the regular consumption.
Shopper three usually consumes the brand twice a week, and consumes another brand on other days. For a while she started eating this brand every day and likes it. Perhaps she feels better, or notices she’s not as hungry during the morning. She resolves to continue eating this brand every day from now onwards. How valuable is that? Pretty high! Not only have we created extra consumption in the short term, we’ve changed long term consumption too. This shopper will now buy more ongoing. Very high value!
And what about shopper four, our trialist? Shopper four tried the product, quite liked it, and finished the box. But next time she went back to the store, she saw her usual brand on promotion, and bought that. In this case we gained one incremental pack (of equal value to shopper two perhaps), but no long term changes in consumption.
Activity Evaluation – Which shopper is most valuable?
“Shopper marketing adds most value when it changes shopping behavior in such a way as to positively impact the long term consumption of the brand/category.”
It’s impossible to understand shoppers without understanding the consumer or consumption that they are buying for. Its impossible to truly evaluate shopper marketing activity without understanding its impact on consumption. For a real life case study of how shopper marketing can impact long term category and brand consumption, check out this article.
PS – who buys your promotions? Which shopper type buys most promotions? In most categories, the shoppers who buy deals are similar to shoppers one and four the least valuable in our fictitious example. If you want to know more about how to change the in-store marketing mix to drive real growth, contact us for a free conversation.
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