by Ionut Rosca, planner g7
One of our clients recently asked us to design a brief questionnaire that would help them understand how shopping decisions were made in-store for their category. The answer to this question is probably the holy grail of marketing and market research and I couldn’t help dreaming that a simple questionnaire could be my ticket for an indefinite vacation on a tropical island, so I very enthusiastically started to work on it. But, no matter how many independent variables I drafted, the model was never complete and it would also have to consider all the pricing and communication strategies of the competition in real time. So, it was with great disappointment that I realized a survey couldn’t even begin to answer this question, but the issue remains: what behavioural model is best fitted for such a holistic endeavour?
Classical economics would draft its model starting with the simple assumption that individuals act rationally and indiscriminately to maximize their utility in a world of perfect information. But, if this were entirely true, shopping decisions would become highly predictable and our jobs as marketers would only consist in providing complete and comprehensive information to shoppers. But, as every junior copy learns during the first three months on the job, long rationales don’t make successful ads and campaigns. So what drives shopping decisions?
McKinsey has conducted extensive research on 350 brands from 30 categories. Surprisingly and perhaps frightening for marketers, they found 27 of these categories were not loyalty driven, with as many as 58% of consumers switching from one brand to another upon every shopping cycle. Except for durables, the utility generated by consumer goods doesn’t change radically from one shopping cycle to the other, instead what changes is the context in which shopping decisions are made.
Context is completely overlooked by classical economics and by most positivist models of human behaviour, as it nullifies the mathematical predictability that makes such behaviour models so popular. But, as McKinsey’s research so eloquently shows, providing context for salience is essential for brands. If a brand isn’t included in the initial consideration set of the consumer journey, chances are it won’t be considered at all during the moment of purchase.
We can therefore argue that top of mind is essential during the consumer journey, but this still doesn’t explain how choices are made between the brands that are considered at the moment of purchase. The easiest answer is that decisions are essentially price driven. But prices can only go so low and the cheapest brand in a category is rarely its leader, so empirical observation doesn’t support this behaviour model. To begin to understand what drives purchases we have to take a step back and understand the mechanisms behind decisions and choice in general.
I bought an apartment this year and, by the time I was done with the redecorations and with the furniture, I was already on a tight budget for a new TV. So, I made the best budget choice available, a Full HD device with 5-star online reviews, and I felt pretty good about myself and my shopping skills. I then went to a local retailer to test it and no matter how hard I tried, I just couldn’t bring myself to buy it anymore. My 32 inches low budget champion was displayed next to a 49 inches bigger brother and next to a 60 inches home cinema beast that made it look incredible feeble and small. Nobody, myself included, wants a small TV, so the 49 inches TV suddenly became the rational choice, although it exceeded my budget by 30%.
This is where the ground-breaking models of Economics Nobel Prize winners Richard Thaler (2017) and Daniel Kahneman (2002) come into place. Their empirical research in behavioural economics shows that behaviour and choices are greatly determined by heuristics, cognitive shortcuts that ease the decision-making process. For example, my in-store purchase of the TV was influenced by what is known as the framing effect.
These heuristics are known as biases in psychology and have little to do with maximizing utility. The most important things we have to keep in mind about biases is that they are unconscious, predictable and universal in terms of marketing segmentations and categories, meaning that, in most cases, completely different consumer profiles or personas will make similar choices in a given set of conditions. So, what is our role, as marketers, in this variable equation of choice?
Advertising and marketing in general have to make sure that brands are always present in the initial consideration set of the consumer decision journey, by prompting consumers with positive associations. Shopper marketing’s main role is to plan consumer behaviours, in other words to create desirable choices based on the consumers’ shopping habits, moments of purchase and the heuristics that drive human choice in general. This is not an easy task, albeit it is a crucial one, as the store is where decisions are made or broken.
We could have the best brands in the world and the largest marketing budgets in our portfolios and we wouldn’t make it very far in terms of results without choice architecture and behaviour planning, as more often than not the smartest and simplest ideas, not the costliest ones, deliver the best results. The mobile digital revolution has transformed our lives, as we connected at all times to a ubiquitous stream of information. Shoppers are experiencing an overload of messages across channels, so what better time than now to make shopping decisions easy by tailoring choice architecture?
With 19 years of experience on the marketing, g7 is one of the biggest 5 agencies in Romania, with a strong presence in the brand engagement sector. The agency proposes itself to be the interface with the consumers in any point of direct contact and non-intermediated between them and the brands and to act as a catalyzing element through creativity run by data, in a world in which the distinction between online and offline is less and less seeable.