Improve Promotions Along the Path to Purchase
A Consumer’s Paths to Purchase
Shoppers have more than 800 possible paths to purchase available to them. The path to purchase refers to the various channels that customers come across as they transform from interest to purchase of a product.
Email. Google. Twitter. Product review sites. TV. Instagram. Apps. Radio. Amazon. The list goes on.
In the grocery store alone, there are tons of paths to purchase. Think of all the information channels that might trigger a purchase: product samples, an ad on your shopping cart, a product display, incentives from Ibotta or Shopkick, price discounts in the weekly flyer, online product reviews, a coupon on your receipt…
71% of consumers say groceries are one of their most common impulse purchases and only 17% say they buy the same brand all the time.
As a CPG, how do you earn the consumer’s dollar? What events are working?
Let’s use in- store displays as an example.
About 65% of consumers are visual learners, so many of us spend our trade dollars on signs, banners, and special product displays.
A floor display typically holds about 4x more product than the shelf according to TPH Inc. So, if you have $100 of product on the shelf, you can get $400 onto the display. If your product sells through at the same rate of that on the shelf, then that display will help increase your sales by 300%.
Just this weekend, I went grocery shopping and noticed these 5 displays as I walked into Giant Eagle:
- Nabisco, fudge covered Ritz crackers
- Nabisco, Oreo holiday display
- Tostitos, chips and dips
- Lays, chips
- Schwebel’s, stuffing cubes
After you run displays like these, do you know if they’re effective?
With trade promotion management and optimization software, you can pinpoint
data associated to your event and measure its promotional performance.
Post-Event Analysis
Use event data to automatically gain understanding of effectiveness.
With a trade promotion optimization (TPO) application, you can quickly review performance indicators like:
- Event duration
- Planned spending detail (per case)
- Planned to actual spend
- Volume
- Total spend
- Pending without EDLP
- Total consumption
- Base consumption
- Lift index
- Spend per incremental case
- ROI %
When done right, post-event analysis (PEA) provides actionable information. After you take a look at the metrics, you might realize changing your event dates would make a big difference. Or, you might learn that a different marketing tactic drives more volume. Sure, you can function without PEA functionality, and keep rolling out your SALY (same as last year) plan, but you’ll be more effective and more profitable when you look at post-event information and optimize your promotions.
Opportunities Online
It’s not surprising that a Gartner L2 report says that $55 billion in CPG trade spending will migrate online in coming years since 80% of consumers browse or research grocery products online.
If you want to capitalize on the fact that over 30% of Americans are using Amazon, you gotta go there. -Andrea Blieden, US General Manager, The Body Shop.
With 51% of grocery sales being digitally-influenced, more CPGs are taking the opportunity to get online during the customer’s path to purchase. A Deloitte survey explains that digital’s influence on grocery overall has nearly doubled year over year and has similarly driven increasing impact on the in-store shopping experience.
This year, emarketer says that US food and beverage e-commerce sales will grow 18.2% to $19.89 billion. By 2021, that figure will reach $38.16 billion. “Brands have learned that getting on the shoppers’ virtual shopping list is a big deal,” said Keith Anderson, SVP of Strategy and Insights at Profitero.
Walmart Expands Online Presence
Walmart, one of the largest retailers, captures 10% of total US retail spend. Last year (2018), US consumers purchased $381 billion from Walmart. And, Walmart has upped the ante with its e-commerce order options: it’s built out a grocery pickup operation, allows consumers to order through Google Assistant, and is testing autonomous delivery vehicles.
A recent Cowen and Company analysis reveals that about 11% – 13% of Walmart customers use its grocery pickup service. Walmart has made click-and-collect the cornerstone of its online grocery strategy, as it’s cheaper for the company to get Walmart customers to come to existing brick-and-mortar stores than for Walmart to deliver a grocery order to them. “Compared to competitors, Walmart’s investments in this space have been more effective and wide-reaching,” Freedonia Group grocery analyst Cara Brosius said, citing the fact that Walmart’s stores can reach more of the U.S. compared to competitors like Kroger and Giant Eagle. The 2,100 Walmart stores that have grocery pickup can reach 70% of the U.S. population.
According to a study from The Retail Feedback Group, 31% of US digital grocery shoppers (who have shopped online for food and groceries in the past 30 days) said they purchased online groceries from Amazon in 2018. That’s a 5-percentage-point decrease from 2017. Conversely, a third of respondents said they purchased online groceries from Walmart in 2018—a 7-percentage-point gain from 2017.
Understanding Your Promotions
Nielsen writes that uncertainty about digital advertising means that many advertisers aren’t able to target as precisely as they would like or spend efficiently. Advertisers with the least data about their customers are most at risk of wasted spend. Nielsen recommends that CPGs target their digital ads based on purchase-based audiences (like “people who bought from my competitor in the last 3 months) since their analysis revealed that audience delivered the highest ROI: 3x above average.
The consumer’s path to purchase is complex, but it’s time for CPGs to get comfortable communicating across digital channels.
Companies looking to get ahead of the pack should consider the following technologies to maximize workflow effectiveness, gain insights into outcomes and improve performance:
Trade Promotion Management & Optimization
- TPM and TPO applications enable top-down planning for sales objectives and setting budgets, bottom-up planning to deliver base and incremental volume, management of settlements and accruals, post-event analytics and predictive constraint-based planning to quantify and improve return on investment.
- If you’re wondering what promotional mix will drive the best ROI for your business, you need TPO ASAP. The good news is that TPO systems can be implemented and leveraged in just 6-12 weeks.
Offer Innovation
- Consumer savings apps abound in today’s digital world; they’re fast becoming table stakes for innovative retailers. If you aren’t partnering with companies like Ibotta and Shopkick to put cash back in the consumer’s hands, you’re missing out.
- Don’t believe the bang is worth the buck? Of the products on IRI’s 2019 New Product Pacesetters list, each of the top five items launched with Ibotta. Consumer trends are influencing purchase behavior, and companies who pay attention will win.
Read more about the path to purchase in Smoke Jumpers December 2019 issue’s cover story A Constellation of Consumer Touches.
