Pick a Product: 40% of Public Decide in Store

Survey Shows Power of Retail Marketing, Busts Long-Held 70% Statistic

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BATAVIA, Ohio (AdAge.com) -- For more than a decade, the oft-quoted statistic that consumers make 70% of brand decisions in the store boosted shopper marketing and made other advertising seem almost pointless. But an extensive new global study by OgilvyAction indicates that consumers aren't nearly as fickle as the figure suggests -- though they're still plenty receptive to changing their minds at the shelf.

AG Lafley

P&G Chairman-CEO A.G. Lafley

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Specifically, the study from the shopper-marketing unit of the WPP Group agency found that only 39.4% of U.S. shoppers really wait until they're in the store to decide what brand to buy; about 10% change their minds about brands in the store; 29% buy from categories they didn't intend to buy from; and almost 20% leave a product they'd planned to buy on the shelf.

In all, the study found 72.4% of shoppers make one of four major purchase decisions in the store, said Jeff Froud, senior strategic planner for OgilvyAction. That's not to say, however, that they do so across all of their purchases.

The study was based on surveys of shoppers before they entered stores compared with surveys of the same shoppers as they exited, including 6,800 in the U.S. and 14,000 in all globally, covering a total of 13 categories ranging from hair care and household cleaning to confectionary and beverages.

The 70% figure is cited so often, usually without attribution and particularly by vendors of shopper-marketing services and in-store media, that it's taken on the air of urban legend.

'A little high'?
But it does have a basis -- a 1995 study for the Point of Purchase Advertising Institute by Meyers Research Center funded by a number of marketers, including Procter & Gamble Co. and Coca-Cola USA. Like the OgilvyAction study, it was based on pre- and post-trip surveys of shoppers, but a smaller sample of 4,200 in the U.S.

"That 70% figure we've all heard over the years always sounded a little high, and we all know it's a little high," said Peter Hoyt, executive director of the In-Store Marketing Institute, a sort of rival of POPAI. "Some think it's a lot high. I think what the Ogilvy study does effectively is help decompose [the data]. I think it's closer to what we can accept as statistics having some validity. ... But it's not that 70% of every shopping cart is made up of something people didn't [originally] intend to buy. That's just not real."

In a statement, POPAI said it continues to stand by the 70% figure in its 1995 study. "There have been various studies that have arrived at different in-store decision rates over the years, based on unique methodologies, trade channels, and the context and location of consumer interviews," the group said. "POPAI welcomes any research that helps brands, retailers and agencies understand the strategic importance of marketing at retail."

"We're not trying to refute a finding," said Rick Roth, CEO of OgilvyAction. "We're trying to add clarity and dimension to it."

The Ogilvy study still doesn't answer the age-old question of the extent to which advertising outside the store ultimately influences purchase decisions consciously or unconsciously. But the two factors cited most by shoppers in the study as influencing impulse decisions in-store were sampling and product display, ranking ahead of price, Mr. Froud said.

Moving parts
The statistics on the number of shoppers make decisions in-store has fueled shopper marketing to a sizzling 21% compound annual growth rate, according to a Deloitte study for the Grocery Marketing Association, higher than any other medium.

That explains why big marketers are watching the statistics closely, even if they'd like to understand more. Procter & Gamble, in fact, recently restated 11 years of advertising expenditures in its financial reports, largely to reflect spending on shopper marketing. The moving parts in the restatement suggest P&G is spending at least $500 million annually on shopper marketing. And Deloitte/GMA data suggest the marketer may actually be a bit behind others in the industry in share of marketing spending there.
Rick Roth, CEO of OgilvyAction
Rick Roth, CEO of OgilvyAction

"More and more of our communication is moving to store," P&G Chairman-CEO A.G. Lafley said during a press conference at the International Advertising Festival in Cannes last month. "And the reason it's moving to store is that more and more consumers are saying -- we're not sure [what] they're doing -- but they're saying they're making their purchase decisions in store. And in a period where you have a fair amount of food price inflation, we think more of that shopping list, whether it's just in [a shopper's] head or actually written down, is being decided in the store."

Mr. Lafley noted that industry watchers have had trouble discerning how much of P&G's shift to shopper marketing has involved true "brand communications" as opposed to those other popular levers of trade promotion: price discounting and incentives to retailers for better display. But, he said, "more and more of what we're doing in store is communication."

Mr. Froud said he was heartened that the Ogilvy study found communication -- or at least in-store display and demonstrations that sell on a basis other than discounting -- resonates better with consumers than price discounting.

"The good news for marketers is that a product display and sampling can build brand equity," Mr. Froud said. "No matter what rulebook you studied when you were studying marketing, price promotions don't build any brand equity and in some cases can be equity destroyers."
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