BATAVIA, Ohio (AdAge.com) -- Package-goods marketers have been plowing more money into in-store marketing as the economy worsens, betting that financially strapped consumers need a harder sell. But new research by Information Resources Inc. indicates that as the economy worsens, more consumers are making more purchase decisions at home, raising new questions about marketing priorities.
For years, marketers have operated under the traditional wisdom that 70% of all purchase decisions are made in store. But IRI's research found that by the end of last year, more than three-quarters -- 76% -- of consumers were making their purchase decisions at home, up from 60% in the first quarter.
That would seem to indicate a lot of in-store marketing may be for naught as the recession takes the edge off impulse in favor of prudence and planning. But even IRI is quick to point out that its research is far from proof that in-store marketing is less relevant, and some others doubt how much consumers are following through on their intentions in attitudinal research.
By any measure, however, the research adds to a growing list of challenges to assumptions about marketing in a recession, such as that coupon-redemption rates will rise or pricey products will suffer most. Neither appears to be universally the case yet in package goods.
Focus on hard value
The rise in at-home decisions "demands an immediate rethinking of marketing and merchandising strategies," said Thom Blischok, president-consulting and innovation at IRI. "The role of in-store displays are still important, but not in absence of quality messaging on flyers and coupons."
He added that TV ads to reach consumers compiling their shopping lists at home are going to be as important as ever, if not more so -- though the message needs to shift to focus hard on value. Some 87% of consumers in IRI's most recent survey said they were shopping on price, but a nearly identical 84% said brand familiarity was an important factor.
Of course, not everyone is buying it. The notion that consumers are shifting decision making back home, however, meets various degrees of acceptance and skepticism by those in shopper marketing or marketing analytics.
"I can completely understand that if you feel your wallet or purse is under pressure, you'll get more considered in your purchasing," said Jonathan Dodd, exec-VP-global retail and shopper-practice leader of WPP's G2. That doesn't, however, mean consumers can't still have their minds changed in store. And if they really are planning more, they may go down fewer aisles, increasing the importance of off-shelf display.
"I can't say I'm seeing a ton of deterioration in trade-merchandising performance," said Gregg Ambach, managing director of Analytic Partners, Cincinnati, which does marketing-mix analytics for package-goods clients. He said there may be a big difference between what consumers say in a survey and what they do in a store, particularly given that most in-store merchandising coincides with temporary price cuts.
While recent research from WPP's OgilvyAction indicated that around 40% of purchase decisions are made in store, vs. oft-quoted studies pegging the rate at 70%, CEO Rick Roth said he doubts consumers are making fewer decisions in store as the economy worsens.
Then again, some say consumers are making more decisions both at home and at the store.
Consumer-product companies are finding that more consumers are making lists and sticking to budgets when they shop, said Sunil Garga, principal of Norwalk, Conn., analytics firm Mphasize. Yet, in the store, consumers also switch more often among brands based on deals, he said.
Masha Sajdeh, senior VP-director of insights and strategy for Publicis Groupe's Arc Worldwide, Chicago, said IRI's data do reflect a behavioral change, but the implications are complex. "More purchase decisions are being made at home," she said. "But purchase decisions in general are taking more of people's time [both at home and in store]."
Arc research shows that people are shopping at more stores or online retailers to get the best deals, she said. The segment of consumers doing one-stop shopping, she said, is half what it was in 2007. And what influences purchase decisions at home increasingly comes online from search or retail sites, which blurs shopper and digital marketing.
While Mr. Blischok calls on marketers to reinvent coupons and fliers, it's not clear any amount of tinkering can restore the print versions' full impact. Recession or no recession, Kimberly-Clark Corp. has been told by its clearinghouse, Valassis Communications' NCH, that coupon redemption stayed flat in 2008, said Laura Keely, director-consumer promotion marketing for K-C.