In-Store Promotions: Ask The Psychologists, Not The Accountants
The secret of promotions is that you need to heighten appeal rather than giving away more margin or product, which is why you need to look to the psychologists, not the accountants. Psychologists can help you understand the appeal, whereas Accountants just look at the margins.
If your focus has been on giving away margin rather than investing in optimising how your ‘give-away’ is communicated in-store, then you are certainly a part of the ‘£100 billion crime’.
This is where you have that all-important window of opportunity while shoppers make their final decisions, choosing between brands and deciding whether to buy or not. With the right appeal factor, you can tip them in the right direction.
I analyse retail promotional effectiveness from a psychological perspective, and an awful lot can be learnt from psychology. It goes way beyond what you can gain from spreadsheet analysis alone.
Using ‘Chilled Juice’ as an example, let’s look at Multi-Buy promotional tickets that major supermarkets all used during the same trading period. Rather than look at the economics of the price, let’s focus on the psychological influence and design of the promotional ticket itself.
If you compare one shelf barker against the others, you will begin to recognise their comparative impact. What is even more intriguing is how shoppers perceive each separate ticket.
Asda’s promotional colours are yellow and red, and their shoppers have been trained to accept these colours as offering added value – this is not just Asda’s conditioning, these are common promotional colours used in many stores. On a ‘4 for £3’ promotion, the Asda ticket does not have an individual unit price, so shoppers have to stop and figure out the price per carton or rely on their emotionally led instinct.
Further research has taught us that most Multi-Buys tend to be mentally processed by the brain’s emotional reward centre. In other words, Asda shoppers have enough going on in their head before they even begin to figure out the extra value on offer. This is proven by the fact that only 15% of shoppers walked away from the fixture with enough ‘Chilled Juice’ to trigger the offer mechanic. 85% bought no more than 3 cartons – totally bypassing the offer.
Sainsbury’s have conditioned their shoppers to look for the big red, black and white shelf edge barkers. Like Asda, Sainsbury’s don’t show the single unit price on their ticket, and they use the ‘£’ symbol a lot less. 30% of supermarket shoppers need to wear glasses, but forget to wear them when they go shopping (according to SBXL research), so who knows how these shoppers interpret ‘3 for 4’ after only a brief glance at the promotion?
Morrisons’ shoppers have been conditioned to see red, white and black as added value. Their tickets begin with the biggest number ‘4’ and they prominently show the unit price of £1.50 on the same ticket. The crucial thing is (more on this later) the unit price is shown after the offer.
Because in the Western world, we read left to right, we see the ‘1’ first – unlike Asda’s ‘4’, Morrisons’ ‘4’ and Sainsbury’s ‘3’. Interestingly, the average number of cartons of ‘Chilled Juice’ each shopper bought was related to the first number viewed. Asda’s average weight of purchase was 1.9 and Morrisons’ was 1.7. These two stores led with ‘4’. Sainsbury’s (which led with ‘3’) had an average weight of purchase of 1.6 and in Tesco it was 1.4 – leading with ‘1’.
In all stores, less than half of shoppers bought enough ‘Chilled Juice’ to qualify for the Multi-buy added value. This is proof that the way the ticket looks tends to be more influential than the numbers it communicates.
An American study suggests that for every $1 spent on advertising, $3 should be spent on promotions, so why do brands and retailers so often ignore the importance of the design of their promotional messaging? In my many years of psychological analysis of promotions I have gathered more than 150 validated rules on how the human brain processes numbers and prices, and I strongly believe that communication is at least as important as above the line brand advertising in selling products.
Shopping Behaviour Xplained