Shop Tactics

Business is finally waking up to the importance of point of purchase, but is still in the dark when it comes to identifying the key variables that affect customer purchases. Richard West reports

It wasn’t so many years ago that point of purchase (POP) was viewed by manufacturers, retailers and advertisers as a promotional afterthought, its credibility squeezed by the more high-profile elements of the marketing mix. But its importance is growing as retailers wake up to the fact that customers want more than aisle upon aisle of boring displays, and manufacturers face up to the decline of the locked in, brand-loyal shopper.

The post-modern, shopping-as-a-theatrical-experience era of retailing is witnessing the emergence of POP as an important advertising medium in its own right, with the total size of the UK POP industry estimated at 350m and expanding. A Mintel report, Point of Purchase 1996, described it as “the ultimate advertising and marketing opportunity”, yet despite its growing popularity, research into the effectiveness of the medium has been slight in comparison with other marketing techniques such as advertising and direct mail.

Alan Toop, founder of the UK-based The Sales Machine International, suggests in his book Sales Promotion in Post-modern Marketing that POP is the decisive moment when all previous marketing activities stand or fall. It’s a view that Paul Narraway, managing director of Marketing Dynamic International (MDI) goes along with, though he points out that manufacturers are still in the dark when it comes to identifying the key variables that affect customer purchases.

“There are many factors that influence buying decisions. It is estimated that 70 per cent of these decisions are made at the point of purchase, yet despite the massive amount of time and money that has been spent developing customer loyalty schemes, lip-service has been paid in trying to understand the initial acquisition phase, the first stage of a potential loyalty relationship,” says Narraway.

With major global brands, such as Reebok, switching large chunks of their above-the-line budgets to POP and local promotion, there is arguably a growing need to develop more sophisticated methods to evaluate the impact of an in-store campaign – other than by crudely monitoring whether more product is sold.

However, Jonathan Hynes, planning director with communications consultant Basten Greenhill Andrews believes that attempting to do this would be akin to untangling the Gordian Knot. “The whole purchasing process is so complex it would be very difficult to assess the relative importance of individual components, including the effectiveness of the POP,” he says.

Nevertheless, having developed a number of successful campaigns for clients, including Greene King and BMW car dealerships, Hynes points to a number of important criteria frequently overlooked when developing in-store campaigns. “People behave differently in different environments, so rule number one in designing POP is to understand the environment and the consumers extremely well. It is also important that the staff understand what is going on, what is expected of them and what the objectives of the promotion are. Too often, POP fails simply because the sales people don’t have an inkling of what it’s about.”

Invariably, understanding the environment and the consumer comes down to detailed market research, and one of the major problems confronting the POP industry is the lack of quantitative data about how shoppers behave. A survey carried out in June 1996 on behalf of merchandising design group Kesslers International found that more than half of the respondents were “sold” their purchase by the POP display, but it would be over-simplifying the case to state that point-of-purchase automatically increases sales.

Research International executive director of retail Maureen Johnson points out that there are a myriad of factors that need to be taken into account. “For brand leaders, the key factors will be the range, position, variants and price. For new or secondary brands, special or dedicated displays will be more important.”

Add to this the impact of the store layout, the mood of the shopper and the attitude of the staff and it becomes obvious why undertaking any scientific analysis on the subject is difficult.

Typically, evaluation will focus on observing how shoppers respond to a category: a questionnaire survey and interviews with selected groups of customers. But isolating the impact of the POP display may mean undertaking qualitative surveys with pre-test mock ups. However, most POP manufacturers will admit in-store promotions invariably mean fast turnaround times and this may result in the pre-test stage being skipped altogether.

Cadbury, which spends a lot on POP, uses a variety of techniques to pre-test POP displays. But, according to POP development manager Brian Pearson, “rate of sale is the most important factor”.

Yet one of the things that the supermarket battles between Tesco and Sainsbury’s has demonstrated is that the Nineties shopper is looking for more choice and a more exciting shopping environment.

Paul Narraway believes this will mean market research must become more refined to keep pace with demand for a more individual, personalised service. This will have a profound impact on the role of POP. “There is no doubt that POP material plays an important role in the purchasing process, but research needs to be done to understand how it can combine more effectively with other elements of instore marketing. We have found, for example, that demonstrations and promotions when linked with POP activities can substantially improve the effectiveness of the medium,” he says. “Face-to-face interaction gives a much better result.”

This may point to the beginning of a consumer backlash against the depersonalising effect of mass marketing and, with shoppers becoming ever more sophisticated in their ability to deconstruct marketing messages, researchers are beginning to look closely at the deeper psychological processes involved.

“Shopping is a highly irrational process,” says Siamack Salari, head of behavioural research at J Walter Thompson. “To say POP will automatically increase sales is far too simplistic.”

Salari says although purchasing behaviour is highly complex, a four-stage process can almost always be identified, whether the scenario is enacted in a supermarket, pub or airport. “Shoppers will first seek a reference point to begin the search. This is usually triggered by associating brands with advertising images. They will then make comparisons against other possibilities, make a final selection and then complete another check against available options to confirm their decision.”

After studying hours of video footage, recording shoppers as hunter-gatherers, Salari believes conventional research, and therefore many preconceived ideas about shopping behaviour, is becoming outdated. “The relevance for the POP industry is that it needs to understand the four-stage process. It is difficult to take on and beat a strong, well-known brand such as Kellogg, so point of purchase from rival brands should concentrate on the second and fourth stages – providing information and reaffirming the decision.” He says.

This may well be the case, but others argue that POP fulfils a wider function: that of creating in-store theatre, which many large multiple chains are beginning to appreciate. Supermarkets, for example, are showing a more relaxed policy towards branded POP, providing it conforms to set guidelines.

“Developments in POP are helping to create more in-store theatre, and hopefully this will continue,” says John Pearn, Sainsbury’s in-store marketing manager.

POP is now a widely accepted element of the marketing mix, but the most radical breakthroughs in helping retailers and brand owners understand its importance are emerging from new technologies. These can employ video tracking systems and sophisticated software to follow the purchasing activities on the shop floor.

Evans Petty Associates, a member of the Market Research Society, has developed new software which enables real-time market research and evaluation of retail dynamics. “Real-time information about what is happening in-store is essential,” says managing director Richard Dutton whose company recently launched a new division – Retail Presence Measurement (RPM) – to market the system originally developed for its client Reebok.

The sports manufacturer has invested in developing its Planet Reebok merchandising campaign and needs to evaluate the return on its investment. The RPM system allows identification of all the variables which affect in-store sales, from in-store positioning, merchandising units, product display and competitors’ activity. Alpha-numeric and digital data can be downloaded onto a central database and correlated instantly.

Dutton believes the system overcomes the problem of separating POP from other elements of marketing activity.

“This is the next generation of market research. The system will profile the retailer and the brand’s performance based on how shoppers react in-store”.

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