We recently conducted a shopper study that uncovered a “tale of two shoppers.” As the name implies, our tale profiles the current attitudes and behaviors of two distinct shopper segments — those on either end of the household income scale. Overall, it reveals the impact on lifestyle and shopping behaviors when income inequality creates both diverse and convergent effects (see chart).
On the higher end of the household income scale (families enjoying $100,000 or more of annual income) we have the Providing Pleasantly. On the lowest end of the income scale (those who earn less than $45,000 in annualized household income) we see the Managing Modestly struggling to make ends meet. These two types of households represent more than 60 percent of US shopper households and significantly influence retail sales and brand vitality at the shelf. They also illuminate unique challenges for shopper marketers due to their divergent lifestyles and dogmatic shopping behaviors.
It’s easy to visualize which of the two groups has struggled. One in four Managing Modestly cite reduced income challenges and difficulty paying bills, while fewer than one in ten Providing Pleasantly recognize that same issue. One-third of Managing Modestly saw their income drop, while one third of Providing Pleasantly enjoyed higher wage gains. The story plays the same across a variety of key indicators. All in all, as income inequality widens, Providing Pleasantly and Managing Modestly are taking distinctively different paths.
However, the most revealing research exposed a troubling commonality of both groups. Despite their many differences, at least half of both ends of the scale emphatically expressed that they habitually buy and stock up on products when they are on sale. This is a strong indicator that, even as recessionary pressures subside, both Providing Pleasantly and Managing Modestly are holding steady to old habits.
What drove this predisposition toward price sensitivity? Our research indicates that the shift to lower-priced brands — specifically, grocery private-label brands — intensified for all shopper segments early in 2008. Later that year, the demand grew because of increased unemployment, paying down personal debt and uncertainty about the future. Chain grocery retailers capitalized on these new behaviors by introducing an unprecedented number of new brands. In fact, during the first nine months of 2011, 30 new private-label coffee brands alone were launched. While growth in private labels seems to have leveled off, it is clear that frugal shopping behaviors have become the new normal, driven primarily by shopper preoccupation with price.
A conclusion can be drawn here: If shoppers on both ends of the income scale are equally influenced by price, then the cause is driven less by economic necessity than it is by the wiles of marketers. In reality, it is marketers who are preoccupied with price. It is marketers who are fueling old habits.
It’s time to shift the conversation away from price and create a more branded dialogue with the shopper. How might shopper marketers begin this new communication? To nudge away from that monologue on price, consider the following options.
Lead with emotion and follow with rationality — in equal doses. “Human beings will always buy for emotional reasons and justify their purchases for rational ones,” says Jim Signorelli, author of StoryBranding. As long as human beings are made from carbon atoms and not carbon fiber, we will always be led by emotion when making decisions. Functional attributes are important, but remain secondary to the conversation.
Kraft’s new adult dessert vending machine is a magnificent example of delivering emotional appeal through exclusivity and indulgence. The machine distributes samples exclusively to an audience of adults looking to satisfy their dessert cravings. Scanning technology detects facial features to determine the maturity of the consumer; kids are easily detected and politely turned away. Kraft then rewards those individuals who have done nothing more than survive adolescence with their sweet tooth securely intact.
Researchers have issued one warning about becoming too lofty in emotional communications and remind us that the focus of communication should be on the immediate effect of the decision. For example, one strategy recommended by Lerner, Han and Keltner (2007), is for marketers to focus on making people feel good about a problem the brand solves rather than trying to convince them the brand purchase will make them feel happier overall.
Deploy social influence to drive switching behaviors. Peer groups and social-networking sources have had a huge impact on shopping decisions and prompted brand-switching patterns. We are all accustomed to seeing “favorites” and “likes” across multiple social sites and now these social influences are moving more steadily into the physical environments where we shop every day.
Brazilian fashion retailer C&A is bridging the gap between both the virtual and physical worlds. Not unlike other brands, C&A actively posts photographs of clothing items it sells on its Facebook page and invites visitors to “like” the most appealing items. Asking for input is only the first step in the strategy, though. The second, and most important, is C&A’s delivery of the social ranking directly to the store and the individual items themselves via special clothes hangers that digitally illuminate and update the number of “likes” in real time. This gives shoppers an immediate indication of the item’s popularity and can drive — or discourage — their purchase.
As shopper marketers, we should identify the triggers that can elevate the impact of social influence on our brands. For instance, within fashion, shoppers aren’t as motivated by the most popular item as they are by the most admired. This pattern may be reversed within categories like household cleaners or detergents.
Re-frame value. If a brand hasn’t truly distinguished itself, then the shopper default is usually driven by price. Low price wins when all else is the same. However, re-framing the choice shifts the basis of comparisons, which means shoppers will choose based on another set of branded attributes. As Rory Sutherland, the newly appointed president of the IPA has exclaimed in his appearances at TED, “Things are not what they are; they are what we think they are.”
Remember the Total cereal commercials of the 1980s? If shoppers were to compare Total against all other cereals, the decision would largely come down to taste or price. Since Total is not the lowest-priced cereal, or the most sugary on the shelf, the odds are that Total would not fare well within that choice framework.
However, when the choice was re-framed around nutrition and value, the decision favored Total. As their commercials pitched it: “You’d have to eat twelve boxes of Shredded Wheat to equal the vitamins and mineral nutrition you get in just one box of Total.” Unless one is inclined to consume massive amounts of grain, the decision was a no-brainer.
A more recent example is the Japan-based brand Storia, makers of an eco-friendly shopping bag. While the bag optimizes convenience by folding to a size smaller than a compact umbrella, the demand for eco-friendly bags is still relatively low. However, the new Storia shopping bag doubles as a safety helmet. In the wake of the 2011 earthquake in Japan, Storia addressed the demand for emergency preparedness by making a shopping bag that is disaster-proof. In fact, the company claims its bag has been comparison tested and performs better than 16 other emergency hoods.
Move at a quick and easy pace. Simplicity and ease are critical for gaining shopper attention in your brand’s space. When evoking a behavioral shift, you mustn’t overlook the importance of making the new behavior appear easier than the existing one.
As Dan and Chip Heath note in their bestseller, Switch, a bias toward the status quo isn’t a result of people just being lazy or uninvolved. Rather, it is a symptom of being overwhelmed and exhausted with the immense number of routine decisions that drive us toward the usual defaults. So, ensure that any real nudge to your brand feels natural and pleasing.
Yo Time, a startup in Zimbabwe, has devised an ingenious way to solve the problem of carrying around loose pocket change. A number of currencies are used in Zimbabwe and change is generally in short supply. To avoid rounding up, or serving up a handful of mixed currencies, Yo Time allows retailers to give change in the form of mobile airtime that is credited directly to the shopper’s mobile-phone number.
Digital marketing has allowed brands to integrate into conversations more seamlessly. Leveraging shoppers’ current behaviors of spreading the word about product performance and then rewarding that activity is a natural. A start-up company called Buzzdoes offers a feature that pays smartphone and tablet users to suggest apps to their friends. As brands participate with Buzzdoes, it adds a button to its app that makes it easy for existing users to relay a recommendation to their friends. Users who succeed in getting their friends to download the app are rewarded with cash, free apps or other prizes determined by the brand. This idea combines the power of social influence with the power of simplicity.
Shifting the conversation and preoccupation away from price opens a more robust and connected discussion with shoppers. However, creating a brand value perception that shoppers are willing to pay for requires a deep understanding of the communication that will connect your brand with your shopper. You will be encouraged to know that our research has also indicated that both Providing Pleasantly and Managing Modestly may be open to spending more for brands that communicate value beyond price.
There’s never a better opportunity to do so than at the shelf or when the purchase decision is imminent. At that very moment, when shoppers have a plethora of brands to choose from, and the temptation to default toward the status quo is the greatest, it’s the subtlety within your brand’s voice that will drive the shopper to choose your brand above all others.