Are you incentivising the right shopper behaviour?
A lot of human behaviour is driven by incentives. Whether they are financial – not many of us work for free. Whether it is the prospect of a benefit in the longer term – studying for exams or going to the gym. Or whether it is to achieve a short term objective – telling a child they can have ice cream after they have eaten all their vegetables.
Whatever the incentives, the key is that they encourage the right behaviour. That sounds obvious – of course they should. However, often they don’t. For instance, many of the incentives that were driving the banking industry a few years ago encouraged the wrong behaviours. And we know how that ended.
Why is this important? Well, incentives in the form of promotions, play a big role in our industry. Walk around any supermarket and there are hundreds being offered to shoppers. But are these always the right incentives? Are they driving the right shopper behaviours?
For a lot of promotions, the main objective is simply to drive sales (and perhaps lock competitors out of promotional slots). This certainly helps the immediate numbers, but it can often store up problems over time. Often the shopper behaviour that is being driven in the short term is working against the shopper behaviour you want to drive in the longer term, to grow a category or a brand.
To change this, you need to move from promotions that are just about driving sales to promotions that are driving the right type of sales. That are getting shoppers to behave in the way you want them to behave. We call this promoting with purpose.
So, what are the things you can do in order to promote with purpose?
Know what shopper behaviour you are trying to drive. This should come directly from your strategy. Are you trying to get new shoppers to a store, channel (e.g. online), category or brand? Are you trying to drive frequency of purchase or get shoppers to buy more volume? Or are you trying to trade shoppers up to higher priced items?
The activities and tactics (the incentives…) you deploy will need to be different according to which of these behaviours you are trying to achieve. Trial driving mechanics or volume based mechanics? Price cuts or multi buys? Or added value promotions, for those you who were reading last week!
Know what consumption behaviour you are trying to drive. This is linked to the previous point. Consumption and buying behaviour should be aligned wherever possible. Do you want your product to be used as part of a particular meal occasion? If so, how do you get shoppers to buy it as part of a meal solution or deal? Is consumption in your category expandable? Then volume based promotions will increase use up rates. Do you want your product to be used with a particular frequency? Then link promotional activities to that (e.g. 5 for £4 on Porridge Pots, to drive usage every weekday).
Know which shoppers you are specifically targeting. If you are trying to drive volume then you are most likely targeting existing buyers. You will probably be able to offer lower discounts. You can probably focus the promotion on the home shelf as these shoppers will be coming down the aisle. Whereas if you are targeting new buyers, you may need to offer a bigger discount and focus on secondary locations. Or you may be trying to get existing buyers to trade up. In which case, you might link a new product to a current product – e.g. a coupon for new product Y when you buy existing product X.
Know which mission the shopper is likely to be on. Is the category more likely to be bought on a main, weekly shop or online, where the average basket size is bigger and shoppers may be open to buying more volume? Or is it more likely to be bought on a mission where the average basket size is much smaller and shoppers buy small volumes? It is amazing to see how many multi buy promotions are run in Convenience stores.
Promoting with purpose is about offering the right incentives for growth in the long term, for the brand, category and retailer.
Are you incentivising the right shopper behaviour?
Feel free to forward. Have a great weekend and speak to you next week.