Podcast: Play in new window | Download
Purchase Decision Hierarchy
Join Andrew Grant and Darren A. Smith in the fifteenth episode of Grocery Guru. This episode discusses the purchase decision hierarchy, shopper map, analytic hierarchy process, consumer decision tree… Whatever you call it, understanding how the shopper shops is key to category performance.
You Can Read the Full Purchase Decision Hierarchy Episode Transcript Below:
Darren A. Smith:
Welcome to episode 15 of the Grocery Guru with Andrew Grant. Andrew, how are you?
Andrew Grant:
Good morning, Darren. Yes. Very, very well. Thank you.
Darren A. Smith:
Good. Good. All right. Well, this week we’re going to get stuck in straight away because I know you and I had a debate earlier about purchase decision hierarchy. What the hell is it?
Andrew Grant:
Yeah, no, absolutely. The way customers decide what they’re going to buy.
Darren A. Smith:
Okay.
Andrew Grant:
And a lot of commentators have said it’s no longer relevant in the world of shopper insight. When a club card swipe can tell you everything you want to know about your shopper, category management’s dead, isn’t it?
Darren A. Smith:
Well… So it’s also called customer decision hierarchy, consumer decision hierarchy. I like to call it shopper map because I think it gives you a map of how to shop something. And if you can’t understand the map, you’re not going to shop it or you’re going to buy less of it.
Andrew Grant:
Yeah. But a lot of people would say, the minute you’ve got that club card or that loyalty data, you can see inside the basket and you can see what the shopper bought with what, when, from which part of the store, how often and how that links to his or her family situation. So why do you need to spend time at a flip chart, working out what the customer decision hierarchy is?
Darren A. Smith:
Because I think we need to know what decisions the shopper makes both before and at the fixture.
Andrew Grant:
Well, let’s do a little test because I do believe that actually loyalty data is, as we kept going on about it, it’s the future. And it can tell you a lot. There’s one thing it can’t tell you. So, Darren, I take you’d like a bit of wine?
Darren A. Smith:
Yes.
Andrew Grant:
I know you like to whine, but you do like some wine.
Darren A. Smith:
I like wine. Go on.
Andrew Grant:
Okay. So let’s assume you are going on an essential journey to your local supermarket this afternoon.
Darren A. Smith:
Yep. Cool.
Andrew Grant:
And you’re going to shop the wine aisle for the weekend.
Darren A. Smith:
Yep.
Andrew Grant:
Just do me a quick picture on a piece of paper of what you’re going to buy.
Darren A. Smith:
Okay. Right, pen.
Andrew Grant:
Yeah.
Darren A. Smith:
Ready for rubbish drawing? Oh God, I feel like I’m back in art class at school. Now, this is what we buy as a treat. And I realized only six months ago, I’ve been saying it wrong for 20 years.
Andrew Grant:
What, Liebfraumilch? Oh, right.
Darren A. Smith:
Barolo.
Andrew Grant:
Okay. Right. That’s interesting. You’ve drawn a bottle of wine.
Darren A. Smith:
Yes.
Andrew Grant:
So you’re not in the market for a box of wine or one of those little miniatures that you used to be able to get on a train?
Darren A. Smith:
Not if I’m going this afternoon because it’s Friday. No, for the family, who’s the kids now drink wine as well. Kids in their 20’s.
Andrew Grant:
So this is the bit where I think customer decision hierarchy is important because what a club card or a loyalty data can’t tell you is that subconscious decision. You decided before, almost without thinking about it-
Darren A. Smith:
Yeah.
Andrew Grant:
… I’m in the market for a bottle of wine, not a five-litre box of wine.
Darren A. Smith:
Yep.
Andrew Grant:
You’ve made a subconscious decision. It’s the same with cars. If I asked you to draw the next car you want, you would probably draw a four-wheel-drive SUV.
Darren A. Smith:
Yeah.
Andrew Grant:
Yeah? Because you’ve subconsciously said, well, I don’t want a Supermini-
Darren A. Smith:
Yeah.
Andrew Grant:
Or I don’t want an estate car. You draw a saloon. You wouldn’t draw an estate car because subconsciously I’m not in the market for an estate car.
Darren A. Smith:
Nope. That’s very true. That’s very true. Now here’s the bit that winds me up. And I’m going to get on my high horse just for a moment. Shopping wine, I can’t see the data, but I would bet £5 of your money, Andrew, that people buy a lot of promotions online because they look at the wine fixture. They can’t understand the map and they go, “Stop this. I’m going to the bottle at the end because it’s on offer. So it’s probably quite good. And I’m going to grab that.”
Andrew Grant:
Yeah, no, absolutely. And that’s what people… When people don’t believe in category management and decision hierarchy is they often rubbish it by saying, “Well, people just shop on price.”
Darren A. Smith:
Yeah.
Andrew Grant:
And actually, you’re right. The vast majority of people are very price-conscious.
Darren A. Smith:
Yes.
Andrew Grant:
But let’s put it this way. So you just drew you a nice bottle of Barolo, which if my memory serves me right, is a very decent Italian red.
Darren A. Smith:
It is. It’s one of our favourites. Yes.
Andrew Grant:
Okay. If Blue Nun is on offer in Tesco at £2.49 a bottle, are you going to buy that? It’s dead cheap.
Darren A. Smith:
No-
Andrew Grant:
No. Well, there you go.
Darren A. Smith:
Because I tried Blue Nun when I was 17, it was horrible.
Andrew Grant:
Okay. So the price isn’t important to you because if the price was the sole decision, you would buy the Blue Nun at 2.49 bug off.
Darren A. Smith:
Absolutely. I agree. I agree. The other bit that winds me up, why is it that when I go to a restaurant it’s so different?
Andrew Grant:
What, so much more expensive?
Darren A. Smith:
No, no, no, no, not expensive. The map. So I open the wine menu in the restaurant and I’m looking, the first thing I see is, as we call it pink, white, or red or sparkling. Okay. So that sort of matches what’s in the supermarket-ish, but the next decision we make is a bit about the price because in a restaurant it was sort of £20-something much, much higher. And we’re looking at the grape. The kids quite like a Merlot. We don’t really spend that much about wine, but they quite like a Merlot, we like a Shiraz. That’s how we’re shopping. So why is it, it’s all laid out by countries in the supermarket?
Andrew Grant:
Well, absolutely. Because lots and lots in there and we already burned three-quarters of our time because when we do this with clients, we spend a good morning, at least doing this because there are some fascinating insights that come out. But just talking about the restaurant experience, you’ve already decided the occasion.
Darren A. Smith:
Yeah.
Andrew Grant:
You’re not going to order a five-litre box of wine because it’s a restaurant occasion or I hope you don’t. So occasion is probably the number one factor when deciding on a bottle of wine. And I don’t want to denigrate any retailers here, but you’re not going to take the cheapest bottle of Fred Blog’s discount stores red to your mum’s 70th birthday party.
Darren A. Smith:
Of course. Of course. The occasion’s important. Absolutely. Yeah. I would agree.
Andrew Grant:
So occasion drives a lot of it, then as we’ve just said, it’s not the price with wine. It’s actually colour.
Darren A. Smith:
Yes.
Andrew Grant:
Because if you like red wine, are you really going to get tempted to buy Rose or white?
Darren A. Smith:
No. No.
Andrew Grant:
You did on occasion maybe.
Darren A. Smith:
Yep. So I’m looking at the first three decisions we make in any task. And I would guess with wine, it’s colour first, probably pricing somewhere in there, and then there’s something about the grape.
Andrew Grant:
I think it’s the occasion, colour, and then it’s grape or brand actually. When you do the research, and I bought wine for a number of years, it was really interesting. People think the grape variety’s often the brand.
Darren A. Smith:
Oh, is that?
Andrew Grant:
They think Chardonnay is a brand as well as being an ’80s footballer’s wife. It’s also in their head, a brand. As is a Shiraz. And they often get confused and people with wine, and this is a UK thing because we were fairly late to the party drinking house wine. They go to a restaurant and they have a nice bottle of something that says Jacob’s Creek.
Darren A. Smith:
Yep.
Andrew Grant:
And instantly on the shelves, they look for that sort of brand beacon that says, Jacob’s Creek, or actually, I had that nice Shiraz. So they get the brand and the grape mixed up. Unfortunately, some people like that also buy it because it’s got a nice, big cuddly fat penguin on the label. I didn’t know you’d be surprised. If you look at the wine aisle, there’s lots and lots of bottles with nice, colourful lizards on it, big fat penguins, French men riding bicycles with a beret. A lot of people buy on that’s a nice bottle, that looks fun.
Darren A. Smith:
Well, and that comes back to it’s… And I guess some wine buyers out there are thinking we ought to be more educated, but I think they need to make it easier for us. Why am I presented by an aisle that’s by country when I don’t shop by country? I don’t know Australian, I don’t care.
Andrew Grant:
Well, again, that comes back to some of these ingrained habits. I mean, would you invent a category called frozen foods because you don’t think I must have a frozen burger for dinner tonight.
Darren A. Smith:
No, no, very expensive.
Andrew Grant:
I want a burger, and then you decide whether you want to have it fresh or frozen or eat out or whatever.
Darren A. Smith:
Yeah.
Andrew Grant:
The fact that it’s just so expensive to put frozen food cabinets in a supermarket means they all have to be clustered together.
Darren A. Smith:
Yes.
Andrew Grant:
So you create this artificial category called frozen foods that people just got used to shopping. And in wine, it was exactly the same thing.
Back in the ’60s or the ’70s, Sainsbury’s actually decided that the UK market was right for drinking table wine. And so they brought French table wine to the masses. Sainsbury’s being Sainsbury’s. As all good retailers, they said to the French wine board, “If you want to sell lots of wine tours, it’d be really nice if you paid for the displays.” So the French wine board at the time, very kindly paid a whole load of money for Sainsbury’s to set up a French wine section.
And then of course, when the Australians came along and said, “Good day, mates. Can we sell you some of our wine?” They said, “Well, yeah, but you’re going to have to pay for the space.”
Darren A. Smith:
Right.
Andrew Grant:
So hence now in every supermarket, there’s a French section. There’s an Australian section. There’s a Chilean section, et cetera.
Darren A. Smith:
Wow.
Andrew Grant:
It’s a hangover from way, way back.
Darren A. Smith:
And what I see when I look at the wine section, there’s probably seven different maps from tiers to countries, to colour, to a format. And then you’ve got sort of the copy of the cheese, which is a mature red or light and fizzy, or whatever it is. It just adds more complexity. And then they started changing the bottle tops to match those colours and those varieties and it’s, oh, I’ve got so many maps to look at I can’t understand it.
Andrew Grant:
Well, that comes down to the conundrum of category management. You’re trying to please all the people all the time because some people will want to buy their wine based on I’m having Stilton for my dessert course. Some people will hate sweet wines. They want something very, very dry. Some people will only buy wine if it’s won a gold medal somewhere, or if Heston Blumenthal says it’s the very best thing to drink in the Saturday Times. So what they’re trying to do with that complexity that you see, they’re trying to meet all the needs of everybody, which is why shelves have to work so, so hard.
Darren A. Smith:
They do. And I think particularly for wine, a bugbear of mine, I think they’re trying to be a Jack of all trades, master of none.
Andrew Grant:
Yeah. Now, who does category management perfectly? Final question before we have to go. Who does wine category management perfectly?
Darren A. Smith:
God. Don’t know.
Andrew Grant:
They all do. It’s when you go online. When you go online, yeah?
Darren A. Smith:
Yes.
Andrew Grant:
You can set the store app to Darren’s personal preference. So I only want to see Italian reds in bottles.
Darren A. Smith:
Yeah, true.
Andrew Grant:
I only want to see Italian reds in bottles under £8. And then you might do it by body or sweetness or dryness or ones that have won medals. So you can set out the store, whether it’s Tesco, Asda, Sainsbury’s, whoever to Darren’s personal wine selection.
Darren A. Smith:
Yeah. And the challenge with that is if my wall of wine is this big, it’s only ever going to be this big because it will struggle to go wider than that. And then we go back to where Sainsbury’s was talking about sleep shopping some years ago, where we just, let’s order that. It comes, done. Okay, Andrew, we’re out of time. What’s the takeaway for our viewers before we go?
Andrew Grant:
Well, I wouldn’t match wine with a takeaway unless it’s a really good takeaway. I think the takeaway is yes, look, I always find them great fun. Whenever we do this with clients, they love doing these decision trees. It’s great, great fun getting a group of guys and girls around a flip chart and getting them to try and decide how they shop, but then how other shoppers shop. So it is still valid even in this crazy electronic world of loyalty and insight and data that we keep banging on about. Some of the old truth still ring true.
Darren A. Smith:
Very true. All right, thank you, Andrew. And next week, I think we’re going to talk about terminology and some of the crazy stuff we use in this industry that shoppers have no clue about.
Andrew Grant:
Yeah. Okay. Let’s talk about that.
Darren A. Smith:
Okay. Until next week.
Andrew Grant:
Okay.
Darren A. Smith:
Andrew, thank you.
