Shoppers in Pushkar Fair, Rajasthan, 2007 (Source: Wikimedia Commons).
Ideas for Leaders #277

How and Why Shoppers Make Unplanned Purchases

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Key Concept

Through analysis of video tracking of consumers in stores, new research offers a greater understanding of how and why consumers consider and make unplanned purchases at the point of purchase. The research highlights the categories of products most likely to be considered as unplanned purchases; correlations between categories of planned purchases and unplanned purchases; and the behaviour of consumers most likely to make unplanned purchases (e.g. standing close to the shelf or talking to an employee increases the chances of conversion). Retailers can use this information to develop strategies to encourage unplanned consideration and purchase. 

Idea Summary

A team of researchers used video tracking to observe consumers in real time during the entire shopping process. Analysing the video, the researchers were able to distinguish a number of behaviours related to both unplanned and planned purchases, and as a result, increased our understanding of why and how consumers make unplanned purchases. The research team’s observation and analysis led to the following results and conclusions:

  1. Some basic differences exist between planned and unplanned considerations:
    • Unplanned considerations are less likely to result in purchases.
    • Unplanned considerations take place later in the trip.
    • When making unplanned considerations, shoppers touch the product more, stand further from the shelf, and don’t check their shopping lists or coupons.
  2. Shoppers were more likely to consider categories that are on promotion, higher in hedonicity, and need to be refrigerated for an unplanned purchase.
  3. Shoppers are more likely to buy hedonic unplanned purchases. While promotions might make shoppers consider an unplanned purchase, they don’t necessarily encourage the actual purchase.
  4. Unplanned purchases complement planned purchases. Complementarity traditionally refers to the correlation between purchases (e.g., someone who buys pasta is more likely to buy pasta sauce). The study showed similar complementary — for example, a shopper who buys fresh meat is more likely to make an unplanned purchase of sour cream.
  5. The outcome of a previous consideration plays a role. If a shopper spends some time considering an unplanned purchase then decides not to go ahead, that shopper is more likely to purchase the next unplanned product he or she considers.
  6. Shoppers are more likely to buy the unplanned purchase they are considering if they are more engaged: They stand closer to the shelf, they have taken some time to consider the purchase, including consulting coupons or their shopping lists, or perhaps they have talked with a store employee.
  7. Shoppers are more likely to buy the unplanned purchase they are considering if they have greater in-store slack, which refers to the difference between the shopper’s total budget and what he or she has already spent.

The research team included Sam K. Hui, Assistant Professor of Marketing at NYU’s Stern School of Business, Yanliu Huang, Assistant Professor of Marketing in the LeBow College of Business at Drexel University, J. Jeffrey Inman, Professor of Marketing and Associate Dean of Research and Faculty at University of Pittsburgh’s Katz Graduate School of Business, and Jacob Suher, a doctoral student at University of Texas, Austin.

Business Application

There are a number of lessons for retailers to be drawn from the research:

  • The influence of in-store slack suggests that popular categories of unplanned purchases should be placed near the entrance of the store, where shoppers have the most in-store slack.
  • Focused or deeper consideration — looking at fewer shelves, standing closer to the shelf – results in more unplanned purchases. Retailers should strive to encourage focused consideration. For example, avoid promoting multiple brands within a product category. Also, offer product samples or highlight certain store display features — anything that will get the shopper to stand closer to the shelf.
  • Engagement leads to conversions. Based on this finding, retailers should distribute circulars and store coupons not only at the entrance but also throughout the store. Store employees should also be available at locations where unplanned purchases are more likely to happen (as in near hedonic products).
  • Based on the complementarity analysis of the research, retailers can predict which unplanned purchases will be considered based on the planned purchases. Retailers should proactively engage customers to encourage the shopper to buy the unplanned purchase under consideration. For example, a mobile grocery store app (e.g. GroceryIQ) allows shoppers to input their planned purchases when they enter a store (e.g., Foursquare). Retailers should tap into this information with targeted mobile promotion strategies. 
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Authors

Institutions

Source

Idea conceived

  • December 2013

Idea posted

  • December 2013

DOI number

10.13007/277

Subject

Real Time Analytics