How often do consumers buy something on impulse? It's probably more than you think. Research by the point of purchase (POP) industry body, POPAI, reveals that a staggering 75% of our buying decisions are made in-store.
Specialist POP marketers love to quote this figure as it highlights the power of their work - those dump bins, graphics and promotions that say 'buy me' really do work.
But there are a few dissenting voices in the industry. Some marketers are starting to question the exact nature of impulse purchases. They are investigating how consumers behave and they are uncovering a host of different influences.
Iris, a marketing and POP agency, claims there is no such thing as pure impulse buying. Its research, in conjunction with Context International, explodes some of the received wisdom. The report Impulse Buying: Burying the Myth reveals that most impulsive purchases aren't impulsive at all.
"The fact that consumers can't always articulate the selection process doesn't mean that a selection process isn't happening. Most impulse purchasing is actually conditioned behaviour. With experience, consumers are very able to accurately match 'need state' to the right brand/category solution." And the older consumers get, the more conditioned they become.
"We had a hypothesis that most impulsive behaviour isn't impulsive," says Ian Millner, managing partner of Iris. "And this research shows that most purchasing decisions aren't spontaneous or random. Consumers are acting on their physical or psychological circumstances. Their decision may depend on who they are with. If they are under heightened levels of anxiety, they may buy the first thing they see. On their own, they may use the store as a memory jogger because they have got time to look for the perfect thing. If they are with their kids, they will choose the most accessible brand."
These findings are backed up by retail lecturer and point of purchase expert, Dr Hugh Philips, of the University of Bournemouth. "Impulse purchases are very, very rare," says Dr Philips, explaining that there are four types of purchase.
One is planned; the second is the reminder purchase, which you remember you need as soon as you see it; the third scenario is when you know the type of product, but not the exact item, for instance when you are looking for 'something for tea'. And the fourth is pure impulse and that, says Philips, accounts for only 5% of sales.
But the Iris research also suggests something more controversial - that "Point-of-sale and promotions exert a negligible influence."
Millner explains: "Most point of sale isn't seen by consumers because it is not significant enough to get them out of auto-pilot."
So is POP a waste of time and money? On the contrary, says Millner. "There's a big role for POP material, but because the consumer is so sophisticated, the POP has to be more sophisticated. It's about taking POP to a different level."
What the research shows, says Millner, is that rational messages are not working. "Most promotional activity still revolves around the delivery of rational propositions to the consumer. But consumers are using emotional and sensory processes to interpret these messages."
Colin Shaw, founding partner of branding consultancy Beyond Philosophy, agrees: "Emotions account for more than half of buying decisions," he says. "The physical elements of price, place and promotion are no longer as relevant," he says.
"Customer experience is the next competitive battleground. Marketers have to do two things. Firstly, they have to ask what is the customer experience they are trying to deliver?
Secondly, they have to ask what is the emotion that they are trying to evoke in consumers? But most organisations are leaving it to chance. In our research, only 5% could articulate the emotion they were trying to evoke with their brands."
Companies need to make radical changes, says Shaw. "Most organisations build experience inside out, they do what is good for them and not what is good for the customer. But customer experience is a key differentiator. If you want to evoke a feeling of trust, then you have to look at everything you are doing in the organisation and check whether it conveys trust. In bank branches, for example, the fact that pens are attached to chains says banks don't trust their customers."
It is vital, then, to get inside the heads of your target market to find out what drives them and what kind of people they are. "I would come at it from the point of view of contextual marketing," says Jon Derry, director of marketing agency KLM. "Our premise is that people are motivated to behave in different ways depending on the context."
KLM has identified 14 patterns that affect behaviour, which can be used to draw up profiles of customers.
"One example is whether the consumer is a 'toward' person who is goal-oriented or an 'away-from' person who is motivated by the avoidance of problems," says Derry. "If you were targeting a ready meal at a 'toward' person, your POP message could be, 'here's a delicious supper for your family tonight'. But if we're targeting an 'away-from' audience, the message would be, 'spend more time with the family, not with the cooker'."
Other crucial types of behaviour, says Derry, include whether consumers usually seek endorsement from others or whether they use their own standards to evaluate a product.
POP marketers that address the emotional needs of their customers are being rewarded with increased sales. Kesslers International, for instance, has done some innovative work with the children's watch brand, Flik Flak, for client Swatch.
To attract sales, Kesslers developed a secure, but open, piece of POP, quite different from the usual locked glass cabinet where most watches are displayed. "We gave consumers a chance to pick up the watch and play with it," explains managing director, Charles Kessler. "As a result, we saw sales rise 80%. That increase came from catching the impulse and browsing market."
Allowing the consumer to experience a product is also effective when it comes to new technology. Sony Ericsson is currently working with T-Mobile on a POP display that promotes the ability to send pictures from one mobile phone to another. "Our own research shows that in 50% of cases, the decision to buy a mobile phone is made by the consumer at the shop level," explains Ben Padley, marketing manager, Sony Ericsson UK.
The result is a special demonstration unit featuring the Sony T300 phone and the Communicam digital camera attachment. Iris has built a POP display that features two handsets so that customers can send pictures from one to another. They can even send pictures to their friends. "Customers need to get to grips with new technology on their own terms," says Sam Noble, partner at Iris.
It's a far cry from the way that WAP was originally marketed two years ago. "The industry thought WAP technology would sell itself but it didn't," says Padley. "It's an application-led product offering and the best way is to see it in action."
Once the consumer has picked up the item, it is on the road to a sale. But how can POP be used to attract attention?
John Wood, managing director at ad agency BDS Beechwood highlights the problem facing retailers. "There's a greater focus not on impulse buying, but on making the store easier to navigate through point-of-sale, clearer merchandising and removing much of the clutter. Doing this has worked for retailers because they're selling their key brands in bigger volumes and people are happier with the retail experience. But this scenario creates less opportunity for driving impulse purchase, which historically has been through extensive use of point-of-sale."
Dr Philips suggests that clarity raises sales. "The main thing the consumer wants is visual clarity," says Philips. "Our research shows that we mainly process information subconsciously. There are 40,000 lines in a supermarket and if consumers tried to deal with all the information rationally, they would get very tired."
This proves that more POP is vital, says Dr Philips. "It creates differentials so people can find things. We have looked at behaviour and have found that the more clarity there is, the easier it is to shop and the more repeat purchases that are made. We have discovered that people allocate a certain amount of time for shopping in a high-street store and if they can find what they want quickly, they spend the rest of the time browsing, which increases the opportunities for purchasing. Today the cost of the goods is not just the price, but the time and effort involved."
But too much promotional noise can be counter-productive, he warns. "POP theatre made a big splash a few years ago but it didn't last. Often people elevate the display to hero status. But the POP is like the frame and the product is the picture."
Even so, POP campaigns can be important signposts in-store, says Lucy Lynch, marketing director of Coutts Retail Communications. "POP instantly helps consumers when they are searching for a solution. Getting right down to basics, it is about visibility, especially in supermarkets where you have got a lot of brands fighting for attention. Visually, it is quite difficult for the consumer to process that information. POP does its job in that it draws the eye."
Annie Lord, managing director of agency Toast, agrees. "You have to stand out, it's about prominence." But, she warns, achieving stand-out is a big challenge, both in multiples and in independent stores.
"The battle for impulse purchases is trade-driven because retailers are saying if your brand doesn't fit in the retail environment, then you won't get a space," says Lord. "Brand owners fight tooth and nail to get into the multiples. It's an extremely sophisticated game in the major retailers and often you won't get your slot unless you are going to do something magical with it. At the independent end, there are 42,000 shops such as newsagents and that's where the battle gets even hotter."
There's a tough challenge facing marketers. POP has to work on a number of levels. It must help improve clarity in-store, but also provide prominence for individual brands. It must appeal to its target market on an emotional level as well as a rational one. Ultimately, it must encourage consumers to stop and pick up the product.
"You have to engage, not rely on entrapment," says Ibrahim Ibrahim, managing director of Portland Design. "Tactical work can be very effective, but it must be underpinned by strong brand presence. The acid test should be, if you take all the product off the display, have you still got powerful branding?"
Portland Design specialises in the travel retail environment and has won a Gold award at the In-Store Marketing POP awards for its work with Grolsch.
"We designed a retail presence for Grolsch, which was piloted in Amsterdam's Schiphol Airport between October 2001 and February 2002," explains Ibrahim.
"We took the architecture of the bottle with the swing top and the luminous green glass and brought it to life. The whole unit reinforced the premium positioning of the brand and heightened the value of the product."
The results were spectacular. Despite a 12% drop in the number of travellers post-September 11, sales of Grolsch rose by 41%. The brand even outsold Heineken for the first time in Schiphol Airport. Now the Grolsch POP campaign is going worldwide.
It's clear that when POP delivers a strong brand experience, then consumers will respond. The POP is, after all, the culmination of the entire marketing effort. And yet many brand owners are still leaving it to chance.
GUINNESS WORLD RECORDS
The annual Guinness World Records book is a classic example of an impulse purchase driven by point-of-purchase display. With no other advertising or marketing, the book is still a big seller every year in the run-up to Christmas, as consumers tend to spot the title in-store while they are browsing for presents.
But last year saw sales soar when an innovative piece of POP display was used to give the book real prominence.
POP specialist Arno Ford came up with a special display unit, which was designed to make maximum impact. "Our research showed that movement and light attract attention, so we used twenty chaser lights wrapped around the header of the unit," explains Mark Aspin, international sales director at Arno Fords. The display unit was covered in graphics that reflected the cover of the book and it worked on a practical level too, providing space for 100 copies of the book.
Such was the success of the display, that retailers such as WH Smith requested extra units. "There were strong sales uplifts compared with the previous year," reveals Aspin. "It was our most successful unit to date. Once someone had opened the book and read one or two records, they often wanted to buy. It was an example of real impulse buying."
The unit also earned gold at the recent POP Awards. "This was the first time Guinness World Records had commissioned this type of programme and the results were 100% placement," says Neil Hayes, systems marketing manager at Guinness World Records. "The overwhelming success required a production re-run and we achieved our targets during the in-store period."
LEADING POP AGENCIES
Arno Fords www.arno-online.com
Coutts Retail Communications www.crc-uk.com
Kesslers International www.kesslers.com
Portland Design www.portland-design.com