fusion point research Marketing Research Reports

Marketing to Consumer Insight Leaders in Retail

Understanding Their Role

A deep and thorough understanding of shopper behavior is required for retail success. Consumer insights drive almost everything the retailer does, including pricing decisions, shelf layouts, store design, building locations, supplier selection, and determining which products to offer. Retailers typically strive to understand:

 

  • How consumers make decisions, for example the understanding the steps between seeing an advertisement, visiting a store and making a purchase.1
  • Which product attributes (quality, size, flavor, brand, etc.,) are considered the most important? 2
  • At what prices different customers will buy a product.3
  • How fast consumers adopt innovations or new technologies.4

 

Since retailers cannot individually understand every buyer, they roll insights up into groups, or consumer segments. Segmentation makes the customer insights more manageable, and allows the retailer to target attractive subgroups in the marketplace. Approaches to segmentation differ by retailer and include:

 

  • Demographics (age, gender, ethnicity, etc).
  • Geographies (zip code, neighborhood, driving distances, etc.).
  • Lifestyles or attitudes (“Upward Bound”, “Urban Achievers”5 , “Golden Years”, “Dorms to Diplomas” 6 , “Believers” 7 etc.,) created by third party data analysis companies.
  • Usage (light, medium and heavy users).
  • Loyalty (loyal customers, competitive customers, deal seekers, etc.).

 

Once a retailer has clearly defined its target market segments, it can conduct specific research using surveys, interviews, focus groups and other techniques combined with actual shopper buying data to form a more complete understanding of consumers.

“Charlotte Russe is about the right fashion at the right price…if she (the customer) doesn’t want it, lowering the price will not make it more attractive to her.” - Jenny Ming, CEO of Charlotte Russe. 8

1 Berman, Barry, and Joel R. Evans. Retail Management: A Strategic Approach 12th Ed. Edited by Pearson Education, Inc., Prentice Hall., 2013.

2 Fisher, Marshall, and Ramnath Vaidyanathan. “Which Products Should You Stock?.” Harvard Business Review 90, no. 11 (2012): 108 – 118. EBSCOhost(82532643).

3 Ibid.

4 Tybout, Alice M. and Calder, Bobby J., ed. Kellogg on Marketing. 2nd ed. Chapter 1. John Wiley and Sons, Inc., 2010.

5 Examples from Nielsen’s PRIZM segmentation. See: www.nielsen.com/content/dam/corporate/us/en/docs/s...

6 Examples from Ersi’s Tapestry segmentation. See:

http://downloads.esri.com/esri_content_doc/dbl/us/...

7 Example from SBI’s VALS segmentation. See: www.strategicbusinessinsights.com/vals/ustypes.sht...

8 Petro, Greg. “Pricing Part 2 -- Focus On Specialty & Vertically Integrated Retailers” Forbes. (2013). Available at: http://www.forbes.com/sites/gregpetro/2012/12/20/r...

 

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Copyright © 2016 Fusion Point Research, Inc.

Retailers devote considerable effort to understanding consumer behavior. They employ a variety of segmentation and targeting tools, often utilizing huge amounts of behavioral data.
fusion point research Marketing Research Reports
Retailers devote considerable effort to understanding consumer behavior. They employ a variety of segmentation and targeting tools, often utilizing huge amounts of behavioral data.
  • How consumers make decisions, for example the understanding the steps between seeing an advertisement, visiting a store and making a purchase.
  • Which product attributes (quality, size, flavor, brand, etc.,) are considered the most important?
  • At what prices different customers will buy a product.
  • How fast consumers adopt innovations or new technologies.
  • Demographics (age, gender, ethnicity, etc).
  • Geographies (zip code, neighborhood, driving distances, etc.).
  • Lifestyles or attitudes (“Upward Bound”, “Urban Achievers”5 , “Golden Years”, “Dorms to Diplomas” , “Believers” etc.,) created by third party data analysis companies.
  • Usage (light, medium and heavy users).
  • Loyalty (loyal customers, competitive customers, deal seekers, etc.).