Ideations

A Retail Publication Issue 4 2012

Engage-Buy-Commit: Relevance and Advantage

The last two issues of Ideations have been devoted to a new approach to understanding shoppers. This new diagnostic picture, developed by the Shopper Sciences team at Interbrand Design Forum, resulted from the search for a more integral insightgathering method to aid CPG clients. The traditional path to purchase model left them with blind spots and missed connections because it didnt account for the two most important new behaviors of todays consumers. First, they never stop shopping. Anytime, anywhere and any way is the name of the game. People are constantly judging, selecting and deselecting, listing, evaluating, projecting and recommending purchases, says Bill Chidley, Senior Vice President, Shopper Sciences. Shopping, buying and consuming have blurred together. Second, they relate to brands and people digitally. People make the majority of their buying decisions in the store, says Chidley, But they are no longer isolated in the aisle. Their smartphones connect them to friends and online searches. New thinking asserts that the traditional path to purchaseawareness, consideration, actionhas evolved into a spontaneous cycle of behaviorsengage, buy, commit phases that repeat but in no particular order. Engage refers to the when-wherehow someone becomes aware of something they need or want. Buy is the way a person acquires goods and services, as well as the enabling experiences that help them make the acquisition. Commit relates to someones readiness to enter a relationship with a brand that will add value beyond the sale and open an enduring dialogue. Given their constant connectivity, consumers are always just a moment away from triggering one of the three behavioral modes. Melding the consumer with the shopper Engage-Buy-Commit is especially compelling to CPG manufacturers, because it melds the consumer with the shopper. Rhonda Hiatt, Director, Strategy and Analytics, explains: In general, we find that manufacturers rely on consumer segmentation to the exclusion of shopper studies, which gives them only half the picture. According to Hiatt, while consumer segmentation reveals whats going on at homeconsumption patterns, magazine readership, family size, frequency of shopping trips, etc.it fails to uncover whats happening in the store at the moment of decisionparticularly in how shoppers make decisions between brands. In the store, behavior can differ depending on the category. For example, a shopper may be locked into a routine purchase cycle of kids breakfast cereal. Or they may be in flux; that is, considering new options for a recurring need, such as lunch. (Deli meats? Peanut butter? Soup?) Maybe theyre completely new to a category, such as baby, and dont know what they need, leaving them open to messages from various brands. Its not about traditional shopping barriers anymore, says Hiatt. Its more about understanding the individual in context.
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Retail Observations

The Store is You

The store is more like a club than a shop with throbbing music, graffiti style dcor and attractive store associates. You dont go there because you need a shirt. You go there for other reasons altogether. Retailers have to have really good reasons. Ive mentioned before how I dislike the word store. I think its tired. It connotes supplies, which is kind of boring. The word shop is a little better, deriving as it does from a treasure house. However, if you want to keep that unpredictable, shifting consumer interested, think differently. Australias Deus ex Machina doesnt have stores. It has an emporium in California, a temple of enthusiasm in Bali and a house of simple pleasures in Sydney. This seller of custom motorcycles, coffee and postmodernist culture proves you dont have to build a weird and wonderful flagship to attract business, but you do have to be passionate, enthusiastic and energetic. Deus ex Machina says theres no right way to do individualism, its all the same juice. I agree. Shopping choices are multitude and highly individual. Each of us may shop the same categories or the same brands, but we each do it differently, customizing the experience to ourselves. Retail is still in flux. Theres disruption ahead. While things just keep getting better for the consumer, reaching them has gotten more complex for the retailer. To help you get a handle on new behaviors, I recommend our cover article. Our Shopper Sciences team has made some pretty exciting advances towards understanding todays shifting shopper. You may sleep a little better after reading it.

Theres always something keeping retail executives up at night competitive pressure, the economy, price transparency. But according to a recent survey by RetailWire and IBM, shifting consumer shopping behavior is retails top sleep-depriving concern. No wonder. Peoples mobility and price sensitivities make them much less predictable. One moment theyre showrooming to get the best price on a toaster, the next theyre dropping a bundle on an iPad. They shop online, but still show up in record numbers for new store openings, from IKEA to Old Navy. Digital innovations create even more ways to shop, as consumers become comfortable with virtual retail. Not long ago, experts predicted online grocery and delivery would fail. Today, Fresh Direct and Peapod are expanding. Peapod is opening virtual grocery stores in metro transit stops, like Tescos Homeplus did in Korea. Weve reached the tipping point of shopping for food and house supplies online. But does that indicate that everything else is going to be purchased online? No. Theres too much creative thinking going on out there thats getting people

into stores by delighting them with great and memorable experiences. American Eagle Outfitters has succeeded in getting more foot traffic with Shopkick, a location-based smartphone app that drives people to brick and mortar stores using reward points. At home, users browse a stores new offerings and create a list that appears when they enter the store, complete with navigational help. Each actionincluding scanning barcodes, trying on clothesearns points towards a reward, like a $100 gift certificate from a favorite retailer or CPG brand. An engaging approach like this, thats in line with a shoppers behavior, makes their trip more efficient, more fun and is sure to help build brand connections as well. Macys, Target and other top retailers plan to roll out Shopkick to get commerce off the couch and into the store. Digital aside, a vibrant, tactile, engaging brick and mortar brand experience can still bring people to the door in droves in the rainin their underwear. The latest chain for street fashion and club wear, Spains Dsigual, opens every new store by promising a free outfit to the first 100 shoppers who arrive undressed. The brand, as you can imagine, is not for shy people. The clothes are loud.

Bruce Dybvad

Guest Feature

A Form of Insanity
by Justin Wartell

Expecting transformation without internal change

Every goods and services company today understands the need to adapt, even transform. Consumers, markets and economies are in a continuous state of flux. A long list of once-reigning brands that failed to change with the timesSears, Circuit City, Bordersserve as cautionary tales. No less than Albert Einstein defined insanity as doing the same thing over and over and expecting a different result. What fascinates me is this: Currently healthy companies, aware that its death to stand still amid the rapid pace of change, are coming to the table to develop plans for radical new brand experiencesthe store of tomorrow, the brand of tomorrow. Yet despite the awareness, creativity, determination and resources a company may devote to future-proofing its brand, the old insanity hits. The plan never gets fully implemented. The organization doesnt change externally because it doesnt want or know how to change internally. Resistance to change runs deep in human nature. Change is uncomfortable. So much so, we often fool ourselves into adopting only the most incremental, benign or nearly invisible reforms and call them change. During my career as a brand strategist helping companies create new brand experiences for growth, Ive determined that companies can be divided into three types of resisters. The first is the operationally successful company that does everything effectively distribution, marketing, pricing, store experienceeverything is good. Nothing is great. Such a company knows how to be effective, but does not see itself as a brand. The challenge is how do you build a brand of the future when youre not a brand builder? Wouldnt the perfect change agent for such a company be one who effects change through checklists, projects plans and schedules? Companies entrenched in silos and hierarchies make up the second type of resister. What kind of provocation do they need? The type of company Im thinking of knows its marketing is broken, and that its corporate culture gets in the way of becoming the customer-centered brand it needs to be to stay on top. Theyve planned for the innovations that would transform the brand experience. But it never happens. Theres no sense of urgency. It may be for lack of anyone in a position to act as a politician, to make working connections between separate constituencies. The third type of company was born a brand, created by people whose passion for their business is so high theyre looking for something new to rally around. A charismatic leader with a dynamic vision would likely inspire them to make the needed change. This is the organization that rewards big ideas, celebrates risk taking, and doesnt mind the perils that often accompany being transformative in their industry and beyond. Once we state the case for change, analyze your business opportunities, determine a brand strategy and create plans for a new brand experience, the next step is yours. Believe me, we want to see you make the leap. Its the biggest leaps that lead to the biggest wins. Courage, of course, is paramount. Much has been written in this newsletter about the need for courage, the willingness to
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Justin Wartell, Managing Director, Interbrand Design Forum

Power innovation. Illuminate growth opportunities. Delight shoppers. Those are the goals at the top of Justins list while overseeing day-today operations for Interbrand Design Forum. With expertise that spans brand development, business strategy, research and analytics, Justin continues to play a key role in evolving the relationship between research and design which generates creative, dynamic and productive brand experiences. Prior to being named Managing Director, he served as Executive Director, Strategy & Analytics.

Engage-Buy-Commit: Relevance and Advantage

Instead of asking whats not working in the aisle or the store, manufacturers need to ask whats not working with the person. Signage and coupons might not necessarily be the answer. The Engage-Buy-Commit approach offers another advantage. Since it provides the previously missing behavior piece, it can make sense of loyalty card data. For example, data may show that a shopper consistently buys Brand A hair conditioner at CVS, but no shampoo of any kind. A study of their behavior reveals that they buy Brand B shampoo at the salon, and Brand C hairspray at Target. Which explains why they dont redeem Brand As shampoo coupons at CVS. Once a CPG company understands such routines as part of the bigger picture, it can reallocate its resources accordingly. The right message, at the right time to the right person remains the ideal when it comes to closing the sale, says Hiatt. And a company can do that much more effectively with the kinds of behavioral insights that come out of the Engage-Buy-Commit perspective. Applied insights that change the way people engage Once a manufacturer organizes its thinking around Engage-Buy-Commit, it becomes easier for them to see where they can relate their own brand ideas to those of the targeted shopper, and find new ways to win, says Chidley. Reckitt Benckiser, the U.K.-based home hygiene manufacturer, must have spent time evaluating the Engage-Buy-Commit moments for its septic system treatment, RID-X. TV ads, a Facebook page and an educational website clearly showed the need for a well maintained septic system. Homeowners were aware. Yet, the brand couldnt create habit and relevance the monthly use of its product. Added to that, RID-X is generally relegated to the lowest shelf in the aisle where it wont necessarily catch the shoppers eye if theyve left it off the list. Based on shopper behavior insights, the brand launched what has turned out to be a highly successful online subscription campaign, leveraging the Engage moment and pulling people to Buy and Commit RID-X now drives shoppers to Amazon.com with an immediate call to action. Once at Amazon, people sign up to receive a monthly delivery of RID-X. Its arrival serves as their cue to add the treatment to their septic system to help keep it flowing. As does their relationship to the brand. The brand found a way to drive trial through end consumption in a way that wont lapse, due to a barrier to exit, which is unsubscribing, says Chidley. Its a great example of a brand that took control of the cycle, eliminating the store in favor of a distribution method that works better for the customer. The idea of shopping as a manageable event is very elusive today. It requires a new method of analyzing how shoppers behave. Insights drawn from the full context of behavior and choice will be powerful enough to inform innovative brand strategies, help drive growth and ultimately create stronger relationships with both consumers and shoppers.

A Form of Insanity
work with ambiguity and risk. You cant win if you dont enter the fray. Yes, innovation comes more easily to companies with passionate forward-thinking leaders, a communal spirit or an inspiring brand story. But its possible for a company to build those attributes carefully and purposefully over time. Theres another school of thought. One thats pretty compelling. It claims the key to change is inducing significant shifts in what people dobasically, changing their behavior by providing them with the opportunity to think and feel differently about what theyre doing. The key is feelings. Behavior change may come less from providing people with a compelling analysis, and more from influencing their feelings with an exciting new vision that allays their fear of change. Its the rare organization, or individual for that matter, that is immune to the madness of thinking they can create breakthroughs without changing inwardly. When companies come to the table to create a plan for a new transformative brand experience, they should be ready to devote resources to a cultural transformation as well. Otherwise the best laid plans go astray.

Ideations
A Retail Publication by
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Bruce Dybvad, CEO Jill Davis, Editor Jonathan Reynolds, Design/Production 2012