Consumers may not take notice as they stock up on hot dogs and related condiments ahead of the July 4 holiday, but new research suggests the placement of these products in grocery store displays can be highly orchestrated to influence your buying decisions.听
A sale on Ball Park franks, for example, might draw your attention to some neighboring spicy chicken sausages or even veggie dogs if you鈥檙e so inclined鈥攂ut these items aren鈥檛 on sale. Before you know it, you鈥檙e heading out of the store with all three sets of links in tow.
Christina Kan.
Donald Lichtenstein.
Two researchers affiliated with the Center for Research on Consumer Financial Decision Making at the Leeds School of Business studied how a sales promotion on one product influences the sales of other non-promoted products within a display.听
Their findings, which are forthcoming in the Journal of Marketing, show that when consumers are drawn to attention-grabbing price promotions鈥攕uch as an eye-level fluorescent sticker advertising two packs of hot dogs for one鈥攖heir attention migrates to the items on each side of the product on sale.听
鈥淵our attention is drawn not only to that one product that鈥檚 on sale, but it also spills over to the products that are located nearby,鈥� said Christina Kan, the lead author of the study, who received her Ph.D. in marketing from听Leeds and continues to be affiliated with the center.
Shoppers then construct a 鈥渃onsideration set鈥� made up of these products, Kan, now an assistant professor of marketing at the University of Connecticut, said. This increases the likelihood of the shopper buying the promoted item, and it also heightens their awareness of surrounding products, which can lead to more purchases鈥攂oth planned and unplanned.
With limited time and attention, 鈥渃onsumers go into the store, and they do what鈥檚 easy. They don鈥檛 pay a lot of attention,鈥� said Donald Lichtenstein, chair of the marketing division at Leeds and a co-author of the study. 鈥淢ost purchases in a grocery store tend to be low-involvement for most consumers and they don鈥檛 scour the full shelf. So they buy what is low-effort, that being the promoted product and/or products located very proximal to the promoted product.鈥�
A takeaway for shoppers? Realize that your attention is stretched when you鈥檙e in the grocery store. 鈥淚f you want to save money, you should try searching the entire shelf rather than being drawn to whatever the grocery store manager wants you to look at,鈥� Kan said.
The upshot for retailers
The study offers lucrative implications for grocery retailers and marketers. The researchers, who also included Yan (Lucy) Liu, an associate professor of marketing at Texas A&M University鈥檚 May School of Business and Chris Janiszewski, a professor of marketing at Warrington College of Business Administration at the University of Florida, found that when a promoted product is located near a 鈥渟trong substitute,鈥� such as an identical product under a different brand, sales of the latter decrease.
鈥淪o if you have high-margin products (products that are particularly profitable for the retailer), you want to put those farther away from strong substitutes that are on promotion. For example, if one brand of hot dog is on sale, you鈥檒l want to locate your high-margin dogs farther away from the sale dog,鈥� Kan said.
The researchers also found that the promoted product will boost the sales of nearby products that are 鈥渨eak substitutes.鈥� They give the example of a regularly priced butter cookie experiencing increased sales thanks to its proximity to an on-sale almond cookie. The butter cookie essentially 鈥渂enefits from the increased attention,鈥� Lichtenstein said. If that same cookie brand is located farther away, say a few shelves down, it doesn鈥檛 enjoy the sales bump, he added.
Treasure hunt听
Costco is one example of a retailer that appears to be implementing this strategy. The next time you鈥檙e shopping at Costco, notice how the store鈥檚 product promotions train you to go on a 鈥渢reasure hunt鈥� for sales on unique items that aren鈥檛 regularly stocked, Lichtenstein said.
When you find these deals, they are often located near products in other categories鈥攊ncluding items that are not on sale鈥攚hich allows Costco to 鈥渃apture sales from people not interested in the discounted product,鈥� according to the paper.
鈥淲hen you go into Costco, your eyes are peeled because they have new things all the time,鈥� Lichtenstein said. 鈥淭hose new things are built-in 鈥榓ttention attractors.鈥� Now (Costco) could put high-margin items that they make more profit on right next to them. That real estate is valuable space.鈥�
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