Friday, April 3, 2009

Website and Supermarket Optimization {there are similarities and differences}

The relatively new field of Website optimization uses specialties such as statistics, user experience testing, and cognitive psychology to get visitors to convert (i.e., do what you want them to do, once they've landed on your site). I talk about these topics in my recent article Statistical and Financial Considerations in Website Optimization. There's a link to it at in my selected bibliography at the bottom of this blog, for anyone who's interested.

The optimization of Websites and supermarkets are both data driven tasks and both have the same goal: to capture visitor/customer activities in your Website/store and transform data about these behaviors into actionable management information.

Before getting too caught up in the art and science of Website optimization, it might be useful to pause for a moment and review some of the widely-used practices for in-store marketing and layout. As you do so, try to see the rather conspicuous parallels between what we do (as outlined in my article) and what they do (as outlined below).

But, remember that unique differences exist between how internet and brick and mortar channels can and do make money. For example, search engines like Google, Yahoo and Sphere help Website publishers to find stories by aggregating links to newspaper websites and blogs. In so doing, they wrest ad dollars from them that they think should be theirs. Not to mention the fact that, in so doing, these Websites are taking copyrighted material. Option like this are clearly not available to brick and mortar stores.

Note: The Associated Press and its member newspapers will take legal action against Web sites that use newspaper articles without legal permission, the group said recently, in a clear shot at aggregators like Google.

From a consumers point of view, a supermarket is quite simple; Put what you want into your cart and go through the check-out. Behind the scenes though, psychology is used a lot to define what products and brands you buy in supermarkets. Stands are designed to catch your eye and the store layout is structured to maximize profit.

Eye level marketing

Generally speaking, the most expensive items with high profit margins are placed on shelves that are at shoppers' eye level. Statistics show that you are more likely to see them than the less profitable brands at the very top or near your feet.

Aisle order

Some customers, particularly men, tend to simply shop for what they want, walking down an aisle grabbing what they want, turning back and walking the way they came, this is called the 'Boomerang Effect'. In order to maximize shopper and produce contact time, markets therefore place major items and brands in the middle of aisles ensuring that from any direction the customer doesn't have to walk the farthest to reach them.

Product grouping

Items that complement each other are often found close together to entice you to buy more. You'll often find pasta sauces on the same display as a featured brand of pasta.

Food smells make you feel hungry

Another tactic supermarkets use is the smell of freshly baked bread coming from the in-store bakery. The smell of warm bread makes people feel hungry. When you feel hungry while shopping you are more likely to buy additional items. Most Supermarkets bake their bread early in the morning; however, to entice more customers, some have resorted to pumping out the smell of fresh baking bread to add to the illusion that it is constantly baked through the day.

Essentials at the back

Supermarkets hit upon the idea of placing the essentials, such as bread and milk, at the back of the store. This is in order to make people have to walk past the rest of the produce, and heighten the possibility of impulse buys, in order to get their necessities. (Changing rooms in clothes stores are almost always situated at the rear of the store.)

Attracting children

One American supermarket chain came up with the idea of drawing a hopscotch in the aisle next to the children's cereal in order to make the children play and thus pin Mom & Pop to a point where the children could hassle them for treats.

Irrational Pricing

Irrational pricing is putting the price of items at say 4.99 instead of 5. The reason offered for not instead rounding $4.99 to $5.00 is based on memory processing time. Rounding upward involves an additional decision compared with storing the first digits. Furthermore, due to the vast quantity of information available for consumers to process, the information on price must be stored in a very short interval. The cheapest way to do so, in memory and attention terms, is by storing the first digits. Therefore customers perceive to be getting a better deal than they in fact are.

Point Of Sale

While you are waiting to pay, retailers often install Point Of Sale displays, this is especially prevalent in Supermarkets who install racks of chocolate to tempt bored children waiting with their parents.

Shuffle and Time

Many stores have a policy of regularly rotating the stock. This happens especially in supermarkets where people regularly shop for the same items. The idea obviously is to confront customers with a variety of items aside from their regulars and encourage them to explore areas of the store they may not usually visit.

The longer customers spend in a store the more money they are likely to spend there. Therefore stores work to make sure customers have to spend the maximum amount of time in their stores, placing obstacles constantly in the way of efficient shopping.

Newer areas where a lot more research is needed

In the UK, the British buy almost two-thirds of their wine from supermarkets; and more than a third of all wines sold in America are purchased at grocery stores, even though only 33 of the 50 US states allow supermarkets to sell wine. Wine is now the largest supermarket category in New Zealand and supermarket sales represent around 60 per cent of total wine sales.

As with any product promotion, there is no 'one solution' for supermarket wine departments. Unlike staples such as milk or eggs, wine is a luxury item (although many will beg to differ). This is the first hurdle for retailers. The difficulty of overcoming this hurdle varies from region to region. Additionally, retailers must decide how much effort and expense to invest in this part of their store. Decisions on these matters must also take into account the local competition, be it a wholesaler or a new chic wine boutique. First and foremost, know your customers.

At the end of the day, basic marketing principles will sell more wine than the most experienced supermarket wine steward. The longer customers stay in the wine department, the more likely they are to make a purchase. That can be encouraged by a tasting, music, or warm lighting. One Piggly Wiggly supermarket in Wisconsin features an expansive wine and spirits department that replicates a speciality wine cellar complete with wood shelving with a library ladder and an extensive walk-in cooler. Music can help in more specialist sales settings. Research at Leicester University showed that French music played in a supermarket's wine aisle boosted sales of French wines. The following day, German folk music led to German wines flying off the shelves.

Here, as in Website optimization, there's no substitute for subject matter expertise!