Retail on the couch: See the world through shoppers’ eyes

Hierarchical clustering analysis shows how shoppers segment categories.

By Corinne Sandler

Best-in-class organizations are already linking category management to shopper insights for proven results, but brands have to allow it to be done through shoppers’ eyes. Following the intuitive segmentation logic of shoppers can reveal a category’s market structure.

Fresh Intelligence uses Hierarchical Clustering Analysis to discover the most complicated category structures through shoppers’ eyes and minds. The inspiration came from a popular in-depth interview technique called sorting. That idea was transformed into an online survey conducted in September 2011, which asked thousands of shoppers to sort products within a category using a drag and drop approach.

Survey respondents sorted items from the cereal category using a drag and drop function.

Every single sorting step revealed a particular distance that indicates how close each product is to others in shoppers’ minds. In other words, shoppers do have a unique and intuitive segmentation logic that guides them in making purchase decisions.

To see how this works, Figure 2 shows the hierarchical structure of the cereal category, revealing three levels of the “decision tree” that influences shoppers. Essentially, the chart explains how shoppers navigate to their desired products when shopping in the cereal aisle and where exactly each cereal product stands in their minds. Taste/Health is a category benefit that consumers expect from the category, so it makes sense that it’s the primary criteria that shoppers use to segment the cereal category. Following that, shoppers use four secondary criteria, which are digestive health, fun, energy and weight management.

Figure 2: The hierarchical structure and "decision tree" of the cereal category.

Due to the complexity of the category, the decision tree doesn’t end there. Five sub-segments were determined by shoppers, which are fibre, classic, wholegrain, sweetness and variety.

Unfortunately, the shelf organization criteria that are used by retailers are completely against this logic. As a consequence, shoppers easily get frustrated when looking at shelves and there are lost opportunities to increase basket size.

In addition to informing more effective consumer-centric shelf organization, studying hierarchical shopper navigation of a category can help identify the potential opportunities for launching new products where category segments appear to be underdeveloped.  It can also serve as an alarm for products in category segments that are perceived by shoppers as overdeveloped.

Last but not least, it is not hard to imagine how many marketing campaigns and product positioning strategies can be created from having a precise decision tree created by real shoppers.

Only through a better understanding and leveraging of shoppers’ needs and missions can the industry align around demand and deliver against current and future shopper needs. Winning manufacturers will be the ones who help retailers provide these solutions with an eye on the total category and not just one product. This shift from category management to shopper management is one way to drive shopper loyalty and total store growth.

Corrine Sandler is the founder and CEO of Fresh Intelligence Research Corp., focused on uncovering insights through unique quantitative and qualitative market research approaches., Read more: