Knowledge Bank Blog, Shopper Communication, Channel Execution

Discounters – Playing to System 1

Are you overthinking things?

Have you ever gone to a new restaurant, been given the menu and then spent the next few minutes looking up and down unable to make a decision?  Each time you look up and down the choice becomes a little harder.  Then when you think you have finally made a choice, you make the mistake of asking the other people what they are having.  They are having something different.  The doubts are set off in your mind again.  Maybe that would be a better option?

The more you think about a choice, often the harder it becomes to actually make a choice.  And the less likely you are to be satisfied with that choice.  That is why, in a new restaurant, your best bet is often to select the first thing that captures your attention, close the menu and relax.  Of if you are in a familiar restaurant, choose what you had last time and get on with the evening.

Over the last few weeks we’ve been talking about System 1 thinking.  How we really think, process information and make decisions and the implications this has for how to influence shoppers in store.  Small changes in the way you present and frame options to shoppers can have a big influence on their behaviour.

The biggest winners in the UK grocery market in recent years have been the Discounters.  There are a number of reasons why Discounters have done so well.  A lot of attention has focused on what they do – their price positioning and ability to deliver very good products at those prices. Often, over delivering on expectations.  However, we believe their success has also been down to how they do things.  And how they do things plays very well to System 1 thinking.

In fact, Discounters, arguably, play to this better than anyone else.

So, what are the key ‘System 1’ things they do?

Managing shopper time and energy.  Smaller stores, less range, less promotions, all make the shopping experience simpler.  This means that shoppers invest less time and energy making each choice.  So the shopper has the energy to make more choices across the whole trip (more purchases).  And leave the store feeling pretty good, not drained.

Priming.  Discounters do this in a number of ways, but there are 2 key ones.  The first is price priming.  They are constantly telling shoppers to expect low pricing.  So much so, that when shoppers walk around the store they don’t need to think about price.  Which, ironically, means that shoppers will often trade up – e.g. ‘Specially Selected’ – because they are expecting any price to be good value.  There is freedom to choose.

The second, more controversially, is replicating brand visual cues in many categories.  Nearly every shopper knows that Frosted Flakes are not Frosties, but the visual cues they share cannot fail to implicitly link to the associations the shopper has already established with the brand leader.  If tertiary brands looked completely different, would shoppers be as willing to buy them?  Probably not.

Framing.  We talked last week about the importance of relative price.  The discounters do this at a total basket level (e.g. Aldi Switch & Save) and at a product level by price framing against the leading brand in many categories.  Explicitly calling out the price differential and implicitly suggesting to the shopper that you would be mad to spend more on something that is no better (according to their claims).

Message Cut Through.  This plays to the ‘availability heuristic’ – how certain memories are more available to us and so have a disproportionate impact on our behaviour (you may remember we talked about 9/11 and the impact on flying).  Competitors challenge the validity of some of the Discounters claims, but there is no doubt that a lot of their communication cuts through with shoppers.  They use specific, tangible and memorable examples of value, quality, or both.  These stick with shoppers.  They are things they are likely to tell other shoppers about.  And we know a big influence on shopper behaviour is what other shoppers say and do.

A few weeks ago we used the phrase ‘we think much less than we think we think’ to describe how people make decisions in life.  And therefore how shoppers make decisions in store.

What we find interesting is that, in the type of jobs most of us do, we do a lot of thinking.  We can be thinking about a piece of NPD for a year or more, a category or channel strategy for a few months.  There is a real danger that we overthink things.  We come up with increasingly clever ideas.  When what is often required is to do a few simple things really well.

Simple isn’t always the most exciting.  But it is often the most effective.  As the Discounters have proved.

By the way, next time you go to a new restaurant, pick the first thing on the menu that catches your eye.  And don’t ask what anyone else is having.  You will probably be pretty happy with your choice.

This week we spoke about our approach to Category Strategy at The Grocer’s ‘How to Get a Listing and Keep It’ conference.  Please get in touch if you are interested in what we said.

Our monthly article in the Grocer goes out in tomorrow’s edition.  There is a link to it on our website ‎

Have a great weekend and speak to you next week.