Shopper to buyer conversion

Conversion is when the shopper decides to buy a product and service and becomes a buyer. On average a very small share of shoppers become buyers of a specific product and service. In the case of shoppers in brick-and-mortar stores, 2.5 percent represent 80 percent of the sales of specific brands in consumer goods categories.⁸⁵ The conversion process could be viewed from a transaction cost analysis perspective.⁸⁶ It is a concept from microeconomics, but can be transferred to explain the relationship between shopper and supplier.⁸⁷ The transaction cost is the subjective evaluation of the opportunity cost by the shopper and consumer.⁸⁸ This includes costs of the entire shopping process, from information seeking, finding products and services, as well as the cost of the product and service itself, and costs of maintenance and so on.⁸⁹ It is not only the price, but the associated costs that are evaluated.

As the shopper journey grows longer with more touchpoints, the possibilities to influence the shopper expand. Shopper management becomes more complex, as many touchpoints are not directly managed or cannot be fully influenced by the company, especially with touchpoints initiated by shoppers and consumers or dependent on direct shopper and consumer feedback.⁹⁰ More and more touchpoints are through cell phones that most shoppers and consumers continuously have at hand, enabling a communication beyond the package and the activation at the point of purchase.⁹¹ Through digital touchpoints, the retail and points of purchase can come to the shopper, and not, as traditionally, the other way around.⁹² Moreover, information becomes more attuned with their needs.⁹³ Word of mouth communication is a non-commercial, informal, person-to-person communication.⁹⁴ The information that the shopper receives through word-of-mouth communication reduces the perceived risk of the purchase.⁹⁵ Therefore, WOM has a positive impact on sales, making social platforms an important challenge for companies to consider in their shopper marketing approaches.⁹⁶

The conversion process transcends the departments of marketing, sales and trade marketing. Shopper marketing has to integrate different areas to successfully activate

Figure 3.24 Percentage of single households in Europe

Number of households composed of singles as a percentage of all households by country in August 2016.

Source: Eurostat, 2017

Figure 3.25 Segmentation of users of cell phones in Europe and Africa

Comparison of a cell phone market segmentation in Western Europe and Africa. In Western Europe, the main differentiation criteria were level of usage and age, while in Africa the main differentiators were the level of income and availability. For the high income segment a Western Europe sub-segmentation was used.

Source: Author

Figure 3.26 Shopper journey in the mobile telecom industry in Western Europe

Example of a shopper journey in Western Europe for cell phone renewal and service of an existing customer.

Source: Author

Figure 3.27 Shopper journey in the mobile telecom industry in Afr ica

Example of a shopper journey in Africa of cell phone renewal and service of an existing customer.

Source: Author

shoppers along the shopper journey and its touchpoints. Consumer marketing has to develop the right offer for the right consumption need state and target group, while sales and distribution need to ensure that the offer is available and activated in the right sales channels and points of purchase in an effective and efficient maimer. Shopper marketing has to align and connect coherently the different activities to manage the process from the consumption need state to the profitable conversion at the point of purchase. This includes the complexity of integrating a B2C view with a B2B understanding and management of retailers and partners, such as distributors. In addition, the step from consumer to shopper and their different perspectives need to be managed.

Figure 3.28 Overview of the shopper conversion process

The conversion process begins with the consumption need state and leads to an evaluation of alternatives depending on the awareness and liking of these alternatives. Awareness and liking leads to the preferences and combined with their affordability the relevant decision set is defined. The availability of the solution set results in the offer, and the relevant shopper activation leads to the purchase of the product and service.

Source: Author

Figure 3.29 Moment of purchase

Example of the moment of purchase for beers in South America in a traditional brick-and-mortar store for immediate consumption. The length of the entire purchase trip is 75 seconds. 38 seconds are used to find the category, 4 seconds to review the information at the category, 2 seconds to take the chosen product. 12 seconds at the cashier, and 19 seconds to leave the store.

Source: Author

Consumers and shoppers can be identical, but in many cases, the shopper is distinct from the consumer. Marketing needs to develop a preference for its products and services, both for consumers and shoppers. This preference is based on the awareness and positive likeability of the products and services. The more important the product or service, or the more importance that can be built, the higher the involvement with the products and services. However, to enter the relevant solution set for the shopper and become part of the purchase planning the products and sendees need to be affordable. The right presentation of the offer will lead to a successful conversion and purchase, as long as there is not a better competitive alternative along the conversion process. The conversion from shopping to buying mode at the point of purchase can be short. Much of the shopper marketing effort lies in the process leading up to the final conversion.

Depending on the final conversion challenges, the manufacturer has to adapt his tactics at the point of purchase in terms of information, promotions, support material (including clicks for additional information at digital points of purchase) and promotions, but also strategically in terms of brand, price, product format and services. The effectiveness of different

Figure 3.30 Shopper conversion funnel

Example of a shopper conversion funnel and corresponding challenges: 58% of shoppers who entered the store passed by the shelf. 29% observed the category. 23% interacted with the products and 14% made a purchase.

Source: Author

purchase drivers in terms of conversion power depend on the product and service, the consumer need states, the shopper attitudes, the activation along the shopper journey and the type of point of purchase.⁹⁷ The conversion power of different purchase drivers also differ by shopper segment.⁹⁸

With higher levels of planning shoppers are more likely to purchase.⁹⁹ The presence of friends and family during the shopping trip influence the purchase decision,¹⁰⁰ as well as price sensitivity.¹⁰¹ Shoppers buy more products and spend more money when accompanied.¹⁰² The shopping environment and the price structure affect the purchasing behavior.¹⁰³ The shopping behavior is influenced by the location of the store,¹⁰⁴ how products¹⁰⁵ and shelves¹⁰⁶ are organized, colors¹⁰⁷ in the store, the position of the product on the shelf,¹⁰⁸ and audiovisual effects.¹⁰⁹ In addition, the assortment of goods,¹¹⁰ a spacious environment, smells and other elements have an important role in influencing shopping behavior.¹¹¹ Still, even if activation increases sales, the longer term impact on the brand image is not conclusive.¹¹²