Role of the point of purchase
Points of purchase have different roles for the shopper in their shopping trip. At the same time, they are one of the touchpoints dining the shopper journey, as in the case of showrooming and webrooming. The starting point for any shopping trip is the consumption need state and the generated motivation to solve the need. The shopper embarks on his shopper journey, resulting in a purchase and point of purchase selection in line with his shopping mission. For the same category, but different consumption need states, both the shopper journey and the point of purchase can differ. Therefore, different activation approaches are needed for a similar product and service. The classic example is soft drinks to be consumed at home with the family compared to immediate consumption in a restaurant. The specific situation under which the purchase process is done will define the shopper needs and expectations, and thus the most fitting activation approach. Depending on the consumption occasion, the consumer and shopper will look for different solutions.1 The importance of the occasion and the related attributes and motivations in selecting consumption solutions in terms of offer and place and their implications on the activation is the basis for occasion-based marketing.2 Depending on the occasion, the shopper looks for specific attributes of the point of purchase that best satisfy that specific occasion.3 Therefore, there is a clear association between type of point of purchase and different categories. Depending on the category, the consumption occasion, and the purchase situation, different channels and points of purchase are preferred by the shopper. As a result, the shopper is multichannel in his behavior.4 Additionally, sociodemographic characteristics of the shopper are related to the choice of channel and point of purchase.5 Points of purchase usually focus on specific audiences. Segmenting shoppers through the channels and points of purchase can be powerful, as it can explain shoppers’ buying behavior and motivations related to the predominant occasion of the point of purchase.6 Segmentations based on occasions give good insights into usage, motivations and purchase behavior, which are relevant dimensions to develop shopper marketing strategies.7 The shopping mission, both offline and online, has a strong influence on the attributes or characteristics of the point of purchase preferred by the shopper.8 This also explains the survival of traditional channels, e.g. in Latin America, as they meet the specific needs of the local shopper.9
Each type of point of purchase fulfills a role that helps the shopper to satisfy his or her needs depending on his or her purchase situation. The clarity of the role of the point of purchase is defined by its ability to satisfy the needs of the shopper in terms of offering solutions in line with the specific purchase situation. The purchase situation can be referred to as the shopping mission of the shopper, i.e. why the shopper embarks on the shopping trip. The type of shopping mission defines the type of point of purchase the shopper will prefer. The point of purchase is described by its attributes and characteristics, i.e. the service it can provide to the shopper. Type of channel already gives a first indication of the role of the point of purchase. Immediate consumption channels have a clear role to satisfy the consumption needs directly, while channels for later consumption are for later intended consumption. Bigger stores with a vast offering are more frequently used for stocking up, while small convenience stores are normally used for urgent and cravings shopping trips. The shopping missions the point of purchase serves defines its role, and depending on the role, the point of purchase will have specific attributes and characteristics that are related to the shopping missions. Due to the specific service it can provide to support the shopping missions of the shopper traditional channels still have an important role in many countries. More than just proximity, they can provide a more personalized services by knowing their customers and
Figure 5.1 Service provided by the traditional channel
Service offering of the traditional channel hi South America in comparison with modem retail.
Source: Booz Allen Hamilton. 2003; Author
provide informal credit, smaller packages and store-keeping units (SKUs) aligned with the economic reality of its clientele.
Modem, or organized retail, has developed different formats to meet the different purchasing needs, the shopping missions, of shoppers. Different formats range from convenience stores, mini-markets, supermarkets, hypermarkets, shopping clubs, wholesalers, department stores, etc. Additionally, there is internet retailing. The distinction between channel and sub-channel allows a finer differentiation to understand the roles of points of purchase. For example, for a manufacturer like Coca-Cola, the focus in hypermarkets could be on larger packages for family consumption occasions. In convenience channels it could be medium or smaller refrigerated packages for almost immediate consumption. In a restaurant a nice bottle or glasses to communicate the brand image would be more fitting. In a fitness center or in a waiting room there could be a vending machine. Depending on the role of the point of purchase, the manufacturer needs to design a shopper activation strategy in line with the role including type of product, services, material, equipment and communication. Additionally, specific activations need to be integrated into the strategy, e.g. promotions, products and service launches, events, tastings, etc.
Each sales channel and sub-channel meets a mix of different shopping missions.
Depending on the shopping mission the different zones in the store will have different roles to fillfill. A store therefore needs to be analyzed by zones of shopping, where they have different roles with different activation approaches.
The activation of the store needs to be adapted by zone in terms of products and services, materials, equipment, communication, promotions, events, etc.
The importance of different shopping missions differs by countries, emphasizing the point that relevant shopper marketing strategies are local.
Sales channels give an indication of the role of the point of purchase, but still there are differences within channels. As an example, the traditional channel includes many different sub-channels with different mixes of shopping missions and thereby roles to the shopper.
Figure 5.2 Sales channel segmentation
Example of sub-channels for immediate and future consumption in Scandinavia.
Allocating roles to points of purchase based on channels, and even sub-channels, can be too general for detailed shopper marketing strategies to optimize the potential for growth. Points of purchase across sales channels can have different roles within the same subchannel. Activation strategies should be focused therefore more on the role, and the zones, than just on sales channels.
Shopping missions are not directly identifiable. They are deducted from the real or intended behavior of shoppers. To categorize the points of purchase of a market, shoppers’ behavior needs to be analyzed to allocate the corresponding role. The characteristics of points of purchase need to match the types of shopping mission they serve. The shopping missions need to be operationalized through the attributes the shopper seeks to fillfill by specific shopping missions. By relating the point of purchase characteristics with the shopping missions, the role can be deducted and the adequate activation strategies designed. The categorization of points of purchase is then based on associating points of purchase characteristics with a specific mix of shopping missions.
Depending on the role of the point of purchase, the focus of product and service activation is different. For the points of purchase, the different categories and their brands play a specific role to attract shoppers. In addition, the way of activating the different stores according to their role differs. To fulfill its role, the point of purchase has to define its offering mix and the role of the different categories, brands, products and services. For retail, it is key to have coherency between the strategy, the objectives and the value proposition at the point of purchase. H&M, the Swedish clothing retailer, has defined specific formats and value propositions to meet different consumption need states and shopper expectations.
Figure 5.3 Shopping missions in hypermarkets and supermarkets
Example from Spain of key shopping missions categorized by length of visit and type of planning (focused on one category/product or interactive during shopping trip).
Source: Shoppennotion. 2O1910
Buying behavior at the point of purchase is related to its role, but also to the attitudes, such as planning, and the shopping experience the shopper is seeking.11 Together with the brand strategy the channel and the route to market strategies can be developed. This can be exemplified through the watch category and the two brands Rolex and Timex. Rolex has a high-status image. It is very expensive, of Swiss origin and usually the shoppers come from a high socioeconomic group or aspire to get there. Timex is a watch brand of American origin, of relatively high quality, and often with relatively advanced electronic functions at a more economical price. It is a watch more associated with functionality than with status. Although they belong to the same category, the target and the needs they fulfill are different and require different route to market strategies. Rolex watches are normally found in specialty stores with a high level of service, along with other high image categories, such as jewelry. Normally only stores selected by Rolex sell the brand. It is a strategy of selective distribution hr line with the brand strategy. Timex watches can be bought in several channels. Classically, the most important channel used to be gas stations. To buy a Timex watch, the shopper does not have to look for a specialized or high-service-level point or purchase. Timex watches come packaged at a moderate price and do not need to be presented to the shopper by a salesperson.
To select the most suitable channels and points of purchase the implications of the brand, product and service strategy on channel and point of purchase attributes and characteristics
Figure 5.4 Importance of shopping missions by store zone
Example from Spain of key shopping missions and their importance by in-store zone.
Source: Shoppennotion, 2019
Figure 5.5 Importance of shopping missions on different continents Importance of key shopping missions across continents.
Source: Nielsen, QI 2011
Figure 5.6 Importance of shopping missions in different sub-channels of the traditional channel Example of mix of shopping missions for different sub-channels of the traditional channel in South America.
Figure 5.7 Mix of shopping missions by point of purchase cluster across channels Example of points of purchase clustered by shopping mission mix across channels. Source: Author
need to be analyzed. Eight criteria can be used to profile channels and points of purchase in relation to brand, product and service strategies.
The first criterion is the type of consumption. This is normally very important for categories, such as groceries and beverages. It describes the place of consumption, whether it will take place immediately at the point of purchase, or if the purchase is planned for later consumption and usage.
Secondly, the level of specialization and therefore the expertise and category focus is an important criteria, especially in more complex categories, or where the shopper is less knowledgeable.
Figure 5.8 Characteristics of clusters of points of purchase
Example of point of purchase clusters based on mix of shopping missions and their association with the offer and specific point of purchase characteristics.
Figure 5.9 H&M retail formats
Retail formats of H&M (Hennes and Mauritz) with different value proposals. The different formats are also presented in different zones within the same shop.
Source: H&M, 2014
Thirdly, related to the previous point, is the level of service, which varies from self-service to high-service levels. For a dinner and romantic encounter, a self-service restaurant would perhaps not be the obvious choice. The fourth criterion, the price level, is normally associated with the level of service and level of product quality.
The fifth criterion, convenience, describes the urgency of the pur chase, as well as the time and effort the shopper is ready to invest to purchase a product and service. For example, is the consumption need state a coffee on the go or preparing coffee at home for breakfast? Is
Figure 5.10 Route to market strategies for watches
Comparison of route to market strategies for Rolex, Swatch and Timex.
the shopper ready to go to a shop, even a specific shop, or is it important to have the goods immediately or even delivered?
The sixth criterion describes the possibility of experiencing the product and service live, and possibly test it. Is it a direct sales channel, like brick and mortar, indirect like digital, telephone sales, or a mail service sales channel, where the product and service cannot be experienced beforehand? Many products and services are not possible to experience, but can be sold through direct personal interaction, like travel, telephone and internet contracts, banking etc. These are also products and services where the internet as a sales channel has been quite successful. On the other hand, it would be difficult to enjoy a meal in a pub through the internet, although the shopper journey could have started digitally, through browsing possible locations and reviews, and making an online reservation.
The seventh criterion touches the important point of the level of exclusivity of the chamrel and point of purchase. Does it only sell products and services of a specific category, or even a specific supplier? Although H&M stores could be perfect for other clothing manufacturers, they are not allowed to sell through that channel. The choice is then either to open their own stores, or to use other multi-brand clothing stores.
The eighth and last criterion is the consolidation of the channel. Retail chains with their specific strategies have a stronger negotiating power and can influence how brands, products and services are presented and activated. With retail chains, a key account management approach is normally needed, and often collaborative models like ECR are applied.
The view of the shopper is crucial, and with omnichannel, different sales channels can be an appropriate point of purchase. The shoppers of today use multiple channels, both as complements and substitutes in an omnichannel way.12 Shoppers re-evaluate the points of purchase, then- role and the way they meet their needs and they are sometimes willing to switch between channels, points of purchase or formats if it suits their needs better.13 With the evaluation of the channels from a brand and company strategy perspective the appropriate route to market strategy can be developed. Shopper and chamrel strategies have to be coherent across channels, based on their role and image.14
Figure 5.11 Channel categorization scheme
Categorization and comparison of channel selection criteria with Timex and Rolex as examples, using different dimensions to profile the preferred sales channels.
The objective of managing sales channels and the point of purchase is a shopper activation to convert shoppers into buyers. Simplified, consumption need states define what to activate and shopping missions define how to activate, all in coherency with the touchpoints along the shopper journey. Aligned with the strategic and commercial priorities of the manufacturer the route to purchase and route to market strategies can be designed. The point of purchase is the place, either brick and mortar, by distance, e.g. by telephone, or digitally, where the shopper encounters brands, products and services. Next to availability, activation is key to convert the shopper into a buyer and generate sales, by satisfying the purchase and consumption need states. The point of purchase is the point of linkage between the route to purchase and the route to market, and the activation ensures the final shopper conversion.