My relationship with Consumer Decision Trees (CDTs) is long and complicated. I’ve sold them, bought them, and applied them to business opportunities in the trenches of retail and at the nexus of sales and marketing at global manufacturers. I’ve led category management and category strategy teams where CDTs have been foundational to our shopper-centric perspective.
I’ve wasted precious time debating the differences and merits of Consumer Decision Trees vs. Market Structure (reasonable minds disagree). When others chime in with Shopper Decision Tree and Purchase Decision Hierarchy terminology, my head starts to hurt. My impatience comes from a practitioner’s point of view to focus on what these studies can do to drive the business.
And on that note I’m happy to declare with conviction that consumers don’t shop trees. Never have and never will. The evidence is overwhelming that shoppers don’t make rational, linear, multiple choice decisions to consider the full breadth of category variety and drill down to a single item selection.
Let’s agree that CDTs are not a model of shopper behavior with predictive power.
I’m not disavowing the importance of Decision Trees, far from it. When done well CDTs provide a clear and simple depiction of product consideration sets in a hierarchical order of distinction and inversely a guide to product substitutability. This representation of category attributes is extremely helpful in making assortment recommendations and in evaluating product development or brand positioning opportunities.
However, a Decision Tree is not a planogram, and by conflating the two, practitioners in our industry get themselves in trouble.
Many take planogram development too lightly, thinking of it as tactical, low value work. Yet people who create planograms make critical decisions about what items are carried in which stores, how much space they receive, and how they are arranged. Hardly a process of low importance; ignore it at your peril.
CDTs should exert influence on an effective planogram in two areas:
- Assortment: including or excluding specific items should be made with an understanding of the relevant competitive set (the lowest nodes on the CDT signifying most substitutability), and
- Arrangement: grouping products at shelf in building blocks corresponding to the CDT will help shoppers make sense of and navigate the selection.
Arrangement is often referred to as “shoppability” and it offers two main potential benefits. It helps the shopper find the desired product (often pre-determined), and it encourages the shopper to view and compare alternative and complementary products.
These dual potential benefits must act in harmony to realize the full potential of a category. Research shows that making it easy for shoppers to find preferred products results in emotionally happier shoppers likelier to spend more money in the time allocated and likelier to return as a shopper.
A CDT on its own is insufficient to develop a winning planogram.
Planogram arrangement must balance multiple priorities including operational imperatives (e.g., days of supply, sufficient packout), retailer strategies (e.g., corporate brands, retailer differentiation), and aesthetics (blocking similar packages types, sizes, and brands) in addition to the shoppability considerations from a CDT.
There is no singular analysis, algorithm, or software program that can lay claim to generating the perfect planogram (many have tried). But perfection should not stand in the way of excellence. We at Decision Insight have seen over and over again that planogram arrangement influences choices at the shelf.
While many aspire to be shopper-centric, keep in mind that your interpretation of a shopper-driven arrangement is likely not the same as your competitor’s. When you attempt to create greater visibility for something important to you, there may well be negative consequences somewhere else on the shelf. For all these reasons retailers maintain a cautious posture to implementing disruptive change.
Test your BIG IDEAS. Don’t roll the dice!
Many categories are in desperate need of a refresh, and bold, breakthrough solutions are often the needed prescription. Forward-looking CDTs can help you create strategic options for category reinvention. Test those big ideas so you can predict with confidence, minimize your risk, and secure the acceptance of your retail partners. Decision Insight can help.
Decision Insight’s CDT method brings the context of the store into the exercise, measures direct substitutability, and allows for the inclusion of your next generation innovation. Our virtual platform enables you to quantitatively test discrete in-store environments with alternative arrangement, signage, assortment, or pricing. Decision Insight is much more than our cutting edge methodologies. Our firm is focused on our clients to help them make better decisions and to apply them to winning retail strategies. We have a passionate, creative, and experienced team to pull it off.