The modern path to purchase journey customers take is complex and multifaceted. That’s thanks, in part, to technology, which has changed how retailers interact with shoppers and vice-versa. What hasn’t changed though is the consumer decision making process. And it is here where category management plays an important role.
In fact, it’s not just any role. It’s a vital role. Consider one of its goals: category management delivers value to your customers. Let’s not forget it also aims to increase your sales and obtain long-term improvements for you as a retailer. But it’s end result is to provide your customers with what they want, when they want it, and where they want it.
For anyone who is currently on the path to purchase journey, that should be comforting. It has everyone’s best interests at heart. When you look on the surface, you could assume that category management doesn’t fit into all five stages of the decision making process. But it actually does.
Before we go any further, though, it’s worth explaining the five stages of the consumer decision making process. They are: Recognition of a need (Awareness), Searching for relevant information (Information Search), Evaluating different alternatives (Consideration), Purchasing the chosen product (Purchase), and Post-purchase behaviour (Loyalty).
Here’s a simple example to illustrate the process. It’s Sunday night, you’re hungry and you don’t have food in the fridge (Awareness). You hop online to find restaurants in your area (Search). You find a few alternatives and read through recommendations from others online (Consideration). After looking through all these suggestions you make a decision to purchase (Purchase). Whether or not you enjoyed the food you ate or the service you received will determine if you eat there again (Loyalty).
Stage 1: Your products can be laid out to encourage impulse buying
While category management doesn’t play a major role in the awareness stage of the consumer decision making process, it can still play a small part.
Let’s say a customer walks into your store to do their weekly shop. They’ve already recognised their problem so technically you’re not part of this stage yet. Of course, it could be argued that any advertising you’d done in the past drew them in. Even a past shopping experience could have played a part. But that’s besides the point. What is the point though is that once in your store, you can use various merchandising strategies to encourage impulse buying.
A customer see a product that isn’t on their shopping list, recognises they want it because it’ll satisfy a need that they’ve suddenly realised they have, and then place it in their basket to buy it. That’s the decision making process at its simplest. And it could take place in a matter of seconds while they’re standing in the checkout line.
Stage 2: How is it that shoppers find one product of 40 000 plus unique products relatively easily?
Have you ever wondered how it is that when you are looking for a product in a large store of over 40 000 unique products that you are able to find what you are looking for relatively easily?
As mentioned in a previous article about how category management can increase customer loyalty, the right store layout allows you to position your categories in a way that enables shoppers to find products more easily. .
With a category management driven product flow in place, you’re able to guide your customers through your store in a logical manner.
Since shoppers that are in store are already on the path to purchase, you’re simply making it easier for them to find what they need. Also, you’re reminding them of what can complement those products that had draw them into your stores in the first place.
Stage 3: Use merchandising principles to help your shopper evaluate all available products
There are very specific reasons for the way in which the shelves of any store are set up. It’s not random or happenstance that you’ll find certain products next to each other. Instead, they’re placed strategically.
That’s thanks to what is known as your merchandising principles. And it helps your customers to navigate through the third stage of the decision making process. By following these specific rules, you’re giving your customers the opportunity to evaluate all the different products you have on offer. As a result, they can make informed decisions about what they buy. That makes for a happy customer as they follow the path to purchase.
So what are these principles exactly?
In short, they cover just about everything in relation to the products on your shelves. That includes the spacing of each product on shelf to their exact location and quantity. And by the way, this is all calculated by looking at sales data, product data and your retail fixture information. Nothing is by chance.
For example, when it comes to the spacing on your shelf, it’s best practice to have a minimum of 2.5cm between a product's highest point and the underside of the shelf above. That’s so your customers can easily take a product off your shelf. Another principle around spacing is to have a minimum of two facings for new products, while yet another is to plan your products small to large on shelf, moving left to right so your customers can compare different sizes and prices.
As for the location of your products, it’s advised you merchandise by category, then by sub-category, then segment and sub-segment. Also, merchandise from premium to economy. The reason it’s done this way is so that your customers will shop your entire store.
Also, you’re appealing to all of your customers, whether they are price-sensitive or value-driven. Category management is playing an important role in making it easier for shoppers to evaluate and compare products.
Stage 4: Use merchandising techniques to show off and entice purchasing
While your merchandising principles are all about how and where your products are placed, you also need to consider the visual aspect of your store. And this is where your merchandising techniques come into play.
How and where does it play a role in the path to purchase? For one, it’s part of stage four when your customers want to make a purchase. It presents your products to your customers, and in so doing, focuses on creating an inviting appearance that will entice your customers to buy a product and shop more of your store.
There are four general techniques to consider: vertical merchandising, horizontal merchandising, cross merchandising and colour block merchandising. And there are advantages and disadvantages for each.
For example, vertical merchandising improves the overall appearance and organisation of your store. It also allows your customers to stand in one position and use their eyes to follow the displays of items, from top to bottom.
Of course, you won’t just pick any technique. Rather, you need to consider the products you offer. Let’s say you sell convenience goods, for example. There are the types of products your customers can’t do without so the decision-making process will be short and easy. Same with impulse goods. You thus need to pick a presentation that will work best for them. Your strategy as a retailer will also influence the technique you choose.
That said, this is about creating a visually appealing store that will entice customers to shop your store. Remember, they need to make a decision about which product they want to purchase. The merchandising technique you choose will either hinder or help them to do that.
Stage 5: Was my in-store experience good or not for customers to want to come back?
Category management aims to increase your sales as a retailer. We’ve already mentioned that. But you can’t do that by simply organising your product categories or merchandising a shelf until it looks its best. You also need customers in your stores. And not just customers who come in once. They need to keep returning and buying the products you stock if you ever want to make a profit.
So how do you do that? How do you provide them with an in-store experience that will ensure they return? There are a few ways.
For one, you can do that by having proper control of your inventory. That means knowing how often your stock is turning over and having a tight control over your replenishment engine. By doing that, you’re able to cut out any unnecessary mistakes that could cause your customers to not want to return. Mistakes including overstocking your shelves and running out of stock altogether.
Even one or two gaps on your shelf can be enough to frustrate a customer and persuade them to think twice about returning. By being aware of your customer’s need and how they see your stores (and shop them), you can ensure that when they recognise their next need or problem, your stores are top of mind.