Exclusive Research: Consumer Decision Trees

Top retailers are making key decisions about brands in their stores more than ever before by using consumer decision trees and associated research to evaluate issues associated with category management, merchandising, marketing and new products according to a study by New York City-based Meyers Research Center, unveiled at the recent Consumer Insights In Action conference held in New York City."Retailers are telling us that decision tree research today is vital in determining how or what the consumer explicitly thinks, in shopping a category and also valuable uncovering major category structures from the consumer's point of view," explained Jeff Friedlaender, Vice President, Meyers Research Center.For the study, Meyers Research Center surveyed over 100 of the country's top retailers to ask them about consumer decision trees and their importance. Contacts were all headquarter-level executives with responsibility for category management, merchandising, marketing, purchasing and research at major supermarket, drug, mass and category killer chains."Over half of the retailers contacted use consumer decision trees in the course of their everyday business and said they prefer to receive this information from category manufacturers or their data collectionresearch firms," Friedlaender said."As an important tool for strategic reasoning, consumer decision trees detail how important decisions are made in a category in terms of consumer perception and need fulfillment. Most retailers told us they critically evaluate the consumer decision trees brought to them and want to see the supporting evidence, the research, statistics and data behind the decision tree," he added. Surprisingly, retailers were equally split on the source of data utilized for developing decision trees."Regarding data sources to back-up decision trees, retailer were equally pleased by point-of-sale consumer interviews and panel data (market structure), recognizing the contributions that both have to make. Panel data (market structure) provides a larger sample, but can only analyze at the household level, not by individual consumer need state and not by occasion. Point-of-sale consumer interviews are far more effective at revealing why a product is purchased, and are more sensitive to time, place and execution, requiring professionals specifically skilled in the collection and interpretation of in-store research.Retailers said overall they prefer that consumer decision trees to be developed from an integration of household panel data and interviews among shoppers at the point-of-sale.The study also found that the majority of retailers use decision trees to:Develop efficient product assortments (84%)Develop new planograms (84%)Determine product acceptance and deletion criteria (71%)Make space allocations (57%)All retailers surveyed who had been exposed to decision trees said they regard them as important to some extent or more. The vast majority of food retailers characterized them as "extremely/very important.""Retailers told us that good decision trees generally cannot be derived in one-shot, closed-form analysis or black box. Ultimately, good decisions trees are a collaborative endorsement and effort between industry experts (manufacturers and retailers) and their research suppliers or sources," Friedlaender said. When asked how to improve consumer decision trees, retailers identified two key areas of concern - a softening of emphasis on brand (as opposed to "the category") and aligning of retailer and manufacturer; category and category segment definitions. Other retailer suggestions for decision trees included more detailedsegmentations (e.g. by type of consumer, by class-of-trade) and morefrequent updating particularly in dynamic categories. "Interestingly, many retailers identified unique perspectives associated with receiving multiple decision trees from different vendors in a category. From one retailer's view, "it is a big struggle to get one perspective together when you get three different views from three different category manufacturers." On the other hand, another chain retailer pointed out, "It is good to compare different decision trees from different vendors and see what fits." More information on the study can be obtained by contacting Jeff Friedlaender at 1-800-221-5015.

Exclusive Research: Consumer Decision Trees

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