In some categories, shoppers have to choose from hundreds of SKUs. Just have a look at the tooth paste aisle at your local supermarket. You will find at least some ten brands with up to thirty different flavors and benefit propositions leaving every single shopper to choose from a selection of up to 200 options.
But do shoppers really consider all these different products and evaluate them on different dimensions such as price and product attributes or do they apply some heuristics to facilitate the purchasing decision?
In this article we define consideration set first, then analyze the consumer decision journey, and finish by promoting means to position your brand optimally in your shoppers’ mind.
A shopper’s consideration set is the subset of brands that the shopper evaluates when making a purchase decision¹. It arises out of human being’s limited information processing capacities and the need to decrease the cost of information search to feasible levels.
Consideration sets might not be confused with the concept of top-of-mind awareness. The latter refers to brands that come up first to shoppers when thinking of a particular category while the former refers to brands which are actually considered for purchase. Hence, these two sets might be completely distinct.
Consumer Decision Journey
The traditional funnel describes the process in which shoppers start with a number of potential brands in mind and subsequently reduce the number of brands before finally arriving at the brand they actually purchase².
However, this concept does not hold for modern purchasing decision for various reasons²:
- Increase in number of touch points (i.e. ads, news reports, product experiences)
- Explosion of product choices
- New marketing channels (i.e. digital)
- Increasingly discerning, well-informed shoppers
During the first phase, initial consideration set, “(t)he consumer considers
an initial set of brands,
based on brand perceptions
and exposure to recent
Brands in the initial consideration might succeed in establishing the criteria for evaluating products in this category and thus might secure some valuable first mover advantage. According to McKinsey, “(b)rands in the initial-consideration set can be up to three times more likely to be purchased eventually than brands that aren´t in it“².
However, brands can also enter the consideration set during the second phase, “active evaluation“, during which shoppers research information on the specific product category. This can even force the exit of brands which have been in the initial consideration set.
It thus offers some kind of second change to marketers to successfully place their brand in shoppers’ consideration set.
The report further argues, “two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing activities, such as Internet reviews and word-of-mouth recommendations from friends and family, as well as in-store interactions and recollections of past experiences“². Consequently, only one-third of marketing activities during this stage is company-driven.
Next, is the moment of purchase during which the shoppers turn into buyers by chosing the brand to purchase.
The postpurchase experience then defines in which group customers fall:
- Active loyalists – truly satisfied with purchase and actively advocating the brand
- Passive loyalists – brand loyal merely for convenience (avoiding switching costs)
- Brand switchers – truly unsatisfied with purchase and actively looking for substitute
Consequently, companies have to increase efforts to turn customers into active loyalists who promote the company’s brand via word-of-mouth. At the same time, marketers should make use of comparison shopping and means to lower switching costs to attract passive loyalists and brand switchers from competitors.
Means To Position Your Brand In Shoppers’ Minds
McKinsey‘s uses an analogy of the US automobile market to illustrate this. According to the report, “companies like Chrysler and GM have long focused on using strong sales incentives and in-dealer programs to win during the active-evaluation and moment-of- purchase phases”². Their Asian competitors Toyota and Honda in contrast, put an emphasis on brand strength (initial consideration set) and product quality (postpurchase experience). Superior product quality resulted in active loyalists which would then promote via word-of-mouth Asian vehicles this way positioning the brands in the shoppers’ initial consideration set. Once this self-reinforcing cycle gained momentum, Honda and Toyota outperformed American car manufacturers along the consumer decision journey.
Finally, measuring a company’s success at each of this four stages is crucial. Based on a deep understanding of the relative importance of each of the four stages, companies can benchmark against competitors to uncover areas for improvement. However, as the consumer decision journey is not a static process which stays stable over time, constant adjustments might be necessary.
Chapter XV will evaluate the effectiveness of different marketing vehicles used for shopper marketing.
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