Consumer decision trees in retail
Executive summary
Explore the differences between consumer and shopper decision trees, the value of decision trees in retail, how decision trees impact planograms and how TELUS Shopper Insights can help CPG manufacturers create winning strategies with its consumer decision tree method.
Before we dive into the differences between consumer versus shopper decision trees in retail, let’s start with the basics.
What are consumer decision trees?
A consumer decision tree is a quantitative model that visualizes how consumers prioritize product attributes and make purchase decisions along the path to purchase. It’s used by Canadian and international manufacturers to:
Make sense of consumer motivations and priorities
Better understand which product attributes influence decision making
Improve product placement
It captures key decision making factors that influence sales and helps cultivate and refine sales strategies.
What are shopper decision trees?
A shopper decision tree is also a visualization of the choices a consumer makes when they purchase a product, but through the lens of in-store or online behaviour.
Like consumer decision trees, they also outline the hierarchy of factors that shoppers take into consideration on their path to purchase, allowing manufacturers to strengthen strategies.
What is the difference between consumer and shopper decision trees?
The terms “consumer decision tree” and “shopper decision tree” are often used interchangeably in Canada, but there are differences between them:
Consumer decision trees
How consumers think about products before they begin shopping
What motivations or needs drive their preference
Shopper decision trees
How shoppers make choices in the retail environment
What steps and decisions they make while actively shopping
We focus on consumer decision trees as the foundation for connecting how consumers in Canada think about a category to how Canadian shoppers behave in-store.
The value of consumer decision trees
The evidence is overwhelming that shoppers don’t make rational, linear decisions on the path to purchase. That being said, consumer decision trees have serious value. When executed well, they offer a clear and simple depiction of retail shopper insights, product consideration hierarchies and a guide to product substitutability. They are extremely helpful in making assortment recommendations and evaluating product development or brand positioning.
The critical link between consumer decision trees and shelf execution
While a consumer decision tree is often confused with a planogram, treating them as the same can lead to trouble on the shelf.
What is a planogram?
A planogram is a diagram or model that indicates the placement of retail products on shelves in order to maximize sales.
What’s the value of planograms?
Planograms are valuable because they can help increase sales, improve efficiency and enhance customer experience. Planograms can translate the hierarchy revealed in a consumer decision tree into shelf placement. We use virtual shopping environments to test whether those arrangements truly improve findability, comparison and purchase conversions.
How consumer decision trees impact planogram development
Consumer decision trees show you how consumers group products, helping them create more shopper-friendly planograms. Consumer decision trees influence effective planogram development in two areas:
Assortment
Assortment is a term for the variety of products a store offers to customers. It includes:
The range of product categories
Variations within those categories
A retail assortment includes:
Breadth: the number of different product categories
Depth: the number of variations like size, flavour and variety within a category
Manufacturers use assortment planning to decide:
Which products to sell to consumers
Where and when to sell products to maximize sales and profits
Consumer decision trees help with assortment planning by revealing the key attributes and needs of consumers that impact purchasing decisions. Any decision to include or exclude specific items should factor in the relevant competitive set (the lowest nodes on the consumer decision tree which reflect the most granular level of the hierarchy, indicating the most substitutability).
Arrangement
Arrangement is often referred to as “shoppability.” It offers two key benefits:
It helps shoppers find their desired products – which they often choose in advance
It encourages shoppers to view and compare alternative and complementary products
These two potential benefits must work in harmony to realize a category’s full potential.
When it’s easy for shoppers to find a product, research indicates there is an increase in:
Shopper happiness
The amount of money a shopper will spend
The likelihood a shopper will become a repeat buyer
Grouping products at the shelf into building blocks corresponding to the consumer decision tree helps shoppers make sense of and navigate the selection.
How to develop a winning planogram
You’ll need more than a consumer decision tree to develop a winning planogram. Planogram arrangement must balance multiple priorities, including:
Operational imperatives such as:
Days of supply
Sufficient packout
Strategies such as:
Corporate brands
Retailer differentiation
Aesthetics such as:
Blocking similar packages types
Sizes
Brands
Shoppability considerations revealed in a consumer decision tree
There’s no shortcut to greatness
You won’t find a singular analysis, algorithm or software program that can generate the perfect planogram for your business – though many providers have tried. But remember, perfection should not stand in the way of excellence.
Planograms are a balancing act
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, you should maintain caution when implementing change.
Many categories are in desperate need of a refresh, and bold, breakthrough solutions are often the needed prescription. Forward-looking consumer decision trees 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.
How TELUS Shopper Insights can help with consumer decision trees
TELUS Shopper Insights offers a consumer decision tree approach that combines attitudinal understanding with in-context behavioural validation. Using our virtual shopping platform, we quantify substitutability, test alternative arrangements, and incorporate innovation concepts within realistic in-store environments.
Our virtual platform enables you to quantitatively test simulated in-store environments with alternative arrangement, signage, assortment or pricing.
To make confident decisions, you need insightful tools and a reliable partner. At TELUS, our sophisticated software solutions help our Canadian clients make data-driven decisions and create winning strategies. Our passionate, creative and experienced team members then help them pull off those strategies.
Key takeaways
Consumer decision trees and shopper decision trees are often thought of as the same thing but are subtly different
Consumer decision trees are essential to planogram development as they reveal shoppability considerations and influence assortment and arrangement in stores
Planograms are critical to retail success
TELUS Shopper Insights’ consumer decision tree method can help CPG manufacturers in Canada create winning strategies
