The Impulse Equation
How to trigger a purchase through high-tech and traditional techniques.
Breaking the QR Code
Those black-and-white patterned boxes, becoming ubiquitous on advertisements and media, have great potential for the c-store industry, said Jim Matorin of Smartketing. He cited McDonald’s move to place QSR codes on its menus this October as a sign that even the biggest players are taking it seriously. However, as with any new technology, there have been several misfires that highlight the key areas to nail to maximize QR codes:
- Link to a Mobile-Friendly Site. Because consumers will be scanning the QR code with an app on their smartphone, ensure that they are connected to a mobile-friendly site. A recent campaign by burger chain White Castle directed users to its non-mobile-friendly site, which was tough to navigate and read. “You don’t have to get a QR code for every promotion you do; this code goes back to your mobile-friendly site,” Matorin said. “If you have the resources, you can change [the site] daily, weekly or monthly.”
- Make It Easy. Be sure to reward consumers who scan the QR codes with original content on your mobile-friendly site.“They’re looking for something, and they’re also looking for handouts,” said Matorin. For example, QR codes on window signage at drug chain Duane Read directed customers to deals of the day and coupons. An incentive can prove especially important when trying to spur an impulse sale, he said. And be sure to offer basic instructions for using the code: According to Matorin, only one-half of consumers understand what a QRcode is, and only 25% of these folks are using them.
- Get the Basics Right. Several retailers and manufacturers have been tripped up by marketing basics in their first QR code promotions. In one, a c-store chain partnered with a vendor for a promotional game that was canceled before it was scheduled to end. In another, a cigarette manufacturer placed a QR code too close to a UPC code on packaging; this confused some QR code scanners, which forced a product recall and delayed launch. Finally, an energy-drink manufacturer ran a QR code promotion in the subway—not considering that many smartphones cannot get a signal there.
- Offer an Alternative. For consumers who do not have QR code scanning capability but would still like to check out the promotion, offer a URL or text number for them to follow.“I think this is still in its infancy,” said Matorin. “I have people challenging me that it’s going away, it’s going to become extinct. No, I think we’re going to get it right as marketers, and I see it being key in this segment here, because it’s going to drive impulse sales.”
Category Notes: Candy
Speaker: Jeff Lilla, Hershey
- 53% of candy is bought on impulse.
- At least 75% of shoppers purchase candy at least once a week.
- Candy has a fast purchase cycle; it averages 16 days between each purchase.
Ideas to Take Back:
- Merchandise at front counter: Focus on a streamlined, focused set with solid assortment of top sellers across all candy segments.
- Everyday multiple pricing: Drive trade-up and grow basket with daily two-for pricing on candy. Retailers are seeing lifts on standard and king-size in the range of 25% to 30%. Recommended price points: king-sized two for $3, standard two for $2.22. Success is all about the take rate: If you’re offering two for $3, how many customers walk out with two items vs. one at full price? Average take rate is 35% (percent who buy multiple of two items), with profitability increasing 10.2% and volume up 23.7%.
- Bundling: Confection is purchased 84% of the time with another category, such as foodservice, coffee, gum/mints, CSDs. Adding candy to the average c-store purchase f $4.94 grows basket to $5.70.
- Seasonal: Almost $250 million opportunity for the channel. Carry key, core items and limit the number of SKUs. Focus on seasons in order of size: Easter, Christmas, Halloween, Valentine’s Day.
- Innovation: The first seven months of a new item introduction are critical; this is when the manufacturer has the strongest launch plan. What are the key new items that have a lot of support activation and are long-term and sustainable?
Category Notes: Gum
Speaker: Heather Oliver, Kraft
- Gum is No. 2 most snacked category, after fresh fruit (NPD).
- On dollar basis, gum is the No. 4 center-store “snacking” category for c-stores.
- Three-quarters of all gum sales come from six brands: Trident, Orbit, Wrigley 5, Stride, Extra and Dentyne.
- 54% of gum shoppers decide to buy gum after they approach checkout.
- Gum shopper decision hierarchy: Functionality first, then brand and flavor.
Ideas to Take Back:
Over the past 3 years, household penetration of gum has declined, as have c-store sales. Kraft sees a few factors at play:
Challenge: Erosion of super-heavy users (teens and young adults). High price, lackluster new products have lost gum fans. Solution: Instead of line extensions, focus on true innovation. A recent example: new Kraft/Cadbury brandID, built from ground up with teen focus groups.Challenge: Less category relevance. Gum is not top of mind, not a need in social settings. Solution: Three greatest snacking needs are to alleviate boredom, gain energy and enhance pleasure—and c-stores meet all three. Location, assortment, speed to market and secondary placements are important. Merchandising gum below front counter brings 6% lift to category.
Challenge: Eroding value perception. From 2006 to 2010, average price per unit of gum rose almost 48% as manufacturers added functionality. Consumer perception that gum is affordable luxury down 11%. Solution: Gum doesn’t have entry price points that other confection segments do. See: five-stick packs of popular, premium brands at 50-cent price point.
Category Notes: Lottery
Speaker: Jeff Sinacori, Scientific Games
- 75% of U.S. adult population has purchased a lottery ticket in their lifetime.
- Game players are typically 18 to 44 years old, while draw-game players are typically 35 to 64.
- Men are more likely to buy lottery games such as Powerball and Mega Millions.
- C-stores with gas sell 39% of lottery tickets, followed by 18% for c-stores without gas
- Lottery commissions generate more gross-margin dollars per store than cold dispensed drinks, according to NACS.
- 50% of lottery sales come from 20% of retailers.
- Lottery customers buy 50% more items than nonlotterycustomers.
Ideas to Take Back:
Retailers often consider lottery a “necessary evil” with many pain points:
- Low commission at only 5.5% per sale. Solution: While profit is low, unit sales are high
- No room on front counter for card-scratching customers.Solution: Consider whether giving valuable counterspace to non-impulse categories. Check out dedicated 4-foot “lottery centers” to create social atmosphere and free up counter space.
- Not enough winners to excite customers. Solution:Launch a winners awareness campaign with signage to highlight each win. Hold “second-chance drawing ”with losing tickets and give away prizes donated by local businesses.
- Online lottery: Consider it an opportunity. Post your store location on state lottery websites with special promotions to bring customers into stores.
Category Notes: Meat Snacks
Speaker: Dana Rohde, Oberto
- Total category dollars up 12.5%, driven by jerky and sticks, result of price increases, growing distribution.
- 40% of meat-snack purchases are planned.
Ideas to Take Back:
Purchase decisions are different based on whether planned or unplanned.
- Planned: Flavor and brand are key drivers. Have right assortment with most popular flavors—original, teriyaki, peppered, spicy and BBQ—and a mix of top brands.Unplanned: Flavor and taste craving are key drivers. Make jerky noticeable to consumers with in-store displays, promotions and bundling. Also, innovative products bring in new users: Consider all-natural products, spicy flavors.
- Bundling: Give consumer an incentive to add jerky to go along with fountain drink or CSD purchase to drive incremental sales. Merchandise product by fountain or in clip strips on cooler.
- Better for you (BFY): 33% of consumers plan to choose healthier snack options in 2012, and 77% of consumers ages 18 to 34 said they’d shop more frequently at a food retailer if healthier options were available. Merchandise jerky with other BFY options in dedicated secondary displays.