Bob walks into a c-store looking for an energy drink. He knows exactly what he wants, from the brand down to the package size.
Joe is not as sure of what he wants, but he has a hankering for a soda and loves to try new flavors.
And Susan is looking for a healthy beverage option for her 5-year-old in a flavor he likes.
Do you know these folks? Would they be able to navigate your cold vault easily and quickly, or will they be forced to settle on a second choice—or, worse, write your store off as a poor destination for beverages?
A decision tree can serve as a helpful map of the likely behavior of these consumers. It also can highlight opportunities for guiding the purchase to completion and making the shopping experience as convenient and smooth as possible.
A consumer decision tree (CDT) reveals how consumers shop a category, ranking the order and importance of elements ranging from occasion and need state to flavor and brand preferences. Each tree—typically presented as a flowchart—is as different as the subcategory and its core consumer.
“Understanding the way the consumer thinks about the [beverage] category will make it easier for them to shop the store,” says Ivan Alvarado, director of category management for Dr Pepper Snapple Group (DPSG), Plano, Texas. It takes the average consumer 12 to 30 seconds to make a beverage choice once in the store, according to DPSG research.
“It’s a good way to manage the shelf flow and the way the aisle is set up,” says Tom Prestridge, director of trade marketing insights for Anheuser-Busch InBev, St. Louis. “Depending on how much space you’ve got, it is difficult for a shopper to look at 20 feet and decide they want A, B or C. … Sometimes I like A or B. Do I want to get one of each? It just makes it more shoppable.”
To help in this endeavor, what follows are examples of CDTs and consumer insights for some of the biggest cold-vault segments to help provide a blueprint for maximizing the beverage category.
Bottled Water
The Consumer: As packaged beverages go, bottled water is among the most widely consumed, according to research by Chicago-based Technomic Inc. Seventy-one percent of consumers had bottled water in the past month, although this skews even higher among 35- to 54-year-old, upper-income women. Flavored water skews younger; while 25% of consumers overall say they have consumed the beverage in the past month, among 18- to 34-year-old males and females the figures are 34% and 36%, respectively.
The Factors: According to Chelsea Allen, senior manager of category and shopper solutions for Nestle Waters North America, Stamford, Conn., brand has risen up the decision tree to take greater priority. The bottled-water supplier—whose brands include Nestle Pure Life, Arrowhead, Deer Park and Ice Mountain, as well as sparkling water brands Perrier and San Pellegrino—shared the latest CDT for the segment, based on research from The Nielsen Co.
“A few years ago, brand wasn’t up there,” says Allen, citing that the type of water (still or sparkling) typically came first, as well as the water source (spring, purified, etc.). But bottled-water brands have so differentiated themselves that they now communicate more than the label.
A CDT can help retailers better organize the bottled-water section to make it more shoppable. “Right now [many retailers] place the still water together; there’s no premium cut-out section. It’s more on who is distributing, what the region is,” she says. Instead, Nestle Waters suggests carving out sections that reflect each area of the CDT: premium brands, flavored and unflavored, sparkling water, glass and plastic bottles, flavored and unflavored, etc.
“Sparkling is such an untapped opportunity,” says Allen, pointing out that its share of c-store bottled-water sales is still small. “This is an untapped opportunity that will help try to drive this channel further.”
Beer
The Consumer: “Beer’s a pretty universal piece of the social fabric and diet for quite a few people,” says Prestridge of A-B InBev. Hispanics and African-Americans skew slightly higher in beer consumption, as do millennials, according to company research. Baby boomers drink beer but like to alternate with wine. Even by gender, beer is surprisingly democratic, with a 55/45 split toward men, although newer types of brews specifically designed to appeal to women’s palates are straightening that lean.
The Factors: According to A-B InBev research, occasion is the top factor in making an alcohol-beverage choice. “What am I using it for, how am I consuming it?” Prestridge says. “Is it for me and right now, or is it for sharing?”
Once the occasion is decided, consumers move on to beverage choice—beer, wine, spirits—brands and price segments, and then the desired shopping experience. “It’s choosing which store will have what I need at the right price, cold or on sale,” says Prestridge. “I’m not just shopping the cheapest. Is it convenient, and who will have what I want?”
Indeed, variety is key in this segment, he says. “If the store is out of stock, they will go somewhere else,” says Prestridge. “If it happens a couple of times, the shopper stops thinking about that as a beer store: ‘It won’t have what I need, so I will take it off the list.’ ”
According to MillerCoors research, the beer decision tree also begins with that immediate-consumption mindset. “The most important factors in choosing a store for beer are cold beer, brand and package size availability,” says Jeffrey Schouten, director of channel marketing for Chicago-based MillerCoors. “Price is also important, especially for millennials.”
Schouten of MillerCoors agrees that variety is key for beer: “Keep it cold and in stock, and make sure the assortment has the most popular brands and pack sizes.”
CSDs and Juices
The Consumer: According to Technomic, 66% of all consumers say they have consumed a regular carbonated soft drink (CSD) in the past month, with the figure skewing toward 18- to 24-year-old males, 80% of whom have consumed a regular CSD. Meanwhile, 44% of consumers have had a diet CSD in the past month. This segment skews toward Caucasian, middle-age consumers, likely because of health concerns, with no strong skew by gender.
For juice, 16% of consumers claim to have made this purchase in the past month, skewing toward 18- to 34-year-olds. Meanwhile, 13% of consumers say they purchased bottled or canned iced tea, with a strong skew toward 18- to 24-year-olds.
The Factors: Alvarado of DPSG shared research from the company’s 2011 c-store study, the findings of which he says continue to be relevant. According to DPSG’s research, there are two groups of c-store shoppers: regulars who stop at a store because it is on the way to work or to home, and those who treat the store as a destination stop for buying a beverage for the work day (e.g., construction workers or landscapers).
When asked why they go to a c-store, 20% of consumers mentioned the need to buy gas, followed by the desire to buy an alcohol beverage (12%) and a meal or snack (11%), according to DPSG.
“The decision of what type of beverage they will purchase is determined by the need they are trying to fill,” says Alvarado. For c-stores, immediate consumption is the sweet spot.
The first item on the CSD decision tree is regular or diet, followed by single- or multi-serve, can or bottle, cola or flavored. For juices, the decision process is simpler and largely dictated by the end user, according to Alvarado. If the purchase is for an adult, the choice will likely be orange or cranberry juice. If it is for a child, apple or grape juice is more popular. For energy drinks, functionality and brand are paramount.
Variety is critical for beverages, DPSG research found. “A shopper is willing to drive past a c-store because they know it won’t have the variety of beverages they’re looking for,” says Alvarado. “Once I do get to the store, the very first factor that will determine what I want to drink is whether I want packaged or fountain. Fountain is preferred because of the value for the money, or size. On the cooler side, it’s mainly variety that plays a very, very important role.”
With CSDs, a large variety of flavors can help drive impulse sales. Of course, this is limited by the number of cooler doors and the need to stock core brands, but leveraging the impulse nature of other brands and flavors can drive incremental sales. For example, DPSG research shows flavored CSDs are more impulsive purchases than colas, but they are not necessarily displayed in a way that maximizes that impulse buy.
“If I go to a typical c-store, the most prominent position is typically allocated to colas, just because historically it’s always been done that way,” says Alvarado. “The biggest brands are also ones that invest the most. We found that by moving flavor brands into premium position—the ‘strike zone’—you can drive impulsive, incremental sales for the retailer.”
Package variety, however, is not as important as flavor variety, says Alvarado: “Having a multitude of different packages won’t necessarily result in incremental sales. [For] energy, you have 8, 12, 16, 20 and 24 ounces. Do you really need all of those package sizes to address the needs of that consumer? If I don’t find an 8-ounce, will I have a 12-ounce instead? Or do I really need 24 ounces when a 20-ounce is enough?”
From the perspective of Atlanta-based Coca-Cola Refreshments, a consumer’s need state—rather than a traditional decision-tree process—guides his or her beverage choice, says Clint McKinney, group director, category advisory and space strategy. Needs states range across several factors, including occasion, brand, package size and price point, he says, and consumer needs are continuing to change.
“Before considering preferred product attributes, it is essential to understand shoppers and their missions,” says McKinney. Coca-Cola’s iShop Study considered stock-up, fill-in non-food, fill-in food/beverage, grab-and-go home, grab-and-go and need-it-now missions.
“Among its many findings, it revealed that one of every two trips to a convenience retailer is made to satisfy a grab-and-go occasion,” he says. “This highlights that today’s consumers are time-strapped and desire convenient solutions to help simplify their lives.
“Retailers can drive all of this by better understanding their own customers,” McKinney continues. “Point-of-sale displays, food bundles, cold-vault signage, points of inspiration and more drive targeted merchandising and execution based on specific consumer needs.
“They need to make sure they have the right product in the right package, at the right price point, and for the right occasion.”
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