Shelve the Hedonic, Sign the Utilitarian

When someone is deciding whether to purchase a healthy food, bonus pack promotions—more product at the same price—carry more influence than price promotions—a price discount on the same amount. For an unhealthy food that will bring hedonic pleasure from consumption, people prefer a price discount to a bonus pack. The discount justifies the purchase.
     However, when a food retailer is deciding how to display vice foods to draw shopper attention, price discount promotions might not be best. Researchers from Universidad de Salamanca and KU Leuven asked a sample of shoppers at a large European food store to rate a range of fast-moving consumer goods categories to indicate the degree to which these shoppers bought each type of goods for practical purposes to satisfy routine needs versus to satisfy desires for enjoyment.
     The researchers then observed in the store whether promotional materials for items from the categories used shelf signage, end-of-aisle displays, and/or island displays. These observations were done daily for one year. Lastly, scanner data from the registers was collected to track daily sales volume and spending over that year for the items.
     Careful statistical analyses of this wealth of data indicated that shelf signage combined with price promotions should be the display modality of choice for utilitarian items. This modality shows off the product choice surrounded by alternatives, encouraging the analytical comparison by attributes generally used by shoppers when selecting a utilitarian item. Shelf signage accompanied by a product promotion—emphasizing benefits other than price—failed to notably increase item sales.
     Sales of hedonic items were best displayed on islands. This isolation of the item from alternatives triggers the impulse decisions associated with selecting pleasure-oriented offerings. In his reply to my inquiry about the study, lead researcher Dr. Álvaro Garrido Morgado added, “A hedonic product presented in an island will increase its sales in the same proportion if it is not promoted or if the promotion is on price. By contrast, product promotions intensify the increase in sales of these hedonic products caused by their presentation in islands.”
     The researchers point out how their findings can help a retailer not only with deciding how to display items, but also in negotiations with suppliers. Manufacturers of utilitarian products might be pleased to save the costs of fancy display fixtures and payment for prime display locations, redirecting those amounts to price discounts to be highlighted on signage.

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