Rooting for retail success: cultivating Insights from Decision Trees

In the U.S., 83% of pet care SKUs generate less than 2% of sales, creating an overwhelming array of non-performing products for consumers. With 41% of pet owners relying on product websites for information, the challenge is to simplify their decision-making process.  

Customers often make quick choices in front of crowded shelves, so understanding their buying behavior through the Decision Tree methodology can help tailor product offerings to better meet their needs.

One behavioral Decision Tree - tones of fruitful outputs 

If you've ever stood in front of your family tree, you can visualize the research output of a Decision Tree. Instead of bloodlines, you see product names and their key characteristics (purpose, flavor, price) that influenced your choices. 

But this isn't the only output from this testing approach. There are many more: 

• Decision Hierarchy: identifies purchase drivers and their order of importance, clearly revealing any gaps in the portfolio.
  
  
• Shopper Decision Types -  analyze the share of each shopper type based on their behavioral profiles and switching patterns.

• Loyality analysis- test respondent’s loyalty to the brand but also switching patterns and importance of other product dimensions such as functionality, size, pack type, price.

• Substitution analysis -  how shoppers substitute one product for another when their preferred choice is out of stock, highlighting flexibility and preference strength.

• Basket analysis - evaluates the composition of shoppers' baskets, identifying common product combinations and spending behaviors.

• Product overlap analysis -  investigates the degree to which different products are purchased together, revealing associations and potential cross-selling opportunities.

• Shopping habits analysis - delves into the regular purchasing patterns of shoppers, uncovering habits and routines that inform stocking and marketing strategies.

• Pack communication - purchase driver analysis - assesses how packaging influences purchase decisions by identifying key communication elements that drive consumer choice.

Branched possibilities of Decision Tree utilization  

Ones your basket is full of tons of juicy outputs businesses can lavage the gathered knowledge for many key insights driven actions – planogram creation and optimization, identifying gaps in assortment, input for communication, distribution optimization.  

Understanding the hierarchy of shopper decisions is crucial for retailers and manufacturers to create category visions that meet both short-term and long-term goals. Decision trees, widely utilized in this context, help segment products based on real shopper behavior, providing insights into how categories should be structured to enhance the shopper experience. They form the foundation for building planograms, adding a crucial layer to planogram creation. And that is not an easy task! Planogram arrangements need to delicately balance various priorities such as days of supply, retailer strategies, aesthetics, and factors enhancing "shopability" derived from valuable insights provided by decision trees.

Nurture your Decision Tree with mix-method in-context approach  

In decision tree research, combining behavioral testing methods and surveys, along with testing respondents' behavior in virtual stores, is crucial for obtaining a comprehensive understanding of shopper behavior. Behavioral testing methods provide objective data on how shoppers interact with products, revealing unconscious preferences and actions. Surveys, on the other hand, capture subjective insights, including motivations, attitudes, and opinions.  

https://www.youtube.com/watch?v=7Pc0hh6lyh8

Testing in virtual stores simulates real shopping environments, offering a realistic context for observing decision-making processes. This holistic approach ensures that both quantitative and qualitative data are integrated, leading to more accurate and actionable insights. By understanding the full spectrum of shopper behavior, retailers and manufacturers can design better category structures, optimize planograms, and create targeted strategies that align with actual consumer needs and preferences. 

In Conclusion 

Understanding the intricate decision-making process of shoppers is key to simplifying their choices and enhancing their shopping experience. By leveraging the Decision Tree methodology, retailers and manufacturers can decode the hierarchy of shopper decisions, optimize category structures, and create effective planograms.  

Combining behavioral testing with surveys and virtual store simulations provides a comprehensive view of shopper behavior, enabling more precise and actionable insights. With these tools, businesses can tailor their product portfolios to meet customer needs, ensuring loyalty and satisfaction for their brand.  

Want to learn, hear, and see more examples of this type of insight and knowledge? Make sure to find us at IIEX EU in Amsterdam this June!  

Come to our session, "Feeding Innovation: Digging into Nestlé Purina PetCare's Bag of Tricks," happening on June 25th at 2 PM at the Green Stage. Join Maud Hua-Bulteau (Consumer Insights Lead at Nestlé PetCare Purina Europe) and Morana Kristek (New Business Director at EyeSee) as they share valuable insights on this topic!