The consumer decision tree, which shows how consumers shop a category, is perhaps the most difficult concept for retailers and manufacturers to act on. However, understanding consumer buying habits gives retailers and manufacturers a leg up on the competition and demonstrates their commitment to satisfy their customers.
Essentially, the consumer decision tree identifies and prioritizes all the decisions a consumer makes while shopping. Conversely, a poorly constructed consumer decision tree serves to only frustrate and alienate customers.
CDTs provide a deeper understanding of your shopper’s behavior and motivations. While traditional decision tree methods are primarily product-focused and based on historical data, Decision Insight’s proprietary approach is forward-looking and shopper-focused.
Also called product hierarchies, consumer decision trees are graphical records which assist manufacturers and retailers to understand consumer buying habits and the decision-making processes followed by individuals while shopping a category
The step before defining the Consumer Decision Tree (CDT) is defining the category, which plays an important role in how the CDT takes form. This part of the process will depend on the consumer need and can vary widely depending on the circumstances such as who and what the consumer is shopping for and what type of need it is i.e. main grocery shop, convenience top up, something to wear etc. etc.
The type of need will also influence what type of retailer and location is chosen.
Planogram Considerations
Before entering a store most shoppers already know what type of product they are looking to buy. The first decision they usually make when first entering a category (or planogram) is which brand to buy. Brands offer the promise of quality and consistency.
The next decision is typically regarding quality segments. This includes economy, premium and super-premium. These segments are typically well-defined within the category and are priced accordingly, making it easy for consumers to shop. Quality and value are typically made evident by pricing and promotion strategies within the segments.
The next decision of the consumer decision tree is based around product attributes including size, type, flavor, packaging, etc. Products in the segments are typically grouped with similar items, for example “kids cereals.”
A well-constructed consumer decision tree gives consumers the opportunity to shop the category and easily perceive value between segments, product offerings and brands. Private labels should be sprinkled throughout the section, typically next to the category leader. Private label strategies should be used to augment branded strategies, not replace them.
Knowing how products are grouped together within a category assists in creating planograms which group products in a logical and shopper friendly way. Practically, when line item product data includes accurate classifications it allows space planners to identify when a product is not merchandised appropriately.
If strategically implemented, consumer decision trees could be the difference between a strong committed loyal customer and an occasional shopper.
Product Adjacencies
Product adjacency is where the products are positioned on shelves near other similar products so consumers can easily purchase all the products they need in one area, it is also used to create awareness of brands shoppers may not have seen before or new product being introduced positioned next to or near the brand leaders.
Building great planograms
Of course there are many more considerations when building great planograms and you will need to take these into account in your process, just click on the first link below where we have explained this in more detail.
Building great floor plans
By using the consumer decision tree you can also build great floor plans, the consumer decision tree will help define how the categories should be grouped together, just click on the second link below where we have explained this in more detail.
CDT Benefits
Consumer decision trees seek to understand how customers shop the retailer. Most stores are laid out in a “race track” format with staples positioned around the outside of the store- dairy, meat, seafood and bakery. The center of the store usually includes dry grocery and health and beauty aids. Items in these sections are designed to augment choices made on the outside of the store. Margins for the retailers are typically higher along the “race track” as opposed to center store.
A well-constructed consumer decision tree gives the retailer an opportunity to encourage up selling. For example, merchandising super-premium items next to category favorites. Consumers are happy to pay extra for items with a greater perceived value.
CDT helps to understand shopper behavior
- Establish key shopper segments and heavy users
- Understand shopper missions and trip triggers
- Determine retail channel and store selection
CDT provides category knowledge
- Establish market structure
- Identify key product attributes
- Understand brand interactions
CDT provides input for category management
- Establish category segments
- Define assortment requirements
- Define optimal shelf arrangement
CDT provides input for shopper marketing
- Identify opportunities to influence purchase
- Set objectives for in-store marketing
The CDT involves understanding consumer needs, selecting the channel / retailer, planning the trip, shopping the store / category, and actual buying behavior
Classification Tree Technique
Decision Tree Model and Variants
The CDT involves understanding and defining the hierarchy of decisions that lead to the purchase. This may often include variations by shopper segment, channel and retailer.
