Advertising and Offline Retail: A Better Way to Track Shoppers (video)

A Better Way to Track Shoppers Offline

Stanford Graduate School of Business video above published Oct 9, 2017: Stephan Seiler, Associate Professor of Marketing, Stanford Graduate School of Business

YouTube.com auto-generated transcript (w/ minor edits):
00:00  [Music]
00:18  off-line compared to online retail is
00:20  still actually a very large fraction of
00:22  consumer spending so although online is
00:24  growing quite dramatically as of now
00:27  essentially still about 90 percent of
00:29  total retail spending happens in the
00:31  offline world and firms are still trying
00:33  to figure out how to best promote
00:35  products how to best run a price
00:37  promotions things of that sort and so we
00:40  wanted to go back and see can we
00:42  actually use tools that we learned about
00:45  it in the online world better types of
00:47  measurement and can we bring that back
00:48  through your flying world and try to
00:50  track things better so we know if I run
00:57  an ad online
00:58  I typically can track did somebody click
01:00  on it did it again to go to my website
01:01  how much they spend all this linkage is
01:04  much closer and those are often things
01:06  that we don't observe in the offline
01:07  world right so an online retailer would
01:09  know how did this consumer get to the
01:12  product you're ultimately purchased we
01:13  can observe browsing with a lot of
01:15  precision. Offline does usually no
01:17  equivalent traditionally we weren't able
01:18  to see how did somebody walk through the
01:20  store how did they actually get to the
01:22  specific aisle where they then picked up
01:23  products and so what we do in the study
01:26  is we actually bring in a new
01:28  measurement tool that's going to mimic
01:30  the way we're gonna observe things
01:31  online in the offline world and in
01:33  particular what we're going to do is
01:34  we're gonna rig consumer shopping carts
01:37  if you will with so-called radio
01:38  frequency identification tags which
01:40  worked like a GPS tracker that allow us
01:42  to track exactly how does somebody walk
01:44  through the store which category is
01:46  godigo? do they walk past what do they
01:48  eventually end up purchasing
01:50  [Music]
01:54  if in a particular week the supermarket
01:57  is running a beer ad do more people buy
02:00  a beer
02:00  that we were usually able to observe
02:02  even before but now we can also see did
02:04  actually more people go to the beer
02:06  aisle so did did that advertising
02:09  attract people to go to different part
02:11  was started they wouldn't have otherwise
02:12  gone to and then they made the purchase
02:14  if that's true then maybe this
02:16  advertising will have positive spillover
02:18  to other categories maybe people on
02:20  their way to the beer aisle are now
02:21  gonna pick up salty snacks other things
02:24  and so there's sort of anecdotally a lot
02:26  of that sense that we are gonna get
02:29  these kind of spillover effect so people
02:31  often talk about the fact that milk gets
02:33  stored in the back of the store
02:34  why because people buy it very
02:36  frequently and having it in the back of
02:38  the store makes them walk past a lot of
02:40  other categories and hence they might
02:42  pick up other things that they didn't
02:43  plan on buying on their way and so you
02:46  could imagine that advertising does
02:48  something very similar if advertising
02:49  allows me to divert traffic to other
02:51  parts of the store then maybe products I
02:54  pass on that way also gonna end up in my
02:56  purchase basket and so that was
02:59  something that we weren't usually able
03:00  to observe
03:01  [Music]
03:05  so for a store manager the good news
03:08  here is that advertising is quite
03:10  effective beyond just individual product
03:12  being advertised so what we find is that
03:14  when you advertise a particular brand of
03:16  beer sales go up in the beer category as
03:18  a whole and that increase comes partly
03:20  from the advertised brands but also goes
03:22  beyond that
03:23  so some consumers presumably just pick
03:26  up on effect beers being advertised
03:27  today they got reminded of I want to buy
03:30  beer and hence we seen increase in beer
03:31  sales and that's beyond the individual
03:34  product being advertised at the same
03:36  time we also find that the effect stops
03:38  there so to the extent that stores might
03:40  have to hope that driving more people to
03:43  the beer aisle through advertising will
03:45  then spill over into higher sales for
03:46  salty snacks or other categories that
03:49  are stocked nearby we find no evidence
03:51  for that whatsoever so we think so
03:53  things stop at the category level but
03:56  they go beyond individual product being
03:57  advertised and so hence as we think
04:00  about allocating advertising budget
04:02  thinking about effectiveness at the
04:04  level of the category rather than the
04:06  more narrow product level or the broader
04:08  store level seems to be the right way to
04:09  tackle that managerial decision
04:12  [Music]

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