Does any single P out of the 4Ps of marketing carry more weight than the others? Considering product, price, place and promotion, retailers these days are likely tempted to point to price as the differentiating factor in making a sale. New research from GroupM Next shows exactly how important price has become.
In the digital age, traditional retailers have found it increasingly difficult to compete. First, online retailers arrived on the scene with their promises of hassle-free shopping. Then, there was the promise of free shipping for online orders. Shoppers are still coming to traditional stores but they’re often checking out the physical product on store shelves and then order ingthe item online. Currently, 44% of shoppers are turning to mobile devices while they are in the store and can quickly determine how much the same item will cost online. Shoppers who engage in this behavior are primarily female and younger.
For most of these shoppers, the final decision comes down to price. In their Showrooming & The Price of Keeping Buyers In-Store report, GroupM Next discovers the necessary price differential that retailers must have to save the sale. Think 2.5%. That is all it takes for 45% of shoppers to walk out the door. When the price difference is 5%, at least 60% of shoppers will complete their purchase transaction with an online retailer. When there is a $5 difference between an traditional and an online retailer, the traditional retailer will likely lose the sale.
The news is not all bad for bricks and mortar stores, however. GroupM Next Director of Research Patrick Monteleone, Ph.D notes that at least 10% of consumers, while price-sensitive, will stay in the store to shop. These shoppers are overwhelmingly older males. 55% of these customers only shop online about once a month. The research also found that “customers who interact with an associate are 12.5% more likely to purchase in-store.”
The takeaway from this study seems to be that marketers can succeed against online retailers by promoting their products and services to older men. And once those customers come through the door, sales associates should be making contact quickly.[Source: Shoppers Leave Stores. Groupm.com. 20 Aug. 2012. Web. 27 Aug. 2012]