Tuesday, November 14, 2006

Herd Mentality of Shoppers

An article in The Economist this week discusses how companies are trying to increase sales by taking advantage of consumers' herd mentality: that they are more likely to buy what other consumers buy.
The idea is that, if a certain product is seen to be popular, shoppers are likely to choose it too. The challenge is to keep customers informed about what others are buying. Enter smart-cart technology. In Mr Usmani's supermarket every product has a radio frequency identification tag, a sort of barcode that uses radio waves to transmit information, and every trolley has a scanner that reads this information and relays it to a central computer. As a customer walks past a shelf of goods, a screen on the shelf tells him how many people currently in the shop have chosen that particular product. If the number is high, he is more likely to select it too.
As evidence that this will work, the author references a market where people download previously unknown songs based on how they are ranked by previous downloaders and the recommendation system that Amazon uses.

Do you think this strategy will have a significant impact on sales in grocery stores? Personally, I am not sure that people buy what is "popular" when buying groceries as much as when buying music or books, but I may be underestimating the herd mentality that buyers have in general.

5 comments:

Anonymous said...

I am definitely skeptical about how much such a plan would actually increase the store’s profits (which, obviously, is ultimately the objective they want to accomplish). The recommendation system on iTunes and Amazon.com may give others advice on whether or not to buy a particular song, but most people (at least that I know) don’t spend much time randomly surfing around iTunes, finding a song that they otherwise wouldn’t be interested in, and then buying it because it is rated 5 stars. There has to be some initial stimulus to make them consider buying it, and that is an issue of personal taste alone; the recommendation system only enhances that. And for a grocery store, considering the fact that choices in food are, even more than music, a matter of personal taste and appetite, the extra time, effort, and money that this complicated system would require hardly seems to be justified. For instance, if you find yourself walking by a display of Brussels sprouts and your monitor tells you that 20 people have recently bought them, you still won’t buy them if you yourself (like me) can’t stand them. With food, the fact that Brussels sprouts could be the hottest food of the century wouldn’t change your personal gag reflex when you see them (haha..). This may be the case with clothes or cars or music--you will consider buying high heels even if they kill your feet, just because other people might think they look good--but not with food as much, I think.
-Nicole O.

Anonymous said...

I do think this strategy has an effect on sales. However, i do not think it will have a large impact in a grocery store. Most people are in a rush and do not want to look at what everyone is buying to make sure they are getting the 'cool' food. If anything they might be swayed to buy a different brand of something if that seems to be the most popular, because maybe their is a reason. That doesn't increase profits though because they didn't buy any additional goods. In a grocery store people are most likey to chose whatever is cheaper. I guess I have a certain herd mentality because i have randomly bought a song from an artist i didnt know that was 5 stars. I think it just depends on the market, or how expensive something is because then people are more likey to research it and find out what is more popular.
Kate C.

Anonymous said...

The strategy may not have as significant an impact as stores such as grocery stores would like, but it will have an impact nonetheless. this strategy has been used in firms such as itunes, where they list the top ten songs and albums and people buy it according to how high the song or album is ranked without ever hearing it. In grocery stores, people have in the past bought products that everybody raves about, and since the necessities are placed in the very end of the store, the shopper must visit many isles in the process, he/she is more likely to buy more products that they needed to. Using technology to show the shopper how many people have bought the product only increases the chance that the shopper would buy the product. However, there will always be people who go in to the store with the purpose of getting what they need and getting out, like me and most men, but for women, especially moms, who like to store up on food and shop during sales, they are more likely to be convinced that because a high percentage of people buy the product means that it is good, and hence, buy it. the use of this technology can only help sales in grocery stores.
- Gautam Rao

Anonymous said...

The strategy may not have as significant an impact as stores such as grocery stores would like, but it will have an impact nonetheless. this strategy has been used in firms such as itunes, where they list the top ten songs and albums and people buy it according to how high the song or album is ranked without ever hearing it. In grocery stores, people have in the past bought products that everybody raves about, and since the necessities are placed in the very end of the store, the shopper must visit many isles in the process, he/she is more likely to buy more products that they needed to. Using technology to show the shopper how many people have bought the product only increases the chance that the shopper would buy the product. However, there will always be people who go in to the store with the purpose of getting what they need and getting out, like me and most men, but for women, especially moms, who like to store up on food and shop during sales, they are more likely to be convinced that because a high percentage of people buy the product means that it is good, and hence, buy it. the use of this technology can only help sales in grocery stores.
- Gautam

Anonymous said...

Although it may seem that the popularity of a certain type of food would not have an effect on a consumer's choice of what to buy, examples from other industries may prove the opposite. The aspect of food that makes it seem immune to popularity-based purchases is the fact that each consumer has relatively unique tastes; however, this may not have as much of an effect as one would think. Take, for example, another taste-based industry: music. How many times have you heard from friends that a band is really cool so many times that you went out to buy the cd and realized you never actually liked the them in the first place. Peer pressure can have a large effect on things that are usually dependent on a person's taste. I don't think that grocery shopping would really be all that different.

-Jordan Croom