Directing store flyers to the appropriate audience

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Abstract

Grocery shoppers were questioned about the frequency of purchasing items that were featured in the store's flyers. This measure was used as the dependent variable in a multinomial logit model with the independent variables being various aspects of shopping behaviour, usage of store flyers, age and employment status. Since only one threshold parameter was significant, the four-level dependent variable was then collapsed and a binary model was estimated. This study evidenced that less than half of the respondents looked forward to receiving unsolicited flyers. Most shoppers read the flyers only to be informed of price specials that the store has to offer. The odds ratio of responding to store flyer deals among those who look forward to sales flyers is more than double the odds ratio of those who do not await the flyers, across every category of shopping frequency. Retailers could employ direct marketing to target specific audiences who look forward to receiving store flyers.

Introduction

There is no gainsaying that retailers need to constantly encourage customers to patronise their store, particularly in environments where competition is intense. Advertisements announcing store promotional offers of various sorts dot the media and store flyers make up a significant part of this advertising avalanche. In the developed world retailers regularly spend anywhere between one third to one half of their marketing budgets on promotions advertised on store flyers (Bodapati, 1999; Volle, 1997; Arnold et al., 2001). According to these authors, the huge spends are justified by the strategic role attributed to store flyer featured promotions.

Stores typically use store flyers to promote new products, announce new stores and communicate price specials. According to Shimp (1997), in the context of a Hi-Lo pricing strategy practised by most supermarkets, there is an endemic belief that store flyers are a means of appealing to the deal-prone, store-switching segment, and of generating traffic and sales among these consumers. Burton et al. (1999) qualify that promotions featured on flyers may also shape product choices made by regular customers and, hence, affect retailers’ profit margins. Further, it is a well-accepted industry fact, that feature-promotions of manufactured brands advertised in store flyers constitute an important source of income for retailers, arising from fees charged to manufacturers. Given the issues at stake in the store flyer activity, it is important to ensure that the store flyer programs of retail stores are carried out as efficiently as possible.

Section snippets

Background

Schmidt and Bjerre (2003) in their study of grocery shoppers in Denmark, found that there are distinct clusters of consumers with different attitudes to flyers—some resistant to them (around 10% indicated using “no-junk mail” stickers on their letter boxes), others (like retired people) more likely to read and respond to them, and still others who only respond to other media.

Burton et al. (1999), comparing two sets of consumers, one exposed and the other not exposed to flyers, found a

Research problem

Studies by Shimp (1997) and Burton et al. (1999) have categorically pointed out that sales flyers seek to direct shoppers’ choices to specific products and stores. Literature while making it clear that sales flyers generate significant additional store sales, concedes that considerable number of the recipients does not read the unsolicited flyers. Often stores distribute their store flyers indiscriminately without knowing who are likely to respond to what appeal. An appreciation of what

Research method

The research methodology included the personal administration of a structured questionnaire among 470 randomly selected adult grocery shoppers across Melbourne, exiting two of Australia's biggest supermarkets, namely, Coles and Safeway. Both of these have stores in most of the city's shopping centres and regularly distribute store flyers that announce short term price specials (discounts vary between 5% and 15%) on both food and non-food items.1

Data analysis

Initially, we intended to relate the dependent variable, DFREQSHFL, to the following nineteen dummy and ranked explanatory variables.

SINCE: How long have you been shopping at this store? (less than 6 months/between 6 and 12 months/more than a year);

FREQSHOP: How often do you shop at this store? (monthly/fortnightly/weekly/more often);

LOOKFORW: Do you look forward to receiving store flyers in the mail? (yes/no);

RETAIN: For how long do you or other household members retain store flyers? (for less

Estimation results

In the original, unrestricted model, eleven of the 19 explanatory variables (SINCE, RETAIN, NEWPROD, PRODAVA, LESSFLYE, RUBBIN, RADIOTV, AVTIME, AVBILL, AGE and EMPL) proved to be insignificant, even at the 10% significance level, both individually and jointly.6

In the subsequent regression we eliminated nine of the insignificant regressors,

Discussions

This research study identified that less than half of the respondents looked forward to receiving unsolicited flyers. The study also showed evidence that those shoppers who look forward to receiving store flyers, are the ones most likely to respond to the promotional appeals. The odds ratio of those who look forward to receiving unsolicited store flyers (for purchasing items in response to the store's promotion) are at least twice the odds ratio of the consumers who do not look forward to

Limitations of paper

The group that trashed their flyers without reading them had to be excluded from the data analysis because their answers to various key questions relating to the stimulus drivers (flyer appeals) and some of the anticipatory mechanisms were not relevant to the research objectives, thus reducing the sample size considerably. Even so it would have been instructive to find out whether this cohort had some common features as those who read flyers, but this sub-sample was not large enough for any

Implications and future research

A large proportion of retail and manufacturer promotions are communicated to customers through store flyers. Yet, little research has been done on consumer reactions to these promotion announcements, in contrast to, for instance, consumers’ overall deal-proneness. Clearly, more research is needed on this issue that can provide guidelines to support important store flyer decisions, such as composition and distribution.

If retailers were able to reduce the wasteful distribution of their flyers to

Acknowledgement

Authors gratefully acknowledge the three anonymous referees for their helpful and constructive suggestions and Prof Harry Timmermans for his support.

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