Grocery Stores

 

Marketers have long assumed that consumers take social cues from branding efforts.  As a Minnesota-based company, we see this all the time.  Take, for instance, grocery chains.  In my particular city, my drive to work every day involves passing both a Cub Foods and a Kowalski’s—not more than five minutes apart from each other.

 

With these two stores in mind, quickly answer the following questions in your head:

 

Which grocery store is more expensive?

 

Which grocery store has unique products?

 

Which grocery store feels more luxurious?

 

Chances are, you answered Kowalski’s to all of the above.  But, why?  A new article to be released in the April issue of the Harvard Business Review helps to explain.  Emory’s Ryan Hamilton and Northwestern’s Alexander Chernev sought to uncover how certain discount stores do such a great job of projecting a low-cost image, even though that image is not always an accurate reflection of the actual cost of products.  Their study revealed that curating and projecting a low-cost brand image is akin to sending a coded message to consumers (for the fellow mass communication research buffs out there, think back to Stuart Hall’s encoding/decoding process).  The pair found three distinct branding tactics.

 

Volume and Cost

 

When buyers presume that a store’s business model is based on selling volume, they inherently assume that the store is able to leverage relationships from suppliers in order to acquire products at a significant discount—a discount which these stores will then pass on you.  What are some signals of high volume stores?  The study found that location, square footage, and even stockouts (when a product is sold out on shelves) are all signs of a discount, volume-based store.

 

Extras

 

Think of the Kowalski’s versus Cub Foods example.  Which store feels like it spent more money on the atmosphere?  Probably Kowalski’s.  The study uncovered that consumers presume that these “extras” are not costs merely absorned by stores—but rather, that they pass those costs on to you.  What are some signals of stores focused on extras?  While the list is potentially endless, here are a few identified in the HBR article: high quality displays, a large staff, extended hours, a business model that includes social responsibility, and even a favorable return policy.

 

Weird Stuff

 

Bacon cheddar salad dressing made from farm-fresh pigs in New Guinea.  OK, that’s maybe a bit too specific, but you get the point.  Stores like Whole Foods, which are known for carrying organic and unique products, struggle to sell those products while simultaneously proferring an image of low cost.  Why?  The study suggests that buyers assume simple products equate to lower prices, and that the inverse is also true—if a store sells peculiar items, it must be high cost.