Frequent Shopper Program Research Articles

Healthy Choice: The Effect of Simplified Point-of-Sale Nutritional Information on Consumer Food Choice Behavior

Grocery retailers are joining the fray against obesity by offering a wide range of health and wellness programs at the point of sale. However, the success of such programs in promoting healthy choices remains an open question. The authors examine the effectiveness of a growing health and wellness initiative: a simplified nutrition scoring system. They present a conceptual framework that predicts the effect of such a scoring system on shoppers’ food decisions and their sensitivity to price and promotion, as well as the moderating influence of category-level factors. Using a large-scale quasi experiment and panel data across eight product categories for more than 535,000 members of a grocery chain's frequent shopper program, the authors demonstrate that the point-of-sale nutrition scoring system helped consumers make healthier food choices, such that they switched to higher-scoring products in the postrollout period. The results also reveal that shoppers became less price sensitive and more promotion sensitive following the introduction of the food scoring system. The authors discuss implications for research and practice.

Healthy Choice: The Effect of Simplified POS Nutritional Information on Consumer Choice Behavior

Grocery retailers are joining the fray against obesity by offering a wide range of health and wellness programs at the point of sale. However, the success of such programs in promoting healthier choices remains an open question. We examine the effectiveness of a growing health and wellness initiative – a simplified nutrition scoring system. We present a conceptual framework that predicts the effect of such a scoring system on shoppers’ food decisions, their sensitivity to price and promotion, as well as the moderating influence of category-level factors. Using a large-scale quasi-experiment and panel data for over 535,000 frequent shopper program members of a grocery chain across eight product categories, we demonstrate that the point-of-sale nutrition scoring system helped consumers make healthier food choices, such that they switched to higher-scoring products in the post-rollout period. Our results also reveal that shoppers became less price sensitive and more promotion sensitive following the introduction of the food scoring system. We discuss implications for research and practice.

Recommendation System for Grocery Store Considering Data Sparsity

Abstract In grocery stores, large-scale transaction data with identification, such as point of sales (POS) data, is being accumulated as a result of the introduction of frequent shopper programs. We propose two recommendation systems based on transaction data of a grocery store. In recommending product items in grocery stores, data sparsity is a problem. This is because individual customers only purchase very few of the total number of product items a store sells. We evaluate various recommendation methods including SVD-type recommendation based on real POS data and summarize methods suitable for the proposed recommendation systems.

The Role of Within-Trip Dynamics and Shopper Purchase History on Unplanned Purchase Behavior

The recent surge in the importance of shopper marketing has led to an increased need to understand the drivers of unplanned purchases. This research addresses this issue by examining how elements of the current shopping trip (e.g., lagged unplanned purchase and cumulative purchases) and past purchases (e.g., average historical price paid by the shopper) determine unplanned versus planned purchases on the current trip. Using a grocery field study and frequent shopper data, we estimate competing models to test behavioral hypotheses using a hierarchical-Bayesian probit model with state dependence and serially correlated errors. Our results indicate that shoppers with smaller trip budgets tend to exhibit behavior consistent with a self-regulation model – an unplanned purchase decreases the probability of a subsequent unplanned purchase – but this effect reverses later in the trip. In contrast, shoppers with medium trip budgets tend to exhibit behavior consistent with a cueing theory model – an unplanned purchase increases the probability of a subsequent unplanned purchase – and this effect increases as the trip wears on. Further, factors from previous shopping trips predict unplanned purchases in the current trip, suggesting that retailers can use their frequent shopper program data to create customized shopping lists and improve the targeting of mobile app-based promotions.

Customer preference based optimization in selecting product/service variety

The breadth of customer choice of products and services has increased dramatically. Consequently, both manufacturing and services have adopted elaborate variety management to satisfy various customer needs while maintaining business profitability. Our study presents a formulation of variety selection problems considering customer preferences by the introduction of preference order from economic theory. Using Frequent Shopper Program data of a large shopping mall in Japan, our proposed framework is applied to the optimization of tenant-mix problems as a case study of service variety selection. Results demonstrate how an optimized variety of shops can satisfy various customer preferences at a reasonable profit level.

The current and future sales impact of a retail frequency reward program

This research presents an empirical study of the impact of a retail frequency reward program on store sales. We examine both the “points pressure,” or short-term impact, and the “rewarded behavior,” or long-term impact. The points-pressure impact is due to forward-looking customers increasing their purchase levels in order to earn the reward. The rewarded-behavior impact is evidenced as purchases above baseline levels after an individual has received a reward and could result from either behavioral learning reinforcement or positive affect resulting from the reward. We investigate a turkey reward program that awarded free turkeys to shoppers who accumulated the required sales levels during an 8-week period. We find both a points-pressure and rewarded-behavior impact. These effects are statistically significant and managerially relevant in that the program is apparently profitable. The points-pressure impact is especially strong among customers who do not place value on frequent shopper programs that in general deliver immediate price discounts. The key implications are that frequency reward programs of the form, “buy x, then receive xx” can be profitable, are segmentation strategies, and can complement a store's overall frequent shopper program.

Secondary analysis of a marketing research database reveals patterns in dairy product purchases over time

Objective Development of a method using marketing research data to assess food purchase behavior and consequent nutrient availability for purposes of nutrition surveillance, evaluation of intervention effects, and epidemiologic studies of diet-health relationships. Design Data collected on household food purchases accrued over a 13-week period were selected by using Universal Product Code numbers and household characteristics from a marketing research database. Universal Product Code numbers for 39,408 dairy product purchases were linked to a standard reference for food composition to estimate the nutrient content of foods purchased over time. Subjects/setting Two thousand one hundred sixty-one households located in Victoria, Texas, and surrounding communities who were active members of a frequent shopper program. Analyses Demographic characteristics of sample households and the nutrient content of their dairy product purchases were analyzed using frequency distribution, cross tabulation, analysis of variance, and t test procedures. Results A method for using marketing research data was successfully used to estimate household purchases of specific foods and their nutrient content from a marketing database containing hundreds of thousands of records. Distribution of dairy product purchases and their concomitant nutrients between Hispanic and non-Hispanic households were significant (P<.01, P<.001, respectively) and sustained over time. Application/conclusions Purchase records from large, nationally representative panels of shoppers, such as those maintained by major market research companies, might be used to accomplish detailed longitudinal epidemiologic studies or surveillance of national food- and nutrient-purchasing patterns within and between countries and segments of their respective populations. J Am Diet Assoc. 2003;103:445-453.

The Impact of Frequent Shopper Programs in Grocery Retailing

Frequent shopper programs are becoming ubiquitous in retailing. Retailers seem unsure however about whether these programs are leading to higher loyalty, or to higher profits. In this paper we analyze data from a U.S. supermarket chain that has used a number of frequent shopper rewards to improve sales and profitability. We find that while these programs are profitable, this is only because substantial incremental sales to casual shoppers (cherry pickers) offset subsidies to already loyal customers. In this way our findings are inconsistent with existing theories about how frequent shopper programs are supposed to work. We construct our own Hotelling-like model that explicitly models cherry picking behavior and show that its predictions match the data quite closely. We further test the predictions of our model by characterizing the impact of such programs on trip frequency and basket size. We then use the model to examine more complex scenarios. For example, our analysis suggests that frequent shopper programs may be unprofitable if they eliminate all cherry picking. This may explain why some retailers seem dissatisfied with their programs. We end by proposing a solution that retains the benefits of the frequent shopper programs and yet continues to let supermarkets benefit from price discrimination.

The Impact of Frequent Shopper Programs in Grocery Retailing

Frequent Shopper programs are becoming ubiquitous in retailing. Retailers seem unsure however about whether these programs are leading to higher loyalty, or to higher profits. In this paper we analyze data from a US supermarket chain that has used a number of frequent shopper rewards to improve sales and profitability. We find that while these programs are profitable, this is only because substantial incremental sales to casual shoppers (cherry pickers) oset subsidies to already loyal customers. In this way our findings are inconsistent with existing theories about how frequent shopper programs are supposed to work. We construct our own Hotelling - like model that explicitly models cherry picking behavior and show that its predictions match the data quite closely. We further test the predictions of our model by characterizing the impact of such programs on trip frequency and basket size. We then use the model to examine more complex scenarios. For example, our analysis suggests that frequent shopper programs may be unprofitable if they eliminate all cherry picking. This may explain why some retailers seem dissatisfied with their programs. We end by proposing a solution that retains the benefits of the frequent shopper programs and yet continues to let supermarkets benefit from price discrimination.

"How Did They Get My Name?": An Exploratory Investigation of Consumer Attitudes toward Secondary Information Use

Strategic uses of information technology based on personal information may raise privacy concerns among consumers if these applications do not reflect a common set of values. This study addresses what differentiates consumers who object to certain uses of personal information from those who do not object. Data collected by questionnaire from young consumers are used to identify a research approach for investigating attitudes toward the secondary use of personal information for direct marketing. Secondary information use occurs when personal information collected for one purpose is subsequently used for a different purpose. While secondary information use is both widespread and legal, it may be viewed as an invasion of privacy when it occurs without the knowledge or consent of the consumer. The setting for the study is the use of point-of-sale data from a supermarket frequent shopper program to generate direct mail solicitations. Control emerges as a clear theme in differentiating individuals with positive overall attitudes toward secondary information use from those with negative attitudes. Study participants with positive attitudes are less concerned about privacy (measured as control over personal information), perceive shopping by mail as beneficial, and have coping strategies for dealing with unwanted mail. The results also suggest that theory related to categorization of strategic issues as positive-negative with outcomes that are controllable/uncontrollable provides a basis for understanding differences in the ways individuals perceive practices involving personal information. Future research should focus on the specific characteristics of secondary use practices, including the sensitivity of the information, its source, its perceived relevance to the original transaction, and whether disclosure reflects informed consent or results in a potentially harmful outcome to the individual