Cherry-Picked Brands: How Retailers Can ID Them and How They Can Respond

 

Takeaway

  • Consumers who cherry-pick products on promotion are difficult to pinpoint, are not loyal and lose money for the retailer.
  • To identify which products draw cherry-pickers, researchers contrasted shopping baskets when a product is not on promotion to baskets that include it when it is on promotion.
  • Retailers can negotiate heavier price discounts with manufacturers when products are known to draw cherry-pickers.

Ginger is spreading the news on the Savvy Shopping Moms website, “Walgreens has Blue Bell Ice Cream on sale for $4.99.” My instincts tell me to swing by the closest store on the way home and pick up a carton or two. I have a firmly ingrained approach to ice cream, I rarely buy any brand other than Blue Bell, and I never pay full price. After all, I don't really need to buy it, and the brand is regularly on sale somewhere, often at Walgreens. So I space out my purchases and buy when Blue Bell is marked down.

There's a problem in that formula for Walgreens, because when I visit I don't shop for soup, or chips or...actually, I can't remember too much about anything else they have at Walgreens, I never look. I walk in the door, make a beeline for the ice-cream cooler, grab my purchase and head for the checkout.

I'm a cherry picker, a shopper who targets a retailer infrequently, only to buy a few promoted items when I do visit. These types of shoppers create a puzzle for retailers. They love the traffic that special promotions create, and don't want to alienate cherry pickers, but wish they could find ways to better capture a wider share of their purchasing dollar.

Another Approach to the Cherry-picker Problem

Leigh McAlister, marketing professor at the McCombs School at UT Austin, has been studying consumer behavior for the last three decades, and most recently turned to the question of cherry picking in a research paper with Edward I. George of Wharton, and Yung-Hsin Chien of the SAS Institute. "Grocery retailers believe cherry pickers exist," she said. "People report doing it, but it has been hard to tease out of the data. It's hard to see it." Scanner data obviously helps, but McAlister explains that by nature cherry pickers are difficult to pinpoint.

"Some retailers have a discount card or other mechanism to track their consumers’ buying histories, but cherry pickers are unlikely to get picked up by these customer databases," McAllister said. "Because cherry pickers are by definition not loyal customers, less is known about their history with a targeted retailer. The measuring instruments are too crude."

McAlister and her colleagues took a different tack for their study. "Electronic cash registers keep track of every basket purchased. They know every item in it and we can match that up with their merchandising promotions. If Blue Bell ice cream is causing cherry picking, then we ought to be able to contrast the baskets that include Blue Bell when it's not on promotion, to the baskets that include Blue Bell when it is on hot promotion. We ought to see a difference."

The difference is seen when a a brand is bought in more small baskets when that brand is on a low price promotion. "We can begin to identify brands that drive cherry picking," McAllister said. "This is key information, because it isn't just the manufacturer who is reducing price, retailers are losing money on those items. They're paying you to carry the promoted product out of the store.

"The manufacturer is rational, and so is the retailer," McAllister said. "If the retailer can identify which brands are drawing cherry pickers then they could say to the manufacturers of those brands, 'Look, your products are going to draw cherry pickers, so I need a better price from you.' These negotiations go on all the time, and both the manufacturer and retailer are very serious about them."

The Cherry-Picker Brand Offenders

One might think any product that is regularly marked down would be a cherry-picker driver, but that doesn't turn out to be true. "For the market we are studying, surprisingly, soft drinks do not encourage cherry picking," she says. The brands identified as cherry-picker attracters in the study include Mazola Corn Oil, Kraft Mac 'n Cheese and Clorox bleach.

McAlister doesn't believe these three brands will always be brands that draw cherry pickers. It is likely to be market specific and related to a retailer's strategy of using a particular brand consistently for special promotion. Walgreens and Blue Bell, for example.

"It's not really about being at fault," she said. "The retailer wants to stop cherry picking but they do not want to stop drawing people in. Walgreens wants to get into the grocery business. They want you to come in and they hope that eventually they'll be able to interest you in some of their other categories. Blue Bell is thrilled, their sales go through the ceiling, but it is likely that Walgreens is putting in their own merchandising money to make that happen. If Blue Bell is drawing cherry pickers to Walgreens, this is a piece of information that Walgreens can use in their negotiations with Blue Bell.

"Does a brand tend to draw more small baskets when it's on promotion? If it does, that manufacturer ought to be helping run that promotion in a bigger way than they are right now."

Related articles

Faculty in this Article

Leigh M. McAlister

Ed and Molly Smith Chair in Business Administration, Department of Marketing McCombs School of Business

Professor McAlister received a B.A. from the University of Oklahoma (1972) and an M.S. (1975) and a Ph.D. (1978) from Stanford University. The...

About The Author

David Wenger

Director of Communications, McCombs School of Business

David Wenger is the director of communications at the McCombs School of Business. He writes primarily on topics of innovation, competition and human...

Leave a comment

We want to hear from you! To keep discussions on-topic and constructive, comments are moderated for relevance and for abusive or profane language.
Login or register to post comments