Price sensitivity and how it is affected by package design, size, and shelf layout is an interesting phenomenon that can be precisely measured using eye-tracking technology. This methodology for measuring price sensitivity can be applied to brands and categories across all retailers.
Package size and placement are key in influencing shopper price sensitivity The key data lies in measuring ‘fixations’ – how long one’s eyes focus on a given area of a package, sign, shelf, etc. For consumer packaged goods and grocery products the share of fixations on price versus products can vary from a low of 3% to as much as 20%, depending on the product category and the retailer.
While there are a number of factors, I’ve consistently found that package size and placement are key in influencing shopper price sensitivity (defined here as: how often shoppers focus on prices compared to products).
Price In The Breakfast Aisle
When it comes to breakfast, yogurt and cereal are two leading categories that shoppers regularly purchase. In a recent study, executed in partnership with the Ipsos Neuro and Behavioral Science Centre, shoppers were fitted with eye-tracking glasses and asked to shop their grocery store as they normally would. The resulting data showed that among cereal shoppers (n=29) 94% of fixations fell on products and 6% on price; in the yogurt category (n=27, with overlap) 85% of fixations fell on products and 15% on price.
A major factor is how much space cereal packages occupy in relation to price tags on the shelf. Larger packages, like cereal boxes, draw a greater share of shopper attention than do smaller packages, i.e. yogurt, which tend to be closer in size to their price tags. Not only are cereal boxes larger, but in typical grocery stores, the products on-shelf often have several facings of a single SKU and but one price tag, while yogurt products come in many different flavors, and are often stacked 2-4 products high or wide, with a single price tag directly below.
The Personal Care Aisle
In another study, consumers in mass merchant and grocery stores were asked to shop for personal care items, including cleaning and hygiene products. The results showed that package size again had an effect on price sensitivity. In comparing facial tissues, which tend to be sold in single or three package sizes, as compared to paper towels, which come in various sizes from singles to 18-packs, but are larger on average, the share of fixations on price was higher for facial tissues. The average across the stores surveyed showed that 10% of fixations fell on price tags in the facial tissue category, but only 7% on paper towels.
As mentioned, relative size can have a major influence of how much shopper attention falls on price tags versus products. By this logic, sale tags, which are usually larger, more brightly colored, and thus more appealing to shoppers, tend to draw more attention than do standard price tags. In one study, tags for regular priced items received 6% of fixations as opposed to 94% on their associated products. On-sale items in the same aisle received 18% of fixations compared to 82% on associated products.
Sales Tags = Greater Interest
While it should come as no surprise that sale tags receive greater interest and therefore greater notice than do regular price tags, it’s also true that when a product is on sale (identified by a sale tag) it draws additional attention. In the same example mentioned previously, 58% of all the products in this particular grocery aisle were on sale (the remaining 42% regular priced products were spread evenly throughout the aisle and shelves). However, the sale products accounted for 71% of product fixations in the aisle while products not on sale accounted for only 29%.
Surely, many factors regarding the size and shape of packages are constrained by product attributes. However, understanding how packaging influences sensitivity to price is invaluable to your in-store sales strategies. Larger packages that take up more space tend to equate to less time spent looking at price, while the inverse is also true. Sales on those products increase the likelihood that a greater share of attention will fall on price tags. These metrics vary depending on category and product price point and, therefore, underline the importance of research-based approaches to gaining a more comprehensive understanding of retail package and display strategy.