Wharton School Marketing Professor Studies Science of Shopping David Bell Researches How Customers and Companies Buy Products
Science and shopping? We don’t usually think of them together. Yet Wharton School marketing professor David Bell has made a career of using data and empirical analysis to innovate new ideas about the buying habits of consumers and retailers.
Bell, a New Zealand-born Associate Professor of Marketing at the Wharton School, applies his approach to such real-world marketing issues as: why shoppers choose one store over another, how retailers can drive more shopping to their stores and offer shoppers more effective discounts, and how people consume the products they have on hand.
“I’m a firm believer in the value of data, models and empirical analysis to complement managerial intuition,” says Bell, “and I try to demonstrate this value in my own research. This view of academic research has a big influence on my teaching as well.”
Think Like a Shopper
Bell’s work focuses on why shoppers choose one store instead of another, and how stores can tailor their marketing efforts to reflect these consumer habits. By learning how to think like shoppers, retailers can drive traffic to their stores more effectively.
Bell’s research finds that, once consumers are used to shopping at one store, it is very difficult to get them to switch. Consumers also develop store loyalties for particular products, and purchase proportions are not necessarily 50/50: a shopper may buy 90% of his or her soda from one store, while buying most of his other groceries at another store.
“The lesson for everyone,” Bell notes, “is that it is always cheaper to keep customers than to try to attract new ones. Therefore, all stores should be creative about enhancing store-specific benefits in ways that keep customers coming back.”
Effective Shopping Discounts
Bell’s work also made a significant real-world impact on how stores and customers receive discounts from manufacturers. Traditionally, manufacturers gave retailers discounts only during specific promotional periods. Stores often stocked up on merchandise during these promotions — or even sold some of their discounted product to other stores — and rarely passed the savings on to customers.
Bell worked with a company called Scanner Applications to use store checkout scanners to track sales and then compensate stores based on what they actually sold.
“When you compensate the retailer based on what they sell, there's no longer any benefit in them loading up on all this inventory,” Bell discovered. “Retailers can dramatically cut inventory costs and reorient their activities around what should be their core competencies – selling and marketing.
The news is good for consumers, too, because retailers are much more likely to pass on the full amount — or even greater than the full amount — of the deal on to the customer.”
Thanks to Bell’s pioneering research, the amount of packaged-goods retailers' promotion dollars devoted to these “pay-for-performance” deals has doubled in a decade.
The Ice Cream Principle
Bell’s research also hits closer to home. He found that, the more discretionary food products like ice cream and soda you have in your house, the more likely you are to consume them.
This finding contradicts that conventional economic view that full inventory of a product leads you to buy less of it. “If it’s a discretionary food product, the level of inventory seems to directly affect the rate of purchase," he explains. “People actually consume items like this more quickly when they have more on hand. Other more mundane product categories like paper towels, butter and detergent don't seem to be affected.”
