Junk or jewel: content, users and sales effectiveness of supermarket catalogues

Author: Pei Jie Tan

Tan, Pei Jie, 2023 Junk or jewel: content, users and sales effectiveness of supermarket catalogues, Flinders University, College of Business, Government and Law

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Supermarkets and product manufacturers invest a significant amount of money in advertising promotions to inform and attract customers in an effort to stimulate purchases. Print catalogues remain a relevant and important promotional tool despite media development towards digital platforms. In 2022, almost 11% of Australia’s advertising industry’s revenue was attributed to print advertising campaigns, equating to over AU$339 million (IBISWorld, 2022). Despite this large amount and a seeming proliferation of big data, most of the decisions made by retail marketing managers remain based on intuitions and untested assumptions, rather than empirical evidence (Bogomolova et al., 2017). This highlights the ongoing need to gather more rigorous research evidence to facilitate better-informed managerial decisions and, ultimately, a better return on marketing investments for retailers and product manufacturers.

This thesis aims to advance marketing knowledge on supermarket catalogues. Catalogue advertising is one of the oldest forms of marketing, compared to other mass media channels (i.e., magazines, radio, newspapers, free-to-air television), and is a highly effective sales driver (Real Media Collective, 2022). Catalogues comprise one of the main sources of information for consumers when searching for promotions (Inside FMCG, 2021). Fifty-five per cent of Australians who read a printed catalogue in the last seven days made a purchase afterwards (Real Media Collective (2019a). This thesis includes three studies, each addressing a different question regarding supermarket catalogue production and consumption:

1. Who uses supermarket catalogues?

2. What are the typical contents of supermarket catalogues?

3. What is the sales effectiveness of supermarket catalogues?

Each study is written as a stand-alone academic journal article. The first was published in the Journal of Retailing and Consumer Services, the second in the International Journal of Advertising, and the third is under review in the International Journal of Advertising. I am the lead author of all three articles.

In the first study, a representative sample of the South Australian adult population was surveyed to investigate catalogue users’ typical psychographic and behavioural characteristics. A novel aspect of this study was the inclusion of health consciousness as a psychographic factor that might explain consumers’ likelihood of using supermarket catalogues. A binomial logistic regression was conducted to better understand the drivers that would lead to higher catalogue usage. Our findings demonstrate that consumers with one or more of certain characteristics – price-conscious, deal-prone, low-income background, and lower probability of brand switching – are more likely to be catalogue users. This study informs retail practitioners about the readership audience of catalogues. For example, there is no statistically significant effect of demographics (i.e., age or gender) on catalogue usage. This contradicts the industry-held belief that certain demographic segments (e.g., the elderly and/or females) are typical users of catalogues. Catalogue promotion is likely to be relevant to everyone in terms of demographics.

The overarching objective of the second study was to understand current practices in supermarket catalogues, to identify key trends in content, composition, format, and layout, and to compare results across five countries: Australia, Malaysia, New Zealand, South Africa, and the United States. A content analysis method was conducted, based on the main design elements in print advertising, to provide an international comparison of 39 catalogues from 13 supermarket chains in five countries. This study was one of the first to examine catalogues from a visual media perspective, rather than solely as a tool for price promotion, as is common in previous catalogue studies (Pieters et al., 2007; Pentus et al., 2018). Based on extensive content analysis, the findings showed that the function of catalogues has evolved beyond merely communicating price discounts. Nowadays, catalogues feature recipes, servings suggestions, and meal ideas. This study indicates that catalogues have the potential to be entertaining, informative, and useful; for example, by encouraging and educating consumers about how to cook at home or choose relevant products, not just merely a tool to community price discounts.

The third study investigated the sales effectiveness of catalogues, specifically how product position in a catalogue layout could affect sales of promoted products. A natural experiment was conducted by obtaining transaction sales data from 74 stores from a large supermarket chain in Australia and measuring the sales outcomes for products located at different locations and discounts in a catalogue. A strength of this study was the access to and utilisation of the retail buyer’s promotional planner (i.e., accurate retrospective information about which products were advertised when and in what positions in catalogues, and at what discounts), which strengthened the design of the natural experiment, provided context to the results, and enabled the analysis of sales transaction data in greater detail. Results show that for the main effects, only discount depth and catalogue location have a statistically significant impact on sales quantity. Discount depth, rather than catalogue location, has a much greater relative impact on retail sales. There was a statistically significant three-way interaction between discount, catalogue location, and product category classification. This, again, challenged common industry assumptions and associated practices – for example charging product manufacturers higher fee for certain catalogue positions.

Although supermarket catalogue promotion has been around for decades, calls for research and improvement in this area are ongoing (Ieva et al., 2022; Woo et al., 2022), and this thesis addresses this issue. Given the substantial amount of investment and resources spent on catalogue promotions, this thesis provides evidence-informed guidance on how to improve the efficiency of marketing and promotion decisions. Interestingly, results from this thesis have debunked several common industry beliefs. Firstly, results suggest that catalogue promotion is relevant to all demographics, which meant that catalogue promotions would not be an effective strategy in targeting and segmenting consumers. Secondly, the effect of discount is much greater in increasing the sales quantity, as compared to the effect of catalogue location and product classification. Thirdly, not all catalogue items offer monetary savings. Hence, the thesis concludes that catalogues have evolved away from their original purpose as solely a price discount tool and moved towards becoming an advertising medium.

Keywords: supermarket catalogue, price promotion, consumer behaviour, sales effectiveness, content analysis, psychographic characteristics, print advertising

Subject: Business thesis

Thesis type: Doctor of Philosophy
Completed: 2023
School: College of Business, Government and Law
Supervisor: Svetlana Bogomolova