Monday, July 21, 2014

Sell What’s Left

Customers generally pay more for scarce items, as long as the customers accept the reason for the scarcity as genuine. Such as seeing the scarcity for themselves on your shelves.
     And it turns out that they’ll see best how little is left when you show this on their left. The orientation of information in the shopping environment makes a difference in the shopper’s mental orientation.
     Consumers in a set of studies at City University of New York, IULM University, and University of Sassari viewed pairs of shelves in which one side was sparsely stocked with products and the other side was not. The participants were quicker to notice there were slim pickings when it occurred on the left. This was true whether the shelves were arranged side-by-side immediately adjacent to each other or arranged facing each other with a blank wall between. (A methodological note: All the participants in the study had said beforehand that they were right-handed.)
     Once the shopper detects genuine scarcity, you will want to decide whether to limit the number of items each customer can purchase. From a strictly business perspective, it would seem that if you allow shoppers to buy as many units as they want, you’re more assured of making quicker profit on the entire inventory.
     From a shopper psychology perspective, there are additional considerations to whip you back and forth, left and right, in your thinking:
  • Customers who come to your store looking forward to getting a high-demand item will feel betrayed if they encounter an out-of-stock. 
  • On the other hand, customers who otherwise have an allegiance to your store and encounter an out-of-stock become more likely to come to your store promptly when sales on high-demand items are announced. 
  • On the other hand, if the purchasers of large quantities then turn around and resell the items online—as happened a while back with the Missoni line featured by Target—your regular customers might conclude that they don’t need to wait in line at your store. 
  • On the other hand, if the prices charged online are twice as much as your store’s purchase price—as happened with Target’s Missoni line—this adds value to purchasing from you. 
     Left-right position also influences the response to perceiving a good deal. The eyes go to the right. Therefore, immediately to the right of a deeply discounted item, have products priced for a healthy profit margin.

Click below for more: 
Turn Comparisons Right Side Up 
Decide Whether to Limit Purchase Quantities 
Offer Scam-Free Scarcity 
Hook Experts on Scarcity

Monday, July 14, 2014

Increase Store Loyalty Using House Brands

House brands—private label brands—offer your shoppers a price advantage. Traditionally, retailers price them at an average of one-third less than the national label brand. House brands also usually offer you higher profit margins than do the corresponding national label brands.
     Now research at University of Texas-Austin and University of Erlangen-Nuremberg finds that, under certain circumstances, house brands have the bonus advantage of building loyalty to your store. This effect is strongest when:
  • Shoppers for the product category consider the alternatives carefully 
  • Most shoppers for that product category are bargain hunters 
  • Your store has the reputation of offering low prices on all merchandise 
     The upshot is for you to feature house brands in these circumstances.
     While you’re at it, check that the house brand incorporates your store name, or at least the package carries your store logo. When items carry the same brand name across product categories—such as a bath soap and a shampoo—you’d like to strengthen the brand image by having the same package design. Having almost identical package designs is common with house brands, where a consumer could be looking at tables and tacos during one shopping trip.
     Overall, using a similar package design to build brand image is a good idea from a shopper psychology perspective. Mere familiarity brings credibility.
     There’s a potential downside, though. Research findings from Wake Forest University and University of North Carolina–Greensboro suggest that when packaging is similar across items, the shopper senses a loss of control. The consequence might be that shoppers seek variety beyond the similarly branded items. The shopper becomes a bit less likely to buy the house brand across product categories unless you take steps to restore the sense of control.
  • Use variations of the same name. At Trader Joe’s, you might see Trader Ming, Trader Jacques, and Trader Giotto. 
  • Introduce distinctions by placing products with the same package design in different relative shelf positions for different product categories. With the mouthwash, the house brand is to the top left of the other brands, while with the toothpaste, the house brand is to the bottom right of the other brands. 
  • Curb the routine with distinctive designs and color schemes on signage for different product categories. Researchers at Columbia University and University of British Columbia find that such techniques give the shopper a sense of control, and this sense of control curbs further variety seeking. 
Click below for more: 
Finesse Profit Margins on House Brands 
Build House Brand Equity with Distinction 
Arouse the Love for Your Store

Monday, July 7, 2014

Time Out for Number-Free Descriptions

Time and money are psychologically different for consumers. Research findings from Hong Kong Baptist University and Chinese University of Hong Kong suggest that a salesperson is wise, under certain circumstances, to bring out to a shopper the time savings the shopper could experience in selecting, using, and maintaining a product or service more than emphasizing cost savings in purchasing or using the item:
  • When you want to keep the shopper from getting bogged down in analyzing numbers associated with item characteristics, instead listening to your number-free descriptions. 
  • When you prefer the shopper to compare alternatives on the basis of benefits rather than on the basis of specific characteristics the items possess. This might be because the alternatives for satisfying the shopper’s needs each do the job in different ways, so don’t share many attributes in common. An example would be asking the shopper to decide between purchasing a motor scooter or a one-year bus pass, both of which provide the benefit of transportation, but in quite different ways. 
     Researchers at National Taiwan University and Chung Yuan Christian University attacked another aspect of “time is money,” an aphorism attributed to Benjamin Franklin: Consumers consider time more valuable than money when thinking about how time is perishable. If you don’t use time now, it’s gone forever, but money not used now can be used later. In fact, if invested properly, the money gains in value.
     If you, as a retailer, establish this mindset in shoppers, they’re more impressed with appeals to saving time than saving money. This appeal also works well when consumers are thinking of time as more subject to having a fixed supply than does money. There’s only so much time available, but a person can use credit to expand the money available now.
     However, unless the consumer has either or both of those mindsets, the consumer will undervalue a savings of time. There’s a tendency to think indefinite amounts of slack time will become available in the future. If your appeal to the shopper is a savings of time, the research findings suggest you start by prompting the shopper to place a greater value on time.
     This doesn’t mean shorter durations always indicate greater value to consumers. In studies at University of Toronto and University of Singapore, people rated services like those of a locksmith as inferior when the service was delivered more quickly than the person expected.

Click below for more: 
Slacken Consumers’ Undervaluing of Time 
Explain How Quick Service Is Worth More 
Sense When Wait Irritation Heats Up

Monday, June 30, 2014

Shelve Self-Control with Risk Mates

Texas A&M University and Vanderbilt University researchers randomly paired study participants, asked each pair to review a short film, and put a bowl of jelly beans on a table between the two reviewers.
     How did the degree of candy gobbling affect the relationship between the study participants?
     It turned out that when each of the pair perceived that the two of them had eaten more jelly beans than was prudent, the two felt closer to each other than for those pairs in which the transgression hadn’t been shared.
     People who feel close influence each other’s consumer decisions. That’s true with minor vices such as eating jelly bean in casual relationships such as random assignment. It’s also true with serious risk-taking and serious relationships.
     Boston College and University of Pittsburgh researchers looked at financial choices by married couples. When both members of the pair exhibited high self-control in other realms, they showed caution in their purchases. However, when one member showed high self-control and the other member, low self-control, the low self-control prevailed. The pair made riskier financial decisions.
     In deciding whether to make a purchase, each shopper consciously or subconsciously weighs the risks. Of the various types of risk, two are called “social” and “psychological” by consumer psychologists.
  • Social risk: “If the people I admire know I’m using this product or service, am I in danger of falling out of favor with them?”
  • Psychological risk: “Does using this product or service conflict with the image I want to maintain of myself?”
     A retailer can address the social risk by encouraging shoppers to bring along their friends. As to psychological risk, research indicates that having shoppers bring along the household is a help.
     The friends or family don’t even need to be there with the shopper in order to exert an effect. A marketing researcher and a psychologist at UmeĆ„ University in Sweden explored what influences a value-laden innovative purchase decision—buying a vehicle that uses electricity and biofuels instead of fossil fuel gasoline.
     Not surprisingly, the study found that one major determinant was the nature of the consumer’s values regarding protection of the environment. Those wanting to maintain an image of themselves as guardians of the environment were more likely to buy.
     Still, another determinant was the size of the consumer’s household. Those living in multi-person households were more likely to take the risk of buying the innovative vehicle.

Click below for more: 
Spread Risks to Family for Values-Laden Buys 
Build on Couples’ Decision-Making Rituals 
Form Crowds into In-Groups

Monday, June 23, 2014

Expand Via Related Links

Why did Friendster fail?
     Business researchers at Harvard University and Bank of Canada claim it was because of poor expansion. Friendster, a predecessor of Facebook and begun on a similar business model, opened up recruitment to anybody who was interested. The result was participation by consumers who often found too little in common with each other. The social networking magic floundered, and so did Friendster.
     Facebook, by contrast, started out by targeting college students and, only when there were enough of those on board, expanding to people who were like college students, and then progressively expanding further to target markets with characteristics similar to those of Facebook’s current consumer base.
     In your retail operations, expand this way. Certainly, do pursue weak links. Say to your satisfied customers, “Recommend us to your friends,” and also, “Recommend those friends talk about us to their friends.” But do it in this way because friends of friends are likely to be similar to the recommender in some ways. They are what the business researchers call “adjacent markets.”
     “Friendship is born at that moment when one person says to another: ‘What! You too? I thought I was the only one.’” So wrote C. S. Lewis, well-known to many as the author of The Lion, the Witch and the Wardrobe.
     To better fit the realm of retailing, I’ll tweak the C. S. Lewis quote to read, “A customer referral relationship is born at that moment when the consumer says about the retailer: ‘What! I’m thinking there are many others who, like me, could benefit from what you offer. I’m far from being the only one.’”
     You might even want to take the initiative in discouraging customers who don’t belong. Some years ago, Kelvin MacKenzie, then editor of The Sun, Britain’s best-selling tabloid, received news that a reader had become so outraged with the paper he was thinking of cancelling his subscription.
     Mr. MacKenzie took no chances. He notified the subscriber that the man was now banned from not only subscribing to, but also reading from,The Sun ever again.
     This story brought to my mind another anecdote, told by comedian Groucho Marx about a possible cancellation of his club membership. As Groucho relates that tale in Groucho and Me, “I sent the club a wire stating, ‘Please accept my resignation. I don't want to belong to any club that will accept me as a member.’”

Click below for more: 
Cultivate Referred Customers 
Grab On with Weak Connections 
Reserve the Benefits of Exclusivity