React to the Reactions to Surprise Specials

When a shopper in your store encounters an unexpected discount on an item which is usually expensive, the shopper might or might not buy the item. According to studies at Columbia University and Hong Kong University of Science and Technology, this decision frequently gives you useful guidance about what to offer the shopper next.
     Those studies and others find that shoppers who end up making the purchase tend to experience a mix of happiness and guilt. They will respond to subsequent sales appeals which talk about prolonging the happiness by doing what’s “right.” If the discounted item is considered by the shopper to be frivolous, they’re open to then buying an item which will bring pleasure, but embodies responsibility.
     On the other hand, shoppers who resist the purchase tend to experience pride, but a sense of loss. Some of these consumers would be classified by consumer psychologists as tightwads.
     Tightwads aren’t the same as frugal shoppers. Frugality is driven by a pleasure in saving. Tightwads are driven by a pain of paying. Research indicates that the key to having tightwads spend their money with you is to reinforce their sense of responsibility.

• Congratulate tightwads on how they shop carefully. Tightwads take pride in limiting their spending, but feel more comfortable when loosening up within reason. 
• Remind tightwads that you’ll be responsible in what you sell to them. Then keep your promise by explaining how the products and services you sell give full value. Remember that tightwads suffer emotional pain when spending. Dealing with a responsible retailer eases the pain. 
• Accentuate the small. University of Pennsylvania and Carnegie Mellon University researchers offered tightwads the opportunity to pay extra for overnight shipping of a DVD they wanted. The extra cost was presented to some tightwads as “a $5 fee” and to the rest of the tightwads as “a small $5 fee.” The tightwads hearing the word “small” were 20% more likely to pay the fee than those not hearing that word. In contrast, there was no difference with a “$5” and “small $5” description among people who were spendthrifts—people who indicated on the earlier survey the opposite of tightwad tendencies. 

     The Columbia/Hong Kong researchers do point out that pride of a different sort can also arise within those who end up buying that expensive item with the unexpected discount. Scoring a great deal justifies a pat on one’s own back.

Click below for more: 
Effect Spillover Buys via Surprise Specials 
Pleasure the Practical Shopper 
Have Fun Items Throughout the Store 
Loosen Up Tightwads’ Wallets 
Sell Impulse Items to Serve

Shelve Old Ideas About Shelf Space Allocation

What are the best ways to allocate your store’s shelf space? The classic study addressing this question was published almost two decades ago, so you might think some of the assumptions need revision. Research over the past few years by German researchers confirm the value of that thinking. Here are findings from those studies—at European University Viadrina and Catholic University Eichstätt-Ingolstadt—and other research:

• Across overall product categories, the biggest sales growth comes from expanding the shelf space allocated to impulse buy items. The elasticity is smallest for expansion with commodities and staples. There is substantial interchangeability among commodities and staples. As a general rule, if your particular favorite isn’t out on the shelves, you’ll settle for a close substitute. Impulse items have more individualized personalities. The more there are, the greater the urge to splurge. 
• An increase in shelf space allocation will have a greater impact on sales than will a decrease in shelf space for a product category. This means you could progressively build sales by rotating which product categories get more space. Behind this effect is that consumers are feeling overwhelmed by the number of purchase alternatives available to them. They’re attracted to a store by an abundance of variety, but are relieved when the filtering task is easier. An increase in space allocation attracts shoppers. A decrease in space allocation for a category can relax shoppers. 
• The nature of the shelf space makes a difference in the sales effects of allocation changes. End caps—shelves at the end of aisles or racks and facing perpendicular to those other shelves or racks—draw extra attention and stimulate extra sales. 
• Items which convey values have higher shelf space elasticities. Increase the shelf space for organic and nonorganic items, and the increase in sales will be greater for the organic set. 
• For many merchandising tactics, what large footprint retailers do can be a useful model for the smaller retail operation. You watch how a successful Big Box changes relative allocations of shelf space and then parallel those changes in a scaled-down version in your store. However, there is one way in which what works for the big doesn’t work the same way for the small: Large stores do well to pay attention to the different effects of changing allocations to product categories versus brands within the category. Smaller stores should not pay as much attention to this. 

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Organize Organic Item Assortment/Promotion

Duck Toward Attention-Getters

The front page of yesterday’s Wall Street Journal described how a certain bright yellow inflatable duck is helping retailers in Hong Kong.
     Shopping mall Harbour City arranged for the duck to occupy Victoria Harbor in order to attract store traffic. The objective is being met, with thousands of people coming by. Shops in the area are changing their merchandise mix to feed the fowl frenzy. Some restaurants are serving duck entrees. WSJ reports that another restaurant is now featuring a duck-shaped food sculpture created from taro and shrimp. Inquiries about rubber duck toys are flying high.
     In retailing, the payoff is in convincing prospects to buy. But you have to catch their attention first. Researchers at University of Southern California and University of Texas-Austin summarized what consumer behavior studies say about standing out. Here’s my adaptation of their list:

• Live large. Did I mention that Hong Kong’s rubber duck is fifty-four feet tall? Along the same line, consumers are more likely to notice bigger ads than smaller ones and to listen more closely to the same salesperson when she’s making effusive gestures rather than restrained movements. Enthusiasm persuades, particularly when the enthusiasm is genuine. 
• Color consumers’ worlds. Signage which employs a range of hues grabs more attention than the black-and-white. It is also true that B&W commands attention when surrounded by colorful stimuli, but this effect is weaker. Don’t overstimulate, though. That repels consumers. 
• Be bold. Product claims made in boldface print or in a slow, deep voice achieve perceptual prominence. To turn shoppers’ heads, surprise them with daring humor or unexpected claims. Do be sure to promptly follow up with a comforting resolution, though. 
• Personalize. People’s attention moves to what has personal significance for them. Harbour City inflated excitement about the duck’s appearance using a stream of social media messages and press releases saying the duck represented joy and playfulness at a time when Hong Kong residents are feeling gloomy from the weather, the pollution, and the economy. 
• Cement with concrete. Concrete words like apple, engine, and hammer are easier for consumers to process than abstract words like aptitude, essence, and hatred. Because they are easier to process, these words will stand out. This is not to say you should completely avoid abstract words. Once you stop the shopper with the prominent stimuli, you’d like them to spend time contemplating what you’re saying. Abstract words help do that. 

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Stand Out

Bring It On Home

The upcoming “Behind Every Project Is A True Value” campaign kicks off with an ad showing a guy demonstrating how he’s put the hardware store retailers’ items to use in his home. The setting for retail competitor Ace Hardware’s recent “Neighbors” TV ad is an Ace store inside a home.
     To shape their operations and marketing, store-based retailers have been bringing it on home for a long time. On the advice of marketing consultants using anthropological methods by visiting consumers’ homes, the manufacturer of Weber grills told retailers that shoppers seemed to put more importance on the social fun of a barbeque than on the ease of the cooking or taste of the food. More recently, Sealy Corporation sent consultants into consumers’ homes to explore the many different ways people use their mattresses.
     In the mid-1980’s as Intuit Inc. was first getting started in Palo Alto, California, company staff hung around local computer stores where Quicken was being sold. Whenever somebody would buy that flagship Intuit product, the Intuit staff member would ask the purchaser if staff could come watch what happens when the person installed the software on the home or office computer and began learning to use it. Intuit made full use of what they discovered. Quicken garnered a reputation as a user-friendly way to get boring bookkeeping out of the way.
     Asking customers if you can follow them home probably wouldn’t out well for you in all circumstances these days. The visits would take time. Customers would say no. And as a retailer, you probably won’t be hiring anthropologists to assist in marketing campaigns.
     Still, you may have opportunities to visit your customer’s home or business locations to install, service, or repair products they’ve purchased from you. In these cases, observe all you can about how they’re using the products.

• What are the uses you didn’t expect and can now leverage as selling points to others? 
• In what ways, if any, are purchasers misusing the products or not using them to full advantage? What do you say that could be delivered by store staff as instructions when a customer purchases the item? 
• What frustrations are the people experiencing that could be eased through in-store training or client-site fee-based consultation? 
• Which pleasant experiences in the intimacy of your customers’ homes can you capture in stories to tell to shoppers and to use in ads with home backdrops? 

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Follow Your Customers Home

Nurture Healthy Retailing Using Human Nature

In last month’s Harvard Business Review, Nava Ashraf described her experiences convincing economically disadvantaged residents of Latin America, Southeast Asia, and Africa to engage in good public health practices. Prof. Ashraf noted how even when the tools for those practices are available at little or no monetary cost, people too often don’t use them. Her insights as to why and how to overcome the problem center around the importance of attending to human nature. Those insights apply to encouraging healthy item acquisitions at retail by the economically disadvantaged in North America, Europe, and elsewhere, too.
     Here’s my adaptation of the list of hints, informed by other consumer behavior research findings:

• Get customer commitment for the longer-term. Consumers who are chronically short on funds become accustomed to thinking about what’s coming tomorrow and avoiding thoughts of what’s happening further along in time. Retailers can encourage healthy purchases by offering incentives for longer-term agreements. “Sign up now for the six-month program, and when you pick up and pay for your purchase of fruits and vegetables each week, you’ll be getting a 15% discount off the regular price.” 
• Offer surprise gifts which give immediate pleasure. The benefits from switching to healthy foods may not be seen for months. The illnesses in children who play with toxic toys acquired in the underground economy at low cost won’t show up for years. Whenever the retailer accompanies the purchase of a good item with a small shot of instant fun, the human nature of bias for the present has been accommodated. This shot of fun doesn’t need to be merchandise. The economically disadvantaged lack the extra for amusement. The parents frequently feel they’re letting down their children. Entertain the kids of purchasers of health items, and you’ll get repeat business. 
• Model healthy habits. When the store staff show high interest in healthy items, the result is the right type of contagion—fitness, not disease. Prof. Ashraf’s literature research indicates that a powerful motivator for retail staff to do this is to remind them how it’s socially responsible. Practitioners in a North Carolina hospital were more likely to wash their hands conscientiously when reminded how it helped the patients than when reminded how it helped the practitioners themselves. In selling to the economically disadvantaged, recruit staff and shape your own thinking by promoting the opportunities to serve the community. Also, reward staff who sell healthy items.

Click below for more: 
Convince Kids that Healthy Has Authority 
Quench a Thirst for Health in Food Deserts