Monday, December 11, 2017

Attach Style to Customized Pricing

Studies at Baylor University, University of South Carolina, and Vanderbilt University explored a type of customized pricing, in which what you charge is determined by your knowledge of a known customer’s past purchases. The researchers found that the reaction of a shopper to such a system is influenced by what psychologists call “attachment style.”
     Attachment style refers to how accepting and supportive people believe others are toward them. Those who are confident others will be available whenever needed have a secure attachment style. In the research, words that characterized them included wanted, welcomed, liked, and cherished. People who worry about the stability of relationships with significant others have an anxious attachment style. Words used by the researchers to characterize them included abandoned, neglected, disregarded, forsaken, disconnected, and let down.
     The study results indicated that customers with a secure attachment style have generally favorable views of a store using customized pricing. But the basis for the favorable view is that the customers believe they’ll get better prices than do others. Unless there is some compensating advantage for the retailer, a customized pricing strategy with these customers results in reduced revenues on balance. It can work if you charge a higher price often enough and explain the higher price in terms of a benefit important to the shopper. It might be expedited delivery, at-home installation, initial training in product use, or access to an increased number of alternatives to select from. Researchers at University of Kentucky suggest setting a price on a customized bundle of items, since this is a step removed from the individual prices.
     On the other hand, customers with an anxious attachment style who shop in a store with a customized pricing policy are relatively less concerned about getting a cut from the price tag tariff. It appears that their yearning for a good relationship with the retailer motivates them to accept that, over the long haul, they won’t be exploited. As long as the retailer maintains a fair overall pricing policy with these people, the customized pricing policy can pay off by evening up product demand and introducing some excitement into transactions.
     How to recognize who feels secure and who abandoned? With customers you’ve come to know over time, their general disposition is revealing. With other customers, engage in conversation and then attend to the words the shopper uses and the nonverbal tells like posture and gestures.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Thursday, December 7, 2017

Table Complexity for Elderly Shoppers

As the brain ages, it becomes less efficient at processing complex information, and the owner of that brain becomes more dependent on shortcuts. These shortcuts, called “heuristics” by consumer psychologists, often involve looking for comparisons, contrasts, and trends. We can ease the process for senior shoppers by summarizing complex information in tables and graphs to supplement the comprehensive descriptions.
     We’ll want to design the graphics in ways that highlight points important for the consumer to understand. Some of this has to do with ease of visual perception. The use of different colors for different trend lines in charts helps. So does the use of shading of alternate rows in a table so the eye tracks correctly. We’ll also want to check that all the data points in the table or chart are accurate. 
     Still, after we do all this, the inclusion of tables or charts can mislead seniors, according to Cornell University research. The reason is that the presence of a table or chart gives the rest of the material credibility even when the information in the visual is of trivial importance.
     To assess the effect, the Cornell studies used material about the sorts of medications elderly adults might consider taking. The researchers found that claims of a medication’s effectiveness were more believable when accompanied by a chart portraying the same information contained in the text.
     Studies at Northwestern University and University of Minnesota indicate that adding animation to a chart, as might be done in online presentations, adds to the risk of misunderstood trends. People readily project ahead from animations which show trajectories, such as weight change or return of motion range.
     Also, many consumers place extra trust in a computer-generated animation because the animation is employing a more sophisticated technology than still pictures. “What’s newer must be better,” they say. And since animations are more lifelike than text descriptions or still pictures, consumers remember with enhanced certainty any mistaken conclusions. A few days later, what was actually false is recalled as true.
     Tables are better than graphs as long as the tables are sufficiently comprehensible. When the table is presenting purchase alternatives, list features across the top, the names of a small selection of product alternatives along the left side, and checkmarks in the cells to indicate which product has which features. In the table, describe features concisely. Outside the table, state the benefit of each feature.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Monday, December 4, 2017

Discern Differences Deep Discounts Make

When tracking the key performance indicators of your retail store, stay aware of the range of benefits an initiative ends up producing. For instance, researchers at University of Arkansas, University of Texas-Dallas, University of Connecticut, and University of Buffalo find that deep promotional discounts might improve store traffic significantly without noticeably impacting weekly store revenues or profit margins. They also showed how joy at improvement in one KPI might blind you to simultaneous deterioration in another KPI. In their study of sales of 27 product categories in 24 grocery stores over 55 weeks, the increased profits from deep discounts on multiple items in a merchandise category were accompanied by a deterioration in store profit margins.
     Here are more findings you can use to analyze effects of deep discounts on a range of KPIs:
  • The best discounts for building store traffic are on best-selling items. Having more shoppers in your store can boost awareness of all that you offer and add excitement to the shopping experience. The payoffs may be in long-term repeat visits even if not in the short-term. 
  • When discounting low penetration, low frequency items, look for the payoffs in increased sales of profitable complementary items. In the study, discounts on beer positively influenced sales of salty snacks, which have a higher profit margin. Findings from other studies indicate you’re wise to stock such complementary items adjacent to each other or at least post pictures of the higher profit item in the areas where you’re selling the discounted item. 
  • Discounts on branded items more strongly affect sales per transaction than do equivalent discounts on generic items. Other research finds that consumer behavior toward generic brands becomes similar to that toward nationally branded items when premium versions are introduced. 
  • Because of stockpiling effects, track sales of items you’ve deeply discounted for a few typical purchase cycles beyond the period of the discount. If customers are purchasing high quantities of storable merchandise, your results for short-term profits on that item will look different from the longer-term results. 
  • Your pattern of KPIs from a deep discount depends on whether other retailers are offering deep discounts on those same items at the same time. Other research finds that loyalty to your store can be maintained or enhanced when you’re matching the low prices of your competitors even when sales of those items are not increased in your store due to the discount. 

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Thursday, November 30, 2017

Feel Easier for Seniors with Biophilia Design

A walk in the forest improves the mood. Researchers from University of South Carolina, Chile’s Externado University, and Peru’s Centrum-Catolica School point out that it also can help maintain the physical health of shoppers like senior citizens. The researchers then go on to apply the concept to the architecture of retail spaces. The researchers call this approach biophilia design.
     Plants in a forest generate phytoncides, which protect them from disease. When people breathe in phytoncides, the immune system is similarly activated. Also, streams, waterfalls and other running water in a forest produce an abundance of negative ions, and negative ions have beneficial effects on emotional and physical health. Negative ions clear the air of pollen, smoke, and dust by binding with them. Blood pressure, heart rate, and muscle tension ease, while the abilities to focus attention and solve challenging problems increase. Although few consumers these days spend the majority of their hours communing with nature, we all retain an inborn urge to take a walk in the forest or spend time in such natural settings.
     Incorporating decorative fountains and manicured gardens with non-allergenic plants into the design of retail shopping areas improves the attractiveness plus increases interest in purchasing. The shapes of nature—curves interspersed with sharp angles—facilitate the effects. All the advantages are particularly influential with the senior citizen shopper, who yearns for the peacefulness of nature and can benefit from the health enhancement. Senior communities, assisted living facilities, and memory care units often have what are called “healing gardens.”
     You might very well choose not to sacrifice shelving and rack space to install a healing garden. But you can work with your neighborhood retailers to introduce more nature into the area. Dwell time is enhanced by creating plazas where people can gather and decorative streets where they can stroll. 
     You also could incorporate live plants into your store interior. Researchers at Vrije Universiteit Brussel and University of Leuven explored the effects on shoppers of adding vegetation. The strongest difference was in areas that were somewhat crowded with merchandise, had high traffic, or were visually busy. Here, the plants reduced stress. The sense of pleasure reported by the shoppers was more calmness than excitement. This is of special value when serving senior citizen customers. Natural elements improve the mood of the retail employees, too, reinforcing the patience and attention useful in selling to a senior citizen clientele.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Monday, November 27, 2017

Rethink the Timing of Reassurance

Researchers at California State University-Northridge and California State Polytechnic University-Pomona asked consumers to imagine they were in the market for a pair of pants and then presented each study participant with one of three statements:
  • Imagine that you are entering a nearby store in the mall and see a brand new pair of your favorite brand of pants (retail price new $60) that fit you just right. 
  • Imagine that you are entering a nearby secondhand store and see a pair of your favorite brand of pants (retail price new $60), worn briefly by another person, that fit you just right. 
  • Imagine that you are entering a nearby secondhand store and see a pair of your favorite brand of pants (retail price new $60), worn briefly by another person, that fit you just right. They have been tested and certified by the American Garment Association as completely cleaned and sterilized, just like brand new. 
     The participants were then asked a series of questions about their perceptions of the pants.
     What is your educated guess as to which of the three groups gave the least favorable ratings? Did the reassurance that the pants had been certified as clean remove any concerns about contamination?
     The answer is that it did not. The least favorable rating of the pants came from the third group. Describing the testing procedure generated increased doubts because it led the consumers to think more about how the pants had been used, even if briefly. The difference in desirability ratings between the second and third groups was almost as great as the difference in ratings between the first and second groups. What could have been intended as well-timed reassurance had the opposite influence.
     Other research strengthens the case for properly timing reassurance to customers. Shoppers usually want specifications rather than reassurance prior to completing the purchase. Right after the purchase they appreciate hearing that they made a good decision, but it’s best received when the reassurance is general in tone. At this same time, asking the shopper what led them to choose one alternative over the others helps them reassure themselves. Then when the customer returns to your store later or contacts you to place a telephone or ecommerce order, deliver a different sort of reassurance about their prior purchase: Emphasize cause and effect. Point out to them how what they obtained from you generated benefits important to them.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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