Thursday, March 23, 2017

Soften Customer Upset Using Friendship

An advantage available to smaller retail businesses is the enhanced opportunity to create perceptions of friendship with customers. Large retailers with headquarters at a geographical distance find it harder to maintain impressions of authentic closeness. Not all small retailers take advantage of this competitive advantage. Those who do can find that, when negatives occur, the customers are more likely to take responsibility themselves. The blame on the retailer is partially or wholly softened.
     This was seen in a University of Washington simulation of the reactions of a night club’s customers who had previously qualified for the premium level in the club’s loyalty rewards program. In the study scenario, participants were told that the required level of annual spending for premium benefits had been raised and that they were losing their premium benefits. In some cases, the customers would have fallen short even with the old limit. Their spending had gone down compared to the period in which they’d qualified. In the remainder of the cases, the expiration of benefits was because of the tighter standard. They would still have qualified under the old limit.
     The customers who felt no close relationship to the night club were more likely to blame themselves than the club for being dropped. It made no difference whether or not they would have qualified under the old standard. For the customers who felt a close relationship, it did make a difference. Those who would have qualified under the old standard blamed the club. They felt that a friend had betrayed them. Those who would not have qualified blamed themselves.
     Still, being a friend isn’t enough. Clarify expectations. Researchers at Lingnan University in Hong Kong and Chinese University of Hong Kong presented study participants with a scenario: You’ve asked the owner of a restaurant with whom you have a close business attachment to hold an ocean-view table for your birthday bash. When you arrive, the owner explains, with a tone of regret, that all the ocean-view tables are taken.
     Many of the consumers empathized with the owner. However, for others, the reaction was anger. What made the difference was whether the study participant, taking on the role of a customer, had clarified in advance their own expectations and obligations and those of the retailer. With this clarification for transactions based on close business attachments, there was more likely to be customer acceptance of the owner’s needs.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Puff Down for Authenticity
Clarify Expectations with Friendship Customers

Monday, March 20, 2017

Smoke Out Which Models Motivate Teens

When people yearn for something they can’t yet have, they often fantasize about having it. Featuring those fantasies in your store advertising can facilitate favorable impressions. But it could be favorable impressions of an item other than the one in the ad.
     How this operates in adolescents was explored by researchers at University of California-Irvine. Teens are more responsive to clothing ads showing teen models than those showing young adult models. But it was different with age-restricted products. The researchers created mock magazines that included cigarette ads. For some study participants, the ads featured young adult models, for another group, teen models, and for a third group, middle-aged models. After perusing the magazine, each participant was asked a number of questions, including how likely they thought it was that they’d smoke in the future.
     The participants showing the highest intent to smoke were those viewing the young adult models. This differential effect was strongest for adolescents who also had expressed dissatisfaction with their current age.
     The researchers’ advice for marketers who want to protect adolescent health: In your ads for cigarettes, feature models who are 45 years old. Study participants seeing those models were the least likely of all to say they intended to smoke.
     Better yet, I propose, is not to advertise tobacco products at all. But the underlying point is that knowing an item is forbidden to them will result in an increase in attractiveness to teens, and this happens more strongly when the teens view use of the items by those they aspire to become.
     Once they get the items, however, the struggle might lead the teens to like the items less. In a Stanford University study, the average price people who failed to obtain an item they wanted said they’d pay was 43% higher than the average willingness to pay among those who got the item. But when the jilted group were given the item later as part of this perverse experiment, they were substantially less likely to want to keep the item than were those who had received the item at the start.
     Such ill feelings even generalize. Some people were told they might win Guess brand sunglasses, then later were told supplies had run out. These frustrated folks rated Guess watches lower and a competing watch brand higher than did an equivalent set of people never promised the possibility of getting Guess sunglasses.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Convince Shoppers to Reach for the Stars
Notice How Teens Are Into Exclusive Resale
Accept the OOS Redirection Exception

Thursday, March 16, 2017

Experience How Experience Is Price-Quality

Many findings in shopper psychology are obtained by exposing consumers to novel situations. In applying those findings to making sales in your store, it’s important to recognize how consumers’ familiarity with the characteristics of the transaction changes the consumer’s response.
     The price-quality link is one example. Decades of research have clearly established that people purchasing a higher-priced alternative from a set with equivalent features generally expect to receive a more reliable embodiment of those features. When people buy at what they consider to be deeply discounted prices, they start out feeling the benefits are less than if they’d paid full price. They love having saved money, but as a rule, they are less in love with the item. And whenever they pay top dollar, they’re primed to believe what they’re acquiring is top quality.
     Studies at University of British Columbia and China’s Cheung Kong Graduate School of Business document that, if these anticipations are violated, the price-quality link is not so much dissolved as it is twisted. After having consumed the item, people evaluate a low-quality product with a high price more negatively than the identical low-quality product with a low price.
     Such violations are fairly common. Any consumer with a few years of purchases behind her can tell you about the high-priced national brand items she came across which were inferior to the discount-tagged house brands and the many episodes in which low-cost items included the reliability of basics not seen in the over-the-top-priced alternatives.
     When your customers come to you with the price-quality link intact, they are willing to pay you more for what they believe has higher quality. This occurs most easily with first-time purchases of the types of items behavioral economists call “experience goods” and “post-experience” goods.
     The values of experience goods are difficult for the shopper to assess until they’ve been purchased and used for a while. Unfamiliar foods, innovative tools, gym memberships, and insurance policies are experience goods. Nutritional supplements and investment portfolios are examples of what are generally considered to be post-experience goods. These are items for which it is difficult to evaluate the advantages of having made the purchase even after the use. Because of this, the influence of the price-quality link lingers long after the first-time purchase, and the effect of the link depends heavily on the consumer being convinced of the quality of the items through advertising and salesmanship.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Depend on Interdependency for Price-Quality
Post Dramatic Tales for Post-Experience Goods

Monday, March 13, 2017

Sidle Eyeballs for Variety Purchasing

Shoppers are attracted to stores that offer a broad variety of choices within product categories. This provides a challenge for smaller retailers, whose display spaces and inventory budgets are more limited than those of large retailers. Researchers at Ohio State University, University of Pennsylvania, University of California-Davis, and San Jose State University suggest that, to up the impression of variety, arrange alternatives horizontally rather than vertically. This works because our eyes move more smoothly from side to side than from up to down.
     The researchers found that shoppers under time pressure will perceive there’s a broader range of alternatives in a horizontal than in a vertical display. The result is a greater interest in buying one or more of the items. When the shopper’s time is not tight, a horizontal display, compared to a vertical, elicits greater amounts of browsing. For those circumstances in which a shopper could use more than one alternative from the selection, the result of the extra browsing is purchase of a larger number of items.
     All this was verified in college students pretending to be shoppers by tracking their eye movements and in mall shoppers by tracking their purchase patterns. The researchers even saw the effect work with how candy selections were made by Halloween trick-or-treaters.
     For using these findings in a retail store setting, the researchers caution about choice overload. Some years ago, studies at University of Pennsylvania and Columbia University found that expectations of large product assortments do indeed attract shoppers to a store, but once there, many of the people avoid making a purchase because they’re not sure what’s best.
     If you encounter this problem, encourage the consumer to think in more abstract ways, such as about features the items have in common rather than considering each item in the choice as unique. Similarly, researchers at University of Delaware and University of Pennsylvania discovered that a way to keep shoppers engaged is to encourage them to focus on product features rather than item alternatives. With the features in mind, the person can start rating each alternative until coming to a decision.
     So in your marketing, point out how you offer a large number of choices. When a shopper starts the shopping with you, display categories within categories to highlight the abundance of alternatives. Arrange the choices within categories horizontally instead of vertically. Then recognize the potential for choice overload.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Organize Shelves & Racks to Portray Variety
Abstract Shoppers to Avoid Choice Overload
Limit Variety as Shoppers Approach Goals
Adjust Assortment by Use Attractiveness
Orient Shoppers to Appreciate Discounts

Thursday, March 9, 2017

Brand Discounts Risky If Discouraging Purchase

How is it that a promotional discount on an item in your store would discourage people from buying the item again? Researchers at University of Iowa and Washington University found it happens when consumers think a special price on an item signals that another promotional discount will be coming soon. When shoppers see the regular price on the item after the promotion, they put off purchasing it, believing they’ll get more for their money by waiting until the next sale. In the meantime, you’re missing out on the sales revenue from the item.
     The discount has devalued the item in a way similar to the effects of a “Buy one, get one for free” promotion. When a product is seen by the shopper as being offered for free as part of the BOGO, the shopper resists paying full price for it afterwards. The remedy for the BOGO is to offer, along with the free sample, a coupon for a discount on the regular price, helping to develop a habit to purchase the item.
     In running promotions, your hope is probably most often for the other sort of interpretation studied by those researchers: A good sale on an item indicates it won’t be going on sale again in the near future. This interpretation can motivate quantity purchases. In fact, when it comes to products that are otherwise highly popular, you might decide to limit how many can be purchased at the discounted price. Otherwise, you could run out, irritating your other shoppers.
     With the commodity category the researchers studied—paper towels—this second interpretation occurred less often among shoppers than did the first one. Overall, the promotional discount was leading people to purchase the particular item less often, not more often, in subsequent weeks.
     This effect is risky for a retailer, but not always bad. It’s found to occur most strongly with brand loyal customers. Therefore, if you want to switch a customer to another brand—such as from a nationally advertised to your private label brand—a discount followed by a return to the regular price could facilitate that. Offer a discount on the private label brand at the same time that you restore the standard price on the nationally advertised brand.
     Analyze purchasing patterns to determine which of the two interpretations of your promotional discounts is happening more often. Then take the steps which best serve your store.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Go for BOGO Free Over BOGO Discounted
Increase Purchase Quantities with Discounts
Decide Whether to Limit Purchase Quantities
Use Customer Life Changes to Switch Brands