Monday, February 27, 2017

Charge for Savoring

Two groups of basketball fans were shown the stats for a fictitious player’s performance over five seasons and asked to state how much this player should be paid in year six. The fans in one group were told that the stats were for actual performance. Those in the other group were told the stats were expert predictions of a rookie’s first five years in the league.
     For which group of basketball fans was the average of the statements of deserved pay higher do you think, and, based on your own years of performance as a retailer, why do you think that?
     The correct answer from the study, which was headed up at Stanford University: The salary estimates were about 20% higher for the rookie than for the experienced player. The researchers attribute the finding to consumers’—sports fans and others’—excitement in thinking about potential. One name for this type of excitement is “savoring,” and savoring does carry with your shoppers a definite value which allows you to set a higher item price.
     The value of savoring shows itself in ways other than money paid. In a study at University of Chicago and Chinese University of Hong Kong, some participants were asked something like, “How much effort are you willing to exert for a bag of Godiva chocolates? Oh, before deciding how hard you’ll work, you want to know how many chocolates are in the bag? Well, it’s either two or four.”
     Those participants worked noticeably harder than did those told that the bag was guaranteed to contain four chocolates. The researchers explain this by pointing out how the tickle of uncertainty stimulates consumers. They had parallel results when offering one group a guaranteed reward of two dollars and the other group only a guarantee that it would be either one or two dollars.
     The value augmentation from savoring is most pronounced with novel experiences. When shoppers have had ample familiarity with a certain type of purchase, the tickle of uncertainty fades. Also, what we see as effects of anticipation might actually be due to reality testing. Those Stanford analysts of the basketball player performance stats should note that other stats show the average career duration of a National Basketball Association player is 4.8 years. The rookie might legitimately garner a higher estimated salary because the player with five years of experience is heading into a downward performance path.

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

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Tickle with Uncertainty
Fill In the Hourglass for Customers
Delay Assumptions About Fast Shipping

Thursday, February 23, 2017

Facilitate Downsizing for Senior Shoppers

The Detroit-area condominium developers couldn’t figure out why so few lookers were turning into buyers. The target market consisted of retirees ready to sell a larger home now that other family members had moved on or passed on. Careful research, including focus groups with prospective purchasers, had provided ideas for pricing and physical designs of the units—ideas which were carefully implemented. But this wasn’t enough, it became clear.
     Then, report the business consultants from Cambridge Group and Innosight who analyzed this case, there was a breakthrough in the form of three words: Interviews with those who had purchased units already often included the phrase “dining room table.” Once the condominium shopper figured out what to do with the big dining room table from the larger home, they came closer to signing the contract for the condo. Further inquiry revealed that the underlying themes were wanting places to socialize with family and the challenge in disposing of possessions. The condo builders reconfigured the floor plans to allow for more hosting areas. They also began offering buyers two years of on-site storage space and use of a “sorting room” to use for pruning down the possessions.
     In the retail store, too, you can bolster business by facilitating downsizing for senior shoppers.
  • Shorter aisle lengths require less walking by senior citizen shoppers. Shorter aisles also look less intimidating. In areas of your store where you stock merchandise primarily of interest to elderly shoppers, divide up long aisles with cul-de-sacs. And can you fit in a bench on which shoppers might take a brief break? 
  • If you carry a broad assortment of brands and models in a category, feature a few of them within easy reach for the elderly shopper. This makes decisions quicker, especially later in the day, when the older brain is more readily confused. 
  • Keep package sizes small. That makes them easier for older hands and arms to lift from the shelf and accurately place into a basket. The elderly generally prefer smaller package sizes for additional reasons. Perishable products can spoil too quickly if the customer is no longer living with a full family. When retirement checks barely cover expenses, smaller item sizes are more affordable. And the elderly often have limited storage areas at home. 
     A skilled retail store operator also can provide opportunities for in-store socializing, completing the lesson from the “dining room table” case study.

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

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Probe for Intentions in Focus Groups
Downsize for Elderly Shoppers
Retire Hopes for Unitary Retirement Marketing

Monday, February 20, 2017

Qualify Discount Effects by Item Quality

Analyze records on the reasons for your promotional discounts along with the amounts of discounts. The more you do this, the better you’ll get at using promotions. And as part of it, you might solve some puzzles about why certain discounts of equal amounts on seemingly comparable items produce widely varying degrees of sales lift.
     The reason, according to a set of studies at Miami University, could be that consumers have different quality perceptions of the items. The researchers saw how discounts on items viewed as of high quality are substantially more effective than are discounts of equal amounts on items viewed as being of lower quality. Another way of viewing this is that a smaller discount is necessary to achieve the same sales lift on higher quality than on lower quality items. And still another angle is saying that to get the best from your promotional discounts, highlight the quality of the discounted items.
     The dimension of perceived quality also comes into play when analyzing discounts of equivalent percentage or dollar amounts on house brands versus national label brands. Researchers at Monash University explored the situation in which a retailer introduces a value version of a house brand to add to a premium version on the shelves. Here’s what happens:
  • Prior to introduction of the value version, the premium version is likely to be considered by consumers to be of standard, not premium, quality. 
  • After introduction of the value version, consumers’ quality assessments of the premium version increase. 
  • If a premium version is introduced to an existing value version, the assessment of the value version doesn’t change noticeably. 
  • The price consumers expect to pay varies directly with their perceptions of the quality. 
     On the other hand, researchers at Miami University and France’s ESSEC Business School found that addition on store shelves of a value version to a premium version of a national label product leads to lower quality ratings of the premium version. The researchers used as examples the introduction by Charmin of a lower-quality Charmin Basic product and Foster’s Beer producing a lower-quality Foster’s Grog.
     All this is a reminder to discover not only how well a promotion is working, but also why. The best promotions pull a variety of triggers. A prospective purchaser might respond to one more intensely than to another, and every prospect is more likely to purchase when there’s a bunch of triggers.

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

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Analyze the Details About Your Markdowns
Raise Prestige of House Brand Premium Label
Uncover Why Your Advertising Works
Moderate Discounts to Project Quality

Thursday, February 16, 2017

Elicit Sameness for Practical Satisfaction

A skilled retailer’s interactions with a customer differ from pre-purchase to post-purchase. For instance, according to studies at Stanford University, University of Utah, and University of Iowa, customers usually want specifications pre-purchase, but after making the purchase, they're usually seeking reassurance. So right after the purchase, tell the customer that they’ve made a good decision. Keep it general. 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.
     Subsequent research at Duke University and University of Florida indicates that when the item was purchased primarily for practical, utilitarian use rather than for pleasure-oriented, hedonic benefits, your inquiries should emphasize usage sameness, not variety. Ask, “What are the one or two ways you’re using the item?” rather than, “What are all the different ways you’ve found uses for the product?” Limiting the scope of consumption experiences led to more positive evaluations of the product and the purchase experience, higher intentions to purchase the product again when a new one is needed, and a greater willingness to recommend the product to others.
     The researcher’s explanation is that when consumers think of the variety of ways they’ve used an item, they’ll tend to think of using it less often than when they think of only the primary way they use it. This leads to perceptions that the product is less valuable, since it’s been used less often.
     This is true just for utilitarian items. With hedonic items, post-purchase questions about the range of consumption situations did not worsen evaluations.
     All this highlights another difference between pre-purchase and post-purchase tactics. Prior to purchase of any item, we’ll want to advertise the range of ways in which the item can be used. This catches the attention of a wider range of shoppers and helps each shopper justify the cost of the item.
     But here, too, usage frequency counts in ways we might not expect. In a set of studies at University of Maryland-College Park and Georgetown University, consumers became less likely to purchase items they were led to believe they would use substantially less often than their peers. So when discussing predicted frequency of use, talk about each shopper as an individual. Avoid comparisons with others.

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

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Ping Consumers with Cause-and-Effect
Anchor Frequency Estimates to Individuals
Dream Consumption Visions of the Past
Ask Shoppers for Reasons to Buy

Monday, February 13, 2017

Opt for Full Disclosure of Opt-Out Defaults

A pre-conference announcement sent to about 300 registrants from over 60 federal agencies described the default lunch option: Bean sprout and soy-cheese sandwich on gluten-free soda bread. The recipients of the announcement were invited to opt out and choose an alternative in advance of the conference. But only 20% did so. How surprised many of the other 80% were when their inaction was discussed at the keynote address, the theme of which was information disclosure to consumers!
     The pair, based at University of Chicago and ideas42, who conducted this little demonstration project went on to point out to the conference attendees that few consumers thoroughly read any terms and conditions given by sellers. That reality opens possibilities for merchants to swindle, and even endanger, their customers. Consumer advocates argue for assertive disclosure to shoppers of any opportunities to opt out of defaults.
     Would doing this encourage opt-outs? Not so much, say researchers at Northeastern University, Indiana University, and University of Cincinnati. They conducted a series of experiments involving opt-out configurations for food choices, financial incentives, energy usage, and privacy permissions. Rejection rates for the default option were about the same whether or not the consumers were told the purpose of the opt-out structure was to encourage them to accept the default. As long as consumers feel in control, they usually prefer simplicity, and accepting the default keeps things simpler.
     But the assertive disclosure did make a positive difference in another way: Those given it developed higher trust in the seller and were more likely to say they’d give the seller future business.
     This argues for using defaults and making full disclosure to consumers that you have opt-outs. Further, in choosing what defaults to use, be aware how your choice shapes behavior. For instance, this applies to charitable contributions. In a field study based at France's ESSEC Business School, a request for a small amount increased the willingness of the person to make a donation, and the larger the greatest amount in the same request, the higher the eventual donation.
     Researchers at State University of New York-Buffalo and University of Chicago obtained similar results, plus finding that because of these countervailing effects, a high default amount with opt-out doesn’t reduce net funds raised. The high default will actually increase the average donation amount over a low default if full disclosure is paired with an effective argument for donating at all.

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

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Disclose Ethically
Simplify the Shopping
Tip Off Shoppers Before Manipulation
Hand Off Intended Hands-Off Items
Enhance Variety in Nonprofit Donations