Promote Sales from Product Recalls

What’s in the news can lead to profits for you, and product recalls are in the news: During this past week, a feature article about product recalls appeared in The Washington Post followed by a segment on Comedy Central’s “The Daily Show.”
     Look at product recalls as traffic builders. If the consumer is instructed to return the item to your store, use the opportunity to show off both your customer service and alternatives to the recalled product. If the consumer is instructed to destroy the product or return it to the manufacturer, include a notice in your ad next to a promotion on one of those alternatives. You earn community gratitude as a good citizen, plus you sell some merchandise.
     The challenge, though, is that many people resist returning recalled merchandise. In a Journal of Consumer Research article appropriately titled “Why My Mother Never Threw Anything Out,” researchers at Baruch College attribute this sort of behavior to what consumer psychologists call the endowment effect: After we’ve acquired a product and worked through any initial regrets, we tend to overvalue the product. To paraphrase the Baruch College researchers: If people saw cheese with some mold on it being offered at a buffet, they’d probably pass on the cheese altogether, but if those same people had that same cheese in their refrigerator, they might very well say, “Hey, what’s a little mold?”
     This might explain why The Washington Post article says 12% of Americans who knew they had food at home that had been recalled ended up eating it. Yes, there are reasons other than the endowment effect. “It’s too much trouble taking it back.” “We’ve already used it, and we’re fine.” “It’s a shame to waste it by throwing it out.” But when the Baruch College researchers statistically corrected for those influences, the endowment effect still pulled weight. Ownership led to lower estimates of risk.
     So you’ll need to convince people to buy an alternative from you. But as a professional retailer, you’re in the business of persuading consumers to do what’s in their best interests and yours. During the 2009 holiday season, Toys “R” Us urged customers to trade in old cribs, car seats, and other baby items for a 20% credit toward new items. One motivation for the promotion was evidence that of baby items recalled because of safety, about one-third are never returned to the seller.

Click below for more:
Protect Customers from Dangerous Decisions
Know How Customers Dispose of Products