Sunday, October 31, 2010

Kill the Excessively Ghoulish

“There has been a death in the family.”
     What a cruel message to flash onto a consumer’s computer screen unexpectedly, especially when nobody in that consumer’s family really died. Even on a Halloween day like today, scaring somebody this way is excessively ghoulish.
     To help me explain the lesson in all this for retailers, go back fifty long years:
     During much of the 1960s, Burroughs Corporation computers were among the best selling in the world, with sales revenues second only to IBM’s. Burroughs produced large computer systems—mainframes—that incorporated creative innovations designed by astoundingly clever experts. Well, astoundingly clever when it came to creative computer innovations. When it came to insights about users of the systems, they were not as smart.
     Oh, they tried to be clever. A team working on one of the Burroughs Computers configurations, for example, decided that they had to catch the attention of any user who committed an error which resulted in the system needing to be completely restarted. In the process of restarting, data would almost inevitably be lost.
     The designers of the interface could have decided to give the user a message like, “System must be restarted. Any pending data will be lost.” Better yet would have been an error message explaining what the person might have done to cause the problem and pointing the user toward a respectful, friendly tutorial about how to avoid making the error in the future.
     But all of this occurred at a time when attention to usability was in its early stages. And I guess to the Burroughs Computers employees’ technical minds, it seemed so much more clever than other error messages to flash onto the screen “There has been a death in the family.”
     I came across this example when doing research for my 1984 book Computer Confidence: A Human Approach to Computers. Much of what I wrote then is now completely out-of-date. Current computer systems seem to have more wizards than existed in all of medieval Europe. But in every business, people with technical knowledge still too often forget that smart consumers make mistakes.
     The lesson for retailers: Regularly check that you and your staff treasure customer misunderstandings as opportunities to learn how to communicate better. Insensitivity to customers can be a fatal error. Oh, yes, the message “Fatal error” is another ghoulish remnant of the earlier days of computing.

Click below for more:
Respect Customers Who Claim Expertise
Show Respect in Front of Customers

Saturday, October 30, 2010

Survey Consumers Person-to-Person

Garbage In, Garbage Out. This motto of the early computer age can be applied to consumer attitude surveys. The survey questionnaire, when used well, is an invaluable tool for identifying consumer sentiments as guides to retailer action. Using it well means constructing the questionnaire with care and analyzing the answers properly. A Harvard Business Review article pointed out that the steps between questionnaire construction and data analysis also must be done well. Those middle steps include sample selection and administration of the questionnaire.
     Here are the problems:
  • Telephone surveys are yielding low and unrepresentative response rates in this age of cell phones and caller ID.
  • People who volunteer to take online surveys tend to be more educated than the general consumer population and are less likely to be middle-aged.
  • When consumers take surveys online, they answer carelessly. A Market Strategies International research project to evaluate this issue found that about 15% of consumer respondents said they owned a Segway Personal Transporter, a rate many times higher than what sales figures indicate is true.
     Address these problems and get the best from consumer surveys by forming a person-to-person relationship with your respondents:
  • Have one of your staff trained in survey methodology or have a survey consultant personally invite each consumer to participate. The invitation, like the survey itself, should be in the language most comfortable for the consumer.
  • Before finalizing construction of the questionnaire, conduct one or more focus groups with a small group of consumers to explore the best ways to phrase items and motivate participation.
  • During survey administration, tell each respondent the name of a person to contact with questions.
  • After data analysis, conduct a focus group to check that your interpretation of the results makes sense.
     Since GIGO was first coined by George Fuechsel, an IBM 305 RAMAC instructor, to refer to Garbage In, Garbage Out, the acronym has morphed. It’s come to mean Garbage In, Gospel Out, referring to the excessive respect we have for analyses just because they’re performed by computers. When you combine computerized analysis with survey administration, retailers can be misled into accepting as gospel what is actually garbage. Retailers then take the wrong action steps.
     Be sure to select consumer samples and administer surveys in accord with professional standards. This adds to the cost. But flawed surveys are worse than worthless.

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

Click below for more:
Use Consumer Attitude Survey Findings

Friday, October 29, 2010

Increase Repeat Customers’ Unplanned Buying

Researchers at University of Pittsburgh and Baylor University say most of your shoppers intend to spend money on impulse items.
     Before starting their shopping, study participants were asked to estimate how much they planned to spend. For more than 75% of the shoppers, the amount they thought they’d spend altogether was more than the amount they estimated to be the cost of items they planned to buy. These shoppers had prepared themselves to come across both needs they’d forgotten to include on their shopping lists and items they wouldn’t realize they wanted until the items were in front of them or in their hands.
     Unplanned purchases add to your profitability. Previous research has said you can make unplanned purchases more likely by offering noticeable discounts on items that are commonly bought. Now researchers at University of Pennsylvania, Instituto de Empresa Business School in Spain, and Tilburg University in the Netherlands have added to the tactics. To spot these, the researchers focused on a certain type of shopper—the repeat customer who has defined their shopping objectives before they enter your store. These are not idle browsers, but are instead out to buy something. The objectives could range from the general (“I’m looking for something to cook for dinner”) to the specific (“I’ll buy two chicken breast fillets”).
     Based on the research findings from 441 households and covering 58 product categories, here’s how to increase unplanned buying by repeat customers who have shopping objectives:
  • Encourage customers to set general shopping objectives instead of specific ones for their next visit. Do this in your advertising and in talking with customers at the cash/wrap (“Please keep in mind that we’re your store for every sort of party planning”). For shopping with general objectives, the jump in impulse purchases was about twice as much as for trips with specific objectives.
  • Maximize your within-store convenience for fulfilling whatever objectives the shopper has set (“I can get almost everything right at that store”). In the research, this sort of store-specific convenience lifted the amount of unplanned buying more than 10%.
  • Avoid unnecessary impressions of multi-store convenience (“If I shop at that store, it would be easy to also shop at other stores”). When your repeat customer decides to stop at a few different stores to meet their shopping objectives, they become somewhat less likely to make unplanned purchases at your store.
Click below for more:
Sell Impulse Items to Serve
Have Unannounced Discounts on Common Purchases

Thursday, October 28, 2010

Peek Into Bathroom Rituals

As a retailer, you’ll gain a profitable edge by knowing how your customers use the products and services you sell. This guides you in stocking items which will be most popular and in telling shoppers those benefits statements which make a sale most likely.
     For some examples of all this, peek into your customers’ bathroom rituals. Consumer rituals consist of the habitual ways products and services are used.
     A few years ago, marketing agency BBDO Worldwide studied consumer rituals. Of the five rituals identified by the study as most common throughout the world, three center around the bathroom:
  • Preparing for battle, in which we get ready to face the day. Brushing our teeth. Taking a quick bath or shower to wake up and be clean. Shaving.
  • Sexing up, in which we aim to become our most attractive selves. From freshening our breath to painting our face and so on. Special products make us feel special.
  • Returning to camp, in which we unwind. This is another ritual in which a bath or shower is common. But analysis of the study results indicates different benefits here than from the “preparing for battle” scrub, rinse, and dry. Here, we seek luxury and, often, solitude. Along with this, of the 5,000 people interviewed for the project, about 50% said their “returning to camp” ritual includes leisurely time spent reading on the toilet.
     The years might change some details of these rituals, but the fundamental characteristics are probably much the same now as in, let’s say, the 1960’s portrayed in the TV show “Mad Men.”
     But there are differences by country. In preparing for battle, about 75% of people worldwide shower or bathe, but among the Japanese, the percentage is closer to 25%. There are also differences by culture and religion. The devout Muslim is forbidden from reading while using the toilet and is to use only the left hand for cleansing.
     What does all this mean for you, the retailer? Carry products, provide services, and design environments to fit the motivators for different types of rituals. The type of soap sought by the consumer might be different depending on whether a person is preparing for battle, sexing up, or returning to camp. So offer all three types. The bathtub ideal for returning to camp should also accommodate the quick cleanup the consumer will probably want when preparing for battle.

Click below for more:
Let Shoppers Go Through Their Rituals
Switch Brand Selection with Shopper Anxiety

Wednesday, October 27, 2010

Romance the Customer, But Professionally

Compared to ecommerce retailing, bricks-and-mortar retailers have an easier time in two ways:
  • Developing person-to-person relationships between the salesperson and the customers
  • Creating a multifaceted entertainment experience
     But if you’re a B&M retailer, these relative advantages will pay off for you only if you use them in ways that build an entertaining personal relationship with your store. Sort of what happens when we love a movie because we identify with the actors.
     So let’s enter the realm of the cinema. Researchers at Roma Tre University and Columbia University analyzed audience ratings of 440 movies nominated for the Best Picture Academy Award. The researchers asked, “What’s the relationship between a movie viewer identifying with an actor in the movie and the viewer rating the movie as excellent?”
     The researchers predicted that the viewer’s identification with a leading star who is about the same age as the viewer and the same gender would carry a lot of weight. But after analyzing the data, the researchers had to admit they were wrong. What did make a difference was the viewer’s identification with relating to opposite-gender stars who were somewhat younger than the viewer. When the movie romanced the viewer, the viewer liked the movie.
     Okay, everybody out of the theatre and back to the store. Does this mean that each time a customer enters, you should flirt shamelessly or at least invite them to dance to your store’s background music? No, but it does mean you should romance the customer.
     Keep the interactions professional. Be ready for a mix of what University of Geneva researchers call “secure business attachment” and “close business attachment.” In the first, the customer wants to rely on you for quick answers to questions about purchases made and for quick solutions to problems with purchases. In the second, the customer wants to exchange information about family and friends.
     The Geneva researchers recommend that when a business-to-business retailer invites a customer to dinner, the customer’s romantic partner be invited as well: B2B customers who demonstrate secure attachment with a romantic partner experience higher satisfaction, trust, and repurchase intentions when doing business with a retailer.
     With all sorts of customers, romance through entertainment. Hey, you’re competing for the customer’s dollar. Each hour a person is sitting in front of the movie screen fantasizing is an hour they’re not shopping with you.

Click below for more:
Learn the Relationship B2B Customers Want

Tuesday, October 26, 2010

Purge Expired Products

When someone buys a product from your store, you’d like them to experience that product at its best. If the product is perishable, you’ll be concerned with expiration dates.
  • Laws may require you to purge expired products from your shelves. Last week, Walmart agreed to pay the State of New Jersey $775,000, part of that to settle charges that it sold infant formula and non-prescription drugs beyond their marked expiration dates. Such sales are forbidden by federal law. Some state laws forbid sale of certain food items after their expiration dates. The publicity that could follow charges of violating national, state, or local laws would leave your target audiences with a bad taste regarding your business.
  • Your customers who take home a product with a date on it can easily be confused as to what the date indicates. “Expiration date” means the last date a food should be eaten or used. But you customers might also encounter “sell by,” “best if used by,” “guaranteed fresh until,” the often cryptically-formatted “pack date,” and the “born on” seen on beer bottles. Confusion can irritate customers. Prepare your staff to answer questions about what these expiration and freshness dates mean.
  • Encourage purchasers to return for exchange any unused product that goes beyond its expiration date, even if purchased months ago. Researchers at Baruch College find that after someone acquires a product and works through any initial regrets, they tend to hesitate discarding the product after an expiration date. As a result, they’ll use an inferior product, becoming less likely to purchase that sort of item and brand from you in the future.
  • As I said, you’d like your customers to experience perishable products at their best. For some customers, “at their best” means they intentionally wait a while until the price goes down substantially. I’ll call this the Day Old Bread Effect. although it’s by no means limited to food items. The Syms stores’ discounting policy is an example. Stamped on the back of each price ticket on women’s dresses is the date the item was placed on the sales floor, and stamped on the front is a series of dollar amounts in descending order. Every ten selling days, the price moves to the next lower amount on the ticket.
Click below for more:
Promote Sales from Product Recalls
Leverage Barriers to Increase Value
Make Your Shoppers Feel Smart

Monday, October 25, 2010

Redirect with Evil Envy

For any retailer who thinks about dollar bills, green is great. So how about getting green with envy? Make some money from jealousy! Research findings from Tilburg University in the Netherlands indicate that when a consumer shopping for a product envies someone who owns that product, they’re willing to spend more money on their purchase.
     In some cases, it’s more money on the product owned by the other person. In other cases, it’s more money on a competing product. Understanding how this works gives you one more tool to redirect shoppers toward products that best serve both their needs and your profitability.
     When a shopper believes the other person earned the right to the advantages of owning the product, that shopper is willing to pay a premium for owning the product themselves. The extra money is like a tribute to the respected person. In the research, people who had this benign envy of someone owning an iPhone, for instance, were willing to pay an average of €80 extra for their own iPhone.
     What about the shopper who believes the other person doesn’t deserve the good fortune? There is then a desire to show that what the other person has isn’t so great, after all. In the research study, people with this malicious envy were also willing to spend more money, but on a competing product, like a BlackBerry instead of an iPhone.
     Consumer psychologists talk about aspirational groups, to which a shopper wants to belong, and dissociative groups, from which a shopper wants to distance themselves. Direct your shoppers toward the right choices with references that stimulate aspirational envy, and redirect them from other choices by referring to celebrity endorsers or others whose names will activate evil envy.
  • Stay aware of how a repeat shopper’s aspirational group might change over time. Newly minted MBAs may aspire to become part of a business professionals’ culture. Hispanic youth attending a U.S. university might aspire to view themselves as mainstream American college kids, but only for the first year. Similarly, changes occur regarding dissociative groups.
  • Whether a product endorser arouses respect or evil envy also can change over time. Marketing agency Zeta Interactive found that positive buzz on the Internet about bicyclist Lance Armstrong dropped dramatically from early July into early August 2010. Zeta Interactive attributed the drop to suspicions Mr. Armstrong used performance-enhancing drugs during races.
Click below for more:
Notice Customers’ Cultural Aspirations
Select Celebrity Endorsers Who Have Credibility
Make Your Sales Staff Celebrity Endorsers

Sunday, October 24, 2010

Shrink Your Shrinkage

After a notable rise in 2009, shrinkage appears to be decreasing this year. According to a Global Retail Theft Barometer report, shrinkage among U.S. retailers is down 7% overall from one year ago. The corresponding decrease is 6% overall among retailers in all 42 countries surveyed. Among these were Australia, China, India, Japan, Russia, and the countries of Europe.
     A limitation of the study is that it surveyed only the largest retailers in each country. Small to midsize retailers might have somewhat different patterns of shopper theft, employee theft, and administrative errors—the three components of retail shrinkage.
     Although shrinkage was down overall, it was up over last year for about one out of three retailers. The reason is found in another statistic: Overall, retailers raised their spending on loss prevention programs and physical security about 10% from last year. Those retailers who funded employee training, store audits, and increased protection of theft-prone merchandise saw shrinkage rates drop. Those retailers who didn’t spend the money generally saw rates go up.
     Consider the proven physical security measures you can take to cut shrinkage: Set up mirrors to increase visibility. Post signs sayings that you prosecute all shoplifting, and then do it. Keep high-value items in locked cabinets. Alternate the direction of hangers on clothing near doors.
     But balance shoplifting reduction with providing a welcoming atmosphere. You probably don’t want to have uniformed guards patrolling your aisles. Reduce dependence on physical security measures by using psychology:
  • Some customers and employees steal for the thrill. Be vigilant in store areas that generate excitement because of loud rhythmic music, bright colors, and/or fast movement. Merchandise classes associated with the forbidden are especially likely to be stolen: Tobacco products and underwear are among the most frequently shoplifted items.
  • Some people steal because affection and attention are missing in their lives. There’s evidence that when you treat all customers with respect, concern, and empathy, people prone to thievery are less likely to steal from you, even when the opportunity is there.
  • Some shoplift to show off to friends. Doing it on a dare is most likely among teenagers. Without hassling the teens or prejudging, you’ll want to be alert when a group of teenagers enter the store together. Being alert includes greeting them so they know you know they’re there.
     To shrink your shrinkage, think like a shrink.

Click below for more:
Use Shopper Psychology to Curb Shoplifting
Fight Employee Theft with Expectations
Psych Out Employee Theft

Saturday, October 23, 2010

Analyze Errors Accurately

Clothing retailer Gap Inc. erred. The company announced they were unveiling a new logo, the reaction was monumentally negative, and within a week, Gap made another announcement: They were keeping the old logo with GAP in all caps on a blue rectangle. The new logo with Gap in upper-and-lower case and the blue rectangle off in a corner was banished.
     As the dust settled, trade periodical Advertising Age reported the Gap explanation of what happened. Part of what Gap said illustrates lessons correctly learned, in my opinion. The rest strikes me as either a public relations deflection of responsibility or a genuine misunderstanding of the causes. Either way, the incident serves as a reminder to analyze retailing errors accurately.
  • Accept the facts. The new Gap logo was almost universally panned by consumers as badly designed. Yet the company attributed the problem to the logo introduction being, “one change too many,” following new product mix, merchandising scheme, and store design initiatives.
  • Be aware of the state of mind of the business over the duration of the error. In the open minds state, all sorts of input is welcomed, realizing it’s always easier to tame down an unrealistic idea than to try to make the same old ideas exciting. In the open roads state, people in the business cut back on the brainstorming, critically evaluate what they’ve got, develop plans based on what’s most
    likely to work for the long-term, and move on ahead for a while with minimum distractions. The open wounds state occurs when the bad news floods in so fast that you must take decisive steps; you might ask others for ideas, but your focus is on short-term bandages. The origins of errors differ among these three states.
  • Take note of the stumbles as you recover. After a couple of days of complaints, Gap said they’d invite the public to design the new logo. That caused an uproar among professional design firms, at which point Gap withdrew the offer, although consumers did go ahead on their own to generate over 300 suggestions along with critical reviews.
  • Isolate the factors to the degree possible. When update of the Sun-Maid Raisin girl was announced late last year, the trademarked brand symbol on product boxes from Sun-Maid Growers of California stayed the same. Only in advertising did the Sun-Maid Raisin girl take on the new look.
Click below for more:
Be Creative, But Only Sometimes
Keep Your Store’s Dress Codes in Fashion

Friday, October 22, 2010

Anchor Frequency Estimates to Individuals

When selling a product to a prospect, don’t make them think they’ll be using the product often, since that can kill off their interest in buying it.
     This strange conclusion is one way to interpret findings from research at University of Maryland-College Park and Georgetown University. And, as you’d expect, the conclusion is only partially right. But the part that is correct provides useful guidance for handling usage frequency estimates with shoppers.
     The experimental study began with asking university students to say how often they played video games. One set was asked the question in the form, “Please tell us how often, using a scale that ranges from ‘Less than once a week’ to ‘More than once a day.’” Among themselves, the researchers referred to this as the “high frequency scale.” The rest of the students were presented what the researchers called the low frequency scale: “… using a scale that ranges from ‘Less than once a year’ to ‘More than once a week.’”
     The students using the high frequency scale reported playing video games more often than did the students using the low frequency scale. Consumer psychologists call this an anchoring effect. When shoppers are given higher numbers as anchor points, they’ll give higher numbers as answers.
     The next part of the study is where things got really strange. Compared to the students who had previously been presented the low frequency scale, students who had previously been presented with the high frequency scale were less interested in trying out a new video game. When we put the two parts together, the college students who had said they play video games more frequently expressed less interest in new video games. The high-frequency-scale group was only half as likely to accept the offer of a free trial of a video game.
     Why? The researchers are convinced it’s because the high frequency scale made students think other students played video games very often, while a low frequency scale made students think other students didn’t play video games so often. When the anchor was set high, the students felt their frequency of use was relatively low, so they labeled themselves as not that interested in video games.
     The advice for retailers: When discussing predicted frequency of use with shoppers, talk about each shopper as an individual. Avoid comparisons to others. Especially with competitive consumers like university students.

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

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Set Price Anchors with Price Adjacencies
Move the Customer to Accept Higher Prices
Know the “Don’t Know” Answer Frequency

Thursday, October 21, 2010

Discuss Attributes to Guide Choices

By discussing with customers the product attributes important to them, you can guide both their choices and your own choices to greater profitability.
     Researchers at Carnegie Mellon University and University of Southern California find that with packaged food items with which the shopper is familiar, shoppers pay the most attention to the attributes of taste and brand name, more than they do the size of the package. Researchers at University of Pennsylvania and University of Illinois-Urbana/Champaign find that across all product categories and levels of shopper familiarity with products, the attributes of color and shape have special importance.
  • Consult online reviews for products you carry. Encourage people to post product reviews. Look at the online reviews maintained by other retailers who sell the same products you sell. Read impartial reviews, such as in Consumer Reports, for the products. In all of this, notice what attributes are being mentioned. Is it color? Speed? Reliability? Guarantees? Support services? Country of origin? Researchers at New York University and University of Florida find that when a shopper sees an attribute discussed in a review, the shopper significantly increases their use of that attribute in product assessments and significantly decreases their use of other attributes. Know what your shoppers are thinking.
  • Discuss benefits in terms of attributes. Every consumer from about age 7 pays closer attention when you say what the product can do for them, not just what attributes the product has. But the consumer will be better able to compare benefits of a set of products when you present them in terms of attributes. “Because this can is square and squat, you’ll be able to stack more inside the locker when you take your boat out.”
  • Use attribute information to prune down inventory. Remember that I said the attribute information could guide your own choices more profitably? Those Carnegie Mellon/USC researchers found that when a major grocery retailer trimmed back stock-keeping units (SKUs) to omit product and category attributes relatively unimportant to customers, sales did not decrease. They increased 11%. The researchers say this was due to decisions being made easier for shoppers.
     You can guide the choices of your shoppers by the ways in which you arrange the merchandise. But it often works even better to present the alternatives in terms of what attributes you discover your shoppers using already.

Click below for more:
Encourage Balanced Customer Reviews
Cultivate Kids as Future Customers
Feature Country-of-Origin Advantages

Wednesday, October 20, 2010

Keep Up On Your Promises

“Always bear in mind what the country mother said to her daughter who was coming up to town to be apprenticed to the Bond Street millinery, ‘For heaven’s sake be good; but if you can’t be good, be careful.’”
     That’s from a 1903 book titled Pitcher in Paradise. Parallel advice for milliners in year 2010—especially if the hats they’re selling are advertised as luxury overstocks—is “Keep your promises. But if you can’t keep your promises, for heaven’s sake keep up on your promises.”
     Stay aware of your customers’ understanding of what you’re promising them, and when there are changes in what you can deliver, head off any negative effects on your customers’ long-term views of your business.
     I snuck in the part about luxury overstocks after reading a recent Bloomberg Businessweek article describing how outlet mall stores like Neiman Marcus Last Call and Saks’ Off 5th Avenue may be reneging on a promise. Customers have come to expect Gucci, Prada, and Dolce & Gabbana at bargain prices. But because high-end fashion retailers have trimmed back on inventory, there are fewer overstocks.
     Customers will still find lower prices than in the namesake stores. They’ll probably find luxury labels. But what’s increasingly being sold at the outlets are items made especially for those stores and to less refined standards than the originals.
     In other cases in our rugged economic environment, the promises not being kept—from the customer’s perspective, at least—have to do with services and pricing. Late delivery times. Failures to be instantly available to resolve complaints. Charges for extras that used to be free.
     Building on research findings from Arizona State University, here are tips for handling such situations to avoid negative fallout:
  • Announce changes in advance. Minimize the surprises.
  • Take personal responsibility. If you need to raise prices because supplier prices have escalated, certainly explain that to the irritated shopper. But in doing it, even your employee furthest from ownership of the business should use an abundance of “I” and “My store.”
  • Allow the customer enough time to brief you about the bother. Then respond with something that shows you understand what the customer said, For instance, you might reply, “I understand the nuisance it causes for you to have to put your project on hold because of the late delivery.”
Click below for more:
Keep Your Promises
Make Your Shoppers Feel Smart
Ease Customer Anger at Delivery Delays

Tuesday, October 19, 2010

Bundle Pricing, But Limit BOGOs

Would you pay the Taiwanese equivalent of $1,000 to purchase the case for an Apple iPad? An ecommerce retailer there says the case is currently her best-selling item, although the price is more than 25 times what it would cost in most other parts of the world.
     Ah, but there’s a secret: A Bloomberg Businessweek article reports that when your case is delivered, inside is a free iPad with 3G wireless and 64 gigabytes of memory. You see, the sale of Apple iPads by Taiwanese retailers is currently banned. The most straightforward way to sell them is to charge for the case and give away the iPad.
     This seems the ultimate in BOGOs—Buy One, Get One. Purchase one item and get an additional item at no additional cost. However, this also seems the ultimate in weird applications of BOGO promotions. It works only because the value of the iPad is so well recognized. Researchers at University of California-Berkeley, University of Southern California, Stony Brook University, and Indiana University find that if a product is seen by the shopper as being offered for free as part of the BOGO, the shopper devalues the worth of the product.
     Aside from BOGOs, bundled pricing—in which an amount is charged for a combination of products, services, and/or fees—can work out well for you. But in announcing bundled pricing to consumers, clearly point out the benefits to them. That’s important because researchers at Harvard University have shown how the opposite of bundled pricing—called partitioned pricing—is better at highlighting the benefits of the individual components of the package.
     One benefit of bundled pricing that shoppers find especially attractive is the ability to choose. Consider cable TV services. As a rule, the customer must buy a package of channels rather than picking only those specific ones they plan to watch. A New Yorker article earlier this year discussed how consumer groups are objecting to the enforced purchase and how an effective response from the cable companies is to highlight the value of being able to select from many choices, including some the customer wouldn’t have known to sample otherwise. Economists refer to this advantage as “option value.”

Click below for more:
Use Promotions with Lasting Payoffs
Move Shoppers Beyond Fixating on Price
Use Partitioned Pricing to Highlight Benefits

Monday, October 18, 2010

Give Customers Assurance They Belong

In the old TV series “Cheers,” the draw of the bar was that, as the theme song said, “…everybody knows your name, and they're always glad you came.” People select hairdressers and even hardware stores on the same basis.
     You might be unable to recall the name of each customer. But you can let every customer know they belong.
     Consumer researchers showed how the opposite of warm acceptance—cold rejection—motivates people to buy. Participants in a study at Tilburg University in the Netherlands, Florida State University, Southern Utah University, University of British Columbia, and University of Minnesota were placed in pairs. Then one of the pair would resign from the team. In some cases, the remaining partner was led to believe this happened because the departing teammate disliked their partner. In these cases, the remaining partner became more likely to buy relatively useless products and spend premium amounts on foods they themselves disliked, but thought their partner would like.
     The power of this escape-from-rejection means it is easy for a retailer to use it unethically. Don’t. But with those exceptions, use welcoming acceptance as a sales tool:
  • If you learn that a customer is experiencing feelings of rejection, guide them toward products carrying a feeling of nostalgia. Hey, offer them a nostalgic cookie brand. Researchers at Netherland’s Erasmus University and at Arizona State University had study participants play a computer game. The game was rigged such that some of the participants were quickly excluded. Those excluded participants became more likely to prefer older—rather than the latest—versions of items ranging from food brands to shower gel. In the study, rejected participants reported feeling better after eating a cookie carrying a brand name popular in the past. This didn’t happen nearly as often with new brand cookies.
  • Shoppers going through significant life changes, like divorce or college graduation, become more open to your recommendations to try out product upgrades and less familiar brands.
  • To the degree that it is socially appropriate, gently touch the customer. Researchers at Tel Aviv University assessed the results of a retail employee touching customers in settings that included a supermarket, a restaurant, and a bookstore. There, a brief touch on the arm of a customer led to the customer feeling more positive about the retailer. And positive feelings toward a retailer increase the potential for financial profitability.
Click below for more:
Use Customer Life Changes to Switch Brands
Touch Customers

Sunday, October 17, 2010

Limn Words Shoppers Won’t Understand

On September 7, 2010, a front-page article in the Baltimore Sun carried the headline “Opposing votes limn difference in race.” Well, at least a few of the newspaper’s readers that day reacted as if they’d like to rip the editors limn from limn. Whoops, I mean limb from limb, which is pronounced the same way.
     As to the definition, limn shares its word root with illuminate and means to give clear, sharp detail. The headline meant that a set of opposing votes portrayed differences between the current electoral candidates in clear, sharp detail.
     But those upset readers of the headline didn’t know what “limn” meant. They were irritated at the Baltimore Sun for creating an unnecessary difficulty. One reader opined, “To put a word like ‘limn’ in the headline for the lead article on the front page of this newspaper seems to me to be unbelievably arrogant and patronizing. Could the headline writer not have fashioned a head around the word ‘illuminate,’ ‘delineate’ or ‘depict’? Perhaps then more readers would not only understand what the article is about but actually might want to read it.”
     Wrong on two counts. First, the Sun’s headline writer said he chose the word not to impress with his vocabulary, but because he needed a shorter word for “show” in a one-column space. Second, classic research by psychologist Edward Wheeler Scripture found that a bit of puzzlement in a headline—whether for a newspaper article or newspaper ad—increases interest in reading what follows. In an 1895 book, Dr. Scripture used his studies’ findings to even suggest putting commercial notices upside down in order to attract attention.
     Using a fancy word also can subtly add to your impression of distinctiveness or exclusivity in a positive way. A two-store California retailer calls themselves Limn to fit their merchandising of sharply designed high-end home furniture, lighting, and accessories.
     Now that you know what limn means, I can recommend to you that you limn for your special attention any words that your target audiences are likely not to understand correctly at first viewing or first hearing. Give each of those words clear, sharp detail as you create your marketing copy and selling scripts. Then decide for each of the words if it will arouse useful interest in your intended message or only create a distracting kerfuffle. Whoops, maybe I should say, instead, create a distracting fuss.

Click below for more:
Offer Aspirational Shopper Subtle Signals
Use Humor in Unexpected Ways
Joke Around to Facilitate the Sale

Saturday, October 16, 2010

Assume Multiple Personalities to Merchandise

Richard Gottlieb, publisher of Global Toy News and respected authority on the business of play, describes a problem that could be robbing you of profit: A company Mr. Gottlieb was working with wanted to bring to market games designed for senior citizens. Both the game pieces and the print fonts were extra large. But the people responsible for buying games for retailers had trouble conceptualizing in which department these senior citizen games would be merchandised. Games are for kids, not for the elderly.
     The way around this problem is the peanut-butter-and-jelly principle of product adjacencies, but with a psychiatric twist. The PB&J principle is that we stock the jellies on shelves close to where we shelve the peanut butter because when a shopper puts a peanut butter jar into the shopping cart, they're likely to start thinking, “Where’s the jelly?”
     The psychiatric twist is that we take on a bit of multiple personality disorder. No, not the pathology portrayed in the Showtime series “United States of Tara” about a woman with what’s formally called Dissociative Identity Disorder. Instead, let’s think creatively about what different sorts of personalities would be looking for in your store and where would they expect to find it.
  • In a dialogue with Mr. Gottlieb, branding expert Carol Spieckerman suggests that retailers follow the example of battery merchandising. Batteries are at multiple locations. Think of all the different places the customer might be interested in what you’re offering. Coach your store’s buyers and merchandisers to relax division by department.
  • But batteries are small and inexpensive. You can’t stock the foot massagers at ten different locations. So in place of the item, use signage saying, “Also looking for a foot massager? They’re on Aisle 7.”
  • Listen to your customers. Ask them, “What items would you like to see in our store that we don’t have now?” If it turns out that you do have the item, notice where the customer is standing and place the item or signage right there.
     Could be that the senior games would offend seniors. Research from Ghent University and Vlerick Leuven Gent Management School suggests, ironically, that the intended audience will think gigantic game pieces and super-large print are for young children, not mature elders. But the lesson from Mr. Gottlieb’s example would still hold. So when merchandising, be ready to assume a variety of shopper personalities.

Click below for more:
Prime Customer Interest with Adjacencies
Ask Customers What You Didn’t Have
Market to Seniors, Not to Elderly

Friday, October 15, 2010

Disclose Product Cautions

Laws, standards of professional practice, business insurance underwriters, and commitment to retailing ethics might all require you to provide customers warning about the risks in using certain products you sell. But what about volunteering negative product information when you’re not required to do so?
  • Researchers at European University Viadrina find that when a salesperson volunteers negative information about a product that’s being considered by the shopper, the shopper becomes more likely to trust everything the salesperson says. This argues for the salesperson starting by presenting a good choice, but one other than what the salesperson thinks is the best choice for both the shopper and the store’s profitability. After presenting a downside of that choice, the salesperson can move to presenting the best choice. But keep the words and logic simple. The researchers also find that if there’s too much complexity, the shopper won’t hook the talk of negative information to the salesperson’s credibility.
  • When comparing choices for the customer, accentuate the positive. A positive frame is of the form “The other alternative is good, but the one I’m recommending is even better.” A negative frame is of the form “The other alternative is bad, and the one I’m recommending is good.” Researchers at New York University and Vanderbilt University find that negatively framed comparatives draw out more counterarguments from the shopper than do positive comparatives. But further research says that if you want the shopper to spend more time thinking about the product selection, use of a negative frame can help.
  • When a shopper is in a positive mood, their decision making is more flexible than when they’re in a negative mood, and they’re more likely to persevere in the shopping process. Decide on your recommended purchase alternative and talk about how the positives outweigh the negatives. But when the shopper is in a negative mood, quickly decide on your recommended purchase and then talk about how it is the least bad alternative. Be ready to answer questions about the negatives of each alternative. Then once the customer makes the selection, talk about positives to reassure the customer.
  • Consider offering a liberal money-back guarantee that’s known about and trusted by the shopper. Research findings from University of California-Berkeley and Hebrew University of Jerusalem indicate that if your store does this, disclosing product cautions becomes less important to making the sale.
Click below for more:
Encourage Balanced Customer Reviews
Combine Positive with Negative Comparatives
Attend to Negatives When High Time Pressure
Selectively Keep Information from Customers

Thursday, October 14, 2010

Refine Your Psychographics

When retailers talk about psychographics, they’re referring to personal values and the shopper habits affected by those values. Demographics (age, gender, income level) and psychographics are often two ways of looking at the same thing. For instance, women generally have different personal values and shopping habits than do men. But the psychographic approach gives the retailer more focused hints for making sales.
     Except when the analysis is insufficiently refined, that is. A recent Bloomberg Businessweek article describes how Toyota dealers suffered from this happening: Figuring that Toyota is America’s largest producer of cars, the company—along with a number of influential industry analysts—expected Toyota to swipe sales of large pickup trucks from GM, Ford, and Chrysler as the market for pickups picked up.
     But the psychographics of buyers of large trucks are different from the psychographics of car buyers. A more refined analysis using data from Nielsen Claritas indicated that compared to Toyota large truck prospects, the GM and Ford prospects are more likely to dine at Cracker Barrel restaurants, have dial-up Internet, and use the paper Yellow Pages. The Toyota prospects were more likely to dine at steakhouses, shop online, own golf clubs, and subscribe to Runner's World.
     This sort of focus gives specifics to be used in merchandising, marketing, and selling. Psychographic analysis for the PowerBar sports nutrition line produced a recommendation that the products be displayed alongside personal grooming items. The focus from refinement also protects against you being buried in trivial findings, while staying open to being surprised. A collaboration of researchers at Columbia University, Advertising Age, and the Minneapolis Star-Tribune found that people most interested in buying fishing equipment also enjoy listening to Christian rock music and reading Southern Living.
     Whether contracting with a market research firm to provide you psychographic information or gathering and analyzing your own data, always be angling for further refinement.
     At the same time, recognize there will be individual exceptions to the overall refined findings. A comment posted to the online version of the Bloomberg Businessweek article reads, “I've built several computers, use an htpc to watch the internet on my plasma, use voip instead of telco, never owned a gun, but have several bikes. I own 3 F150's and no toytas [sic].”

Click below for more:
Recalibrate for Shopper Gender Trends
Help Customers Show Off New Products

Wednesday, October 13, 2010

Prolong Your Reputation as Cutting Edge

“New and improved” has been a mainstay of retail marketing for forever. But a preference for the cutting edge has exploded in shopper psychology. An upside for the smaller retailer is that it gives an opening to get customers. “Want the latest technology/fashion statement/service delivery method? Come to us rather than to the stodgy retailer that’s been around too long.” At the same time, the challenge for retailers is that once you’ve made “new and improved” a major marketing message, you risk losing that reputation—and your customers—to upstarts.
     Here are some ways to prolong your reputation as cutting edge:
  • Continually introduce some new and improved items. A common sense suggestion, I know, but one that is too often overlooked by busy retailers.
  • Open pop-up stores. These are stores that remain in business for a very limited time. A Bloomberg Businessweek article from a few years ago describes how even retailing giants Target and Walmart have successfully used pop-up stores. In one case, the Target pop-up was open for only four days. Your objective is to generate excitement about your bricks-and-mortar store and/or ecommerce site. With this in mind, announce the pop-up widely to the media, realizing that even after the pop-up has closed, reporters will figure their audience is still asking, “What the devil happened?” When the Bloomberg Businessweek article was published in 2007, retail was thriving, so the article said, “Unoccupied stores in hot retail locations aren’t easy to come by.” The situation is different now.
  • Repackage nostalgia. Australian entertainer Peter Allen thought enough of the saying “Everything old is new again” to coauthor a song by that title. Merchants are accommodating nostalgia fans who want the cutting edge by offering items like antique toasters sold as accent pieces, music tracks from old LP records reissued as MP3 downloads, and traditional house calls augmented with Internet ordering.
  • Build customer loyalty. Another common sense suggestion? Maybe, but for a reason you might not have recognized: Loyal customers are sensitive to whether the cutting edge has become overly trendy. Researchers at Concordia University and University of Wisconsin-Madison explored what happened when loyal customers’ shopping selections threatened to be associated with terms like “yuppies,” “metrosexuals,” “urban gangstas,” and “hipsters.” The research findings indicate that loyal customers’ reactions in rejecting these labels strengthen their conviction that their existing store of choice is cutting edge.
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Meet Needs of Divorce Market
Welcome the Plus Sizes
Meet Customers’ Desires for Nostalgia

Tuesday, October 12, 2010

Clarify Item Advantages via Pricing

Present item costs as benefits that the product or service brings in units important to the shopper. This helps move your shoppers beyond a fixation on the item price so they can more accurately assess the value of the alternatives and more often consider purchasing items that bring you a higher profit.
     Researchers at London Business School and European School of Management and Technology gathered some examples of this tactic:
  • Embrex (now Pfizer Poultry Health) offered poultry breeders inoculations by the egg.
  • General Electric priced airline engines by the power delivered per hour.
  • Goodyear dealers priced tires according to how many miles they were expected to last.
  • Explosives supplier Orica charged customers according to the fragmentation of the rocks extracted.
     Here are the steps to clarifying advantages via pricing for items you sell:
  1. Ask your customers and prospective customers about the benefits they find in using the product or service for which pricing has become an issue. Questionnaires, focus groups, interviews, and customer diaries are the chief methodologies for gathering this information. Be sure to ask customers about their beliefs, their emotions, and their intentions when it comes to the product type you’re investigating. To help ensure accurate results, don’t limit yourself to one or two of these three.
  2. Analyze what you’ve gathered. The most revealing, and therefore most valuable, discoveries will come from statistical techniques like conjoint analysis, factor analysis, and cluster analysis. However, since these techniques require use of an outside consultant, you might choose to employ less sophisticated looks at the data.
  3. Word each main benefit in terms of units the shopper would use or process: fertile eggs, engine power, road miles, rock fragments, and so on. The units might be different for different target populations or for different roles the shopper takes on. In the role of household accountant, the consumer might be assessing cost per serving, while in the role of parent, the consumer might be assessing cost per set of daily nutritional requirements. If you’ve used the statistical analysis techniques, they’ll help you in this segmentation.
  4. Set pricing in terms of the units.
  5. Announce both pricing and benefits using the units.
  6. Over time, regularly analyze how well this pricing structure is meeting your profit objectives, and make any necessary adjustments.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Ease Customer Pain About Item Prices
Move the Customer to Accept Higher Prices
Know Your Potential Customers' Intentions
Use Cluster Analysis on Customer Data
Keep Customers Happy About Data Collection
Analyze What Your Shoppers Say and Do

Monday, October 11, 2010

Design Dress Codes Deliberately

Desmond Morris, whose career work is central to the field of evolutionary psychology, wrote, “It is impossible to wear clothes without transmitting social signals. Every costume tells a story, often a very subtle one, about its wearer. Even those people who insist that they despise attention to clothing, and dress as casually as possible, are making quite specific comments on their social roles and their attitudes towards the culture in which they live.”
     …and their attitudes towards the culture in which they work.
     Employee dress standards are part of the service we offer customers. But dress standards are tricky for retailers. A Bloomberg Businessweek article acknowledges the confusion by reporting results from an employee survey sponsored some years ago by the now-defunct department-store chain Mervyn’s: About 90% of the surveyed workers couldn’t describe the differences among formal business attire, business casual, and just plain casual.
     Take a leadership role in deliberatively designing dress codes for your stores, offices, warehouses, and outside sales teams. Think through the functions that dress serves for you and incorporate those in the standards. In that way, you can best answer questions about the standards.
  • Functional. Whatever the employee is wearing, they probably can put on coveralls to unload boxes or put on gloves and kneepads to clean up spills. But rugged, well-fitting shoes might be essential for workplace safety, even if the shoes look clunky.
  • Show off the merchandise. This applies to more than clothing stores. Customers will give greater credibility to the merchandise in a medical supply store when the staff wear white jackets and greater interest in cooking utensils when demonstrated by somebody wearing a chef’s toque.
  • Reinforce the business’s code of behavior. For a time, the British Broadcasting Corporation was getting static for allowing female newsreaders to show lots of leg and the men to wear turned-up jeans. Older audience members recalled that when Lord Reith was in charge, even the newsreaders on radio had to wear dinner suits. The objective was to give the newsreading the proper gravitas. What’s the personality you want to project with your dress code? High or low gravitas? It’s how the clothing style makes the wearer feel. It’s also the nature of the clothing styles the employees see as they look around at each other.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Train Staff About Dress Standards
Keep Your Store's Dress Codes in Fashion
Spring Your Colors
Woo Item Experts

Sunday, October 10, 2010

Give Shoppers Permission to Spend More

Suppose I ask your shoppers to think about the slogan “Save money. Live better,” and then the slogan, “The good life at a great price.” My question for you: Does thinking about those slogans make a shopper likely to spend more money or less money, or does it have no measureable effect on spending habits?
     You might recognize that the first of those slogans has been used by Walmart, and the second one by Sears. Both store names are associated with thriftiness. But I’m asking your shoppers to think about the slogans, not the store names.
     The answer to my question of you comes from research at University of Miami, Hong Kong University of Science and Technology, and University of California-Berkeley. A set of studies found that thinking about either of those slogans increases the amount of money people are willing to spend during a shopping trip. In fact, the amount was twice as much after thinking about the slogan than after thinking about the store name. With the store name, the average amount study participants were willing to spend was $94. With the slogan, it was $184.
     What’s going on? In my opinion, a good explanation for the findings is that the slogan gave shoppers permission to spend money by shifting their thinking toward a longer-term perspective. “Live Better” and “The good life” was enough to lift shoppers’ eyes from their day-to-day expenses.
     Researchers from Princeton, University of Chicago, and Digitas-Boston surveyed people entering a grocery store. One set were asked, among other things, questions about the contents of their wallets. This nudged their thoughts towards the money they had to spend in the short term. Another set of shoppers were asked instead about the different types of financial accounts they had in their investment portfolio, such as checking and savings accounts. This got those shoppers thinking long-range.
     What difference did it make? Well, the second group spent 36% more than the first group while shopping.
     In advertising and selling, regularly remind your shoppers about living the good life. State large prices not just as the total, but also as the cost per month over the expected useful life of the product. Offer extended payment terms. Have shoppers gaze over the horizon so they’ll subconsciously give themselves permission to spend more.

Click below for more:
Give Customers Long-Range Perspectives
Influence Subconsciously, Not Subliminally

Saturday, October 9, 2010

Turn Your Image on a Dime

Want to turn on a dime while navigating in traffic? That’s no great trick if you’re driving a Harley-Davidson motorcycle. But how about if you’re driving a Buick motorcar. As a recent Bloomberg Businessweek article says, Buicks are traditionally big and stodgy. Not the sort of vehicle to turn on a dime.
     Yet both Buick and Harley are doing a tight turn in another sense. They’re successfully moving to swiftly alter the brand image their respective dealerships portray. Buick sales are about 60% higher this year than last as a result of positioning themselves as a youthful, tech-savvy car.
     Harley is aiming to augment their male macho image with a bow to the softer feminine direction. Market share for on-road motorcycles is up one percentage point from last year, according to vehicle market analysts R.L. Polk & Co. One percentage point doesn’t seem like much, but when your market share for last year was already 46%, incremental gains are more challenging.
     The key to turning your store brand image on a dime is contrast. The shopper psychology underpinning is called Weber’s Law: In the 1830’s, Ernst Weber reported that weight lifters would notice an increase or decrease in the load only when the change was about 20% of the prior load. For 100 pounds, it took a 20 pound difference. But for 300 pounds, it took a 60 pound difference. Experimental psychologist Gustav Theodor Fechner extended Weber’s Law to cover all sorts of human perceptions.
     Now Buick and Harley applied Weber’s Law to change brand perception by implementing dramatic differences sure to exceed a 20% threshold in the product and the promotion:
  • Last year, Buick introduced a midsize sedan with a sculpted body on the outside and iPod connectors on the inside. A few months ago, Harley began selling the SuperLow model, which features a much lower seat, significantly lighter weight, and more festive color options than past Harleys.
  • Buick phased out sponsorship of a major golf tournament and used the funds to promote the Buick Regal at a series of rock concerts, each concert highlighting one or more local bands. Harley’s 650 U.S. dealers have been holding special events to which only women are invited. Bloomberg Businessweek reports that for one set of events, more than 40% of the women were in a Harley dealership for the first time.
Click below for more:
Project Your Brand Positively
Use Customer Life Changes to Switch Brands
Combine Flavors for Bonus Effectiveness

Friday, October 8, 2010

Become the Only Game in Town

The story, dating from the early 1900s, credited with originating the term “the only game in town” sticks any recipient of that designation with negative associations: A traveler asks the hotel desk clerk to recommend a place to play some high stakes poker. The desk clerk says, “The bar next door has high stakes poker going all the time. But I’ll tell you that the dealer there cheats people blind.” “My goodness,” the traveler asks, “why do people from around here play poker there?” The clerk replies, “Well, it’s the only game in town.”
     Why do I suggest, then, that you aim to be the only game in town? Because the distinctiveness you achieve will bring you added business. In my opinion, the hotel desk clerk’s answer to the traveler was incomplete. People played poker at that bar because it was the only game around going on whenever you wanted to play, and people were willing to accept losing their money in order to have fun playing cards, drinking, and socializing. The customers kept coming back because they received value, even though, with being cheated blind, they probably wouldn’t describe themselves as high in customer satisfaction.
     The “only game in town” dynamic came to mind as I read a prepublication version of an article scheduled for the November 2010 issue of Journal of Marketing. Researchers now at Southern Methodist University, University of California-Riverside, and Boston College found that under certain circumstances, customer satisfaction has little effect on repurchase behavior. Because you as a retailer need to expend resources to achieve high customer satisfaction, that finding is an alert to ask where there might be better alternatives for you than working to achieve outstanding customer satisfaction.
     The answer: With products and services you provide and products you carry that are essential commodities—like automobile repair services and groceries—settling for less than ideal customer satisfaction might be most profitable for you. Assess if other tactics would be less expensive ways to keep shoppers coming. Maintaining convenient hours and always being in stock, for example.
     On the other hand, with luxury, pleasure-seeking products—such as high fashion—the convenient hours and in-stock positions are important, but they won’t compensate sufficiently for low customer satisfaction. To be the only game in town, you’ll need to do it all.

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Build Up Shopping Convenience

Thursday, October 7, 2010

Craft Fear Appeals

In certain circumstances, we can make a sale more likely by arousing in the customer a sense of fear—fear about the consequences of not making the purchase or buying into the course of action we’re proposing. But unless the fear appeal is crafted well, it could end up doing damage to your business.
     Here are some tips on crafting fear appeals:
  • Research at Universidad PĆ¹blica de Navarra in Pamplona, Spain concludes that for certain shoppers in the world, fear sells, but for others, it’s a turnoff. How to tell which is which? Monitor the extent to which your shoppers use fear words themselves.
  • Raise enough fear of a real danger to win the customer’s attention and motivate action, but only to the degree that you’ve a guaranteed way to substantially reduce the risk. Don’t oversell. Researchers at Auburn University find that if the fear becomes too intense or if they don’t see a way out, shoppers become defensive and start thinking about why they don’t need the item you’re wanting to sell them. Or if they do end up making the purchase, chances are they’ll associate negative feelings with your store, making it less likely they’ll come back again.
  • Pair the fear with regret (“I can understand why you’re sorry you didn’t make a purchase like this before the accident”), guilt (“I’m sure you want to do all you can to protect your family”), and/or challenge (“I realize the price is high”). Research at Tulane University regarding health behaviors like using sunscreen and eating high fiber foods concluded that regret, guilt, and challenge increase the rate at which the consumer buys into compliance.
  • Don’t hesitate to use legitimate fear appeals with older consumers. Seniors respond better to fear-laden sales messages than to purely rational sales messages, especially if the fear appeal is combined with appeals to positive emotions, like comfort, contentment, and relief. This is what’s suggested by research at University of Pennsylvania, UCLA, and University of California-Irvine. Emotional appeals also help elderly shoppers remember details about sources of sales messages more accurately. All emotions—positive and negative—arouse interest among older consumers, and as people age, they get better at turning the negative into the positive (comfort from achieving control over fear).
For your profitability: Sell Well: What Really Moves Your Shoppers

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Know How Much Emotion to Deliver
Scare Customers into Buying
Emphasize Emotions with Older Consumers
Sell Self-Esteem After Times of Fear
Use Terror Management Theory for Status Items

Wednesday, October 6, 2010

Time Your Statements of Benefits

Knowing when to do what is essential to maximizing retailing profitability. Offering cold weather merchandise when your target consumers start thinking about cold weather preferences. Ordering the heavy sweaters and recruiting the tire chain jockeys enough in advance of when they’ll be needed.
     Tony Curtis, who died last week at age 85 after having appeared in more than 140 movies, is quoted as having said, “…(M)y longevity is due to my good timing.” I don’t know who first advised, “Timing is everything,” but Albert Einstein associated time with everything when saying, “The only reason for time is so that everything doesn't happen at once.”
     Prof. Einstein’s insight applies to the best ways for you to present product and service benefits to your retail shoppers:
  • Researchers at University of Connecticut and University of Virginia found that women shoppers vary between thinking, “It’s time for me” and “It’s time for others.” Analyze how your shoppers cycle between these two, then adjust your merchandise mix to fit. Retail store consultants at Envirosell performed an even more sophisticated analysis of timing, resulting in them advising a shopping mall bookstore to use cylindrical fixtures to rotate out different sorts of books for different times of the day. These approaches help you not only to sell more merchandise, but also to even out the flow of customers over the hours your store is open.
  • In advertising, describe the range of alternatives you have available to each customer. If your in-store or warehouse range is, in reality, limited, you could expand it by offering special-order services. But once the shopper arrives at your store or ecommerce site, have the products presented in easily understood categories. Researchers at University of Texas-Austin describe how having a broad assortment of products available draws shoppers, but once the shoppers arrive, they seek ease of product evaluation.
  • Before the sale, emphasize the number of functions the product can serve and have technical specifications easily available. Once the sale has been completed, state benefits in terms of making it easy to use the functions and reassuring the customer they’ve made the right choice. Researchers at University of Maryland-College Park found that consumers tend to choose the most feature-filled models, but then after purchase, tend to get frustrated with the complexity of what they chose.
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Merchandise to Fit Purchasing Cycles
Acknowledge the Power of Cycles
Use Signage to Categorize Items
Pitch the Synergy of Multifunction Products
Offer Fundamental Indulgences
Sell Ease of Use to Last-Minute Shoppers

Tuesday, October 5, 2010

Pair Contributions with Purchases

Fulfill your social responsibilities as a retailer by making charitable contributions. To increase sales at the same time, announce to your target markets that you’ll donate a certain amount of money for purchases from your store. Building on University of Texas-Austin and University of Wisconsin–Madison findings from a study of 3,500 consumers, here are some tips about pairing contributions with purchases:
  • Limit how frequently you announce that you’ll be pairing a contribution to charity with the purchase of an item. Just as with price discounts, if it’s done too frequently, it becomes less likely to boost sales. But as long as you don’t do it too often, your promise of a charitable contribution of $1 for each item purchased at the regular price will produce a higher average percentage gain in sales than offering a discount of $1 off the regular item price.
  • Make the offer for moderately popular products and/or brands. The percentage increase in sales for items that are already selling well won’t be as great as with less popular items, so don’t make the offer for items that are already quite popular. But because we’re talking about percentage increases, also don’t make the offer for products and/or brands that are not selling well at all. A 20% increase in unit sales of 100 is much less than a 10% increase in unit sales of 500.
  • Make your offer of the donation for an item where you carry products with the same brand name in different product categories. By allowing the customer to feel they’re contributing to a worthy cause, you build in the customer a good feeling toward the brand they purchase. This good feeling spreads to other items in different product categories that carry the same brand name, so makes sales of those other items more likely.
  • For the most efficient sales increases, make the offer on a branded item in only one product category. Announcing that you’ll make the donation for items in three different product categories that carry the same brand name won’t triple brand attractiveness compared to the effect of doing it with a product from a single category. If you want to make the offer for three different products, do it for products in three different categories, each one carrying a different brand name.
Click below for more:
Introduce Unknown Products with Charity
Show Fair Pricing by Contributing

Monday, October 4, 2010

Honor Those Who Love Those Pets

Today is World Animal Day, described by Bloggers Unite as “a special opportunity for anyone who loves animals to acknowledge the diverse roles that they play in our lives.”
     Retailers certainly should love animals for one of those diverse roles: Pets motivate their owners to be wonderful customers.
  • The Humane Society of the United States says about 40% of U.S. households have at least one dog and about 35% own at least one cat. That’s a substantial market, even if you don’t add in the horses, birds, lizards, gerbils, and goldfish. Whatever your retailing line, it would benefit you to carry some products of special interest to pet owners.
  • Researchers at St. Joseph’s University report that about 90% of pet owners consider their pets to be members of the family and about 75% of household cats and dogs receive gifts on holidays and birthdays. An ethnographic study by University of Utah researchers found a surprisingly high frequency of pet owners wanted to have a picture of their pet—ranging from dog to horse and beyond—taken with Santa Claus. What services do you offer to humans that could be profitably also offered for pets?
  • Survey researchers at Eastern Washington University find much stronger loyalty for pet food expenditures than for the owner’s own food expenditures. This indicates that once you establish the habit of owners making purchases from your store for their pets, they’re likely to keep coming back, but to woo pet food purchasers who are shopping elsewhere, you’ll want to do something dramatic to bring attention to what you offer.
  • People are more willing to buy premium items for their pets than for themselves. The Eastern Washington research found that about 80% of dog owners said they were serious about selecting healthy food for their dogs, but only 65% of the same people said they were serious about their own food selection. Bloomberg Businessweek reports a high increase over past months in spending on designer-label pet clothing and accessories, a substantial proportion of it via ecommerce. The University of Utah research attributed trends like these to us considering our pets to be more defenseless than ourselves. The Bloomberg Businessweek view is that we can feel luxurious with a lower price tag when the product is for Fido. So be sure you’re ready to defend and indulge pets in your business operations.
Click below for more:
Go Upscale for the Pet Market

Sunday, October 3, 2010

Impress with the Exotic

“And for the next item in our Mexican feast, may I offer you a smoked corn custard sprinkled with pale yellow, squirming wax moth larvae?”
     Not your cup of tea—or your cup of chapulines, those little fried grasshoppers described as tasting like the exoskeleton of a potato chip? Then how about visiting the latest exhibit at our local museum where we’ve graphic photographs of children from Mozambique snacking on live locusts?
     A New York Times article described the bug-filled Mexican feast at Brooklyn Kitchen restaurant. Exotic experiences like these will draw interest in, and therefore footsteps to, your retail business. Whether you run a restaurant, a museum, a travel agency, or some other type of business altogether, think of what unusual experiences you might offer to your target audiences.
     Then, as you plan the publicity for these events, consider what benefits the unusual experiences provide:
  • Roller Coaster Effect. Consumers go on the most treacherous roller coasters not only for the stimulating physical sensations, but also for the sense of pride achieved in prevailing over fears. To draw shoppers, publicize the thrill of confronting the exotic. Tell people they’ll be able to take away a memento to verify their show of courage.
  • Exotic Dancer Effect. Some people are more interested in breaking taboos than in breaking through fears. We don’t call those ladies “exotic dancers” simply because they hail from faraway places. As a general rule, consumers yearn to push the limits. Publicize the opportunities you’re giving people to do that.
  • Educational Effect. The organizers of the Brooklyn Kitchen event touted the benefits from learning about cultures in which eating bugs is common. And notice how the Travel Channel introduced viewers to exotic places with presentations of Andrew Zimmern’s “Bizarre Foods” international ingestion interludes. Publicize the educational benefits of your unusual offerings.
     After reading the NYT article, I decided to add a fourth effect to those three. It was of particular relevance in New York City. It was also probably of particular interest to one diner at the Brooklyn Kitchen event. She works at Victoria’s Secret. Around the time of the exotic dinner, a NYC Victoria’s Secret store along with a Niketown store shut down for a while in order to eliminate infestations of bedbugs. Considering this, the pleasure from chomping down on bugs might be called the Revenge Effect.

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

Click below for more:
Reduce Unwanted Risks for Your Shoppers
Apply Systematic Desensitization to Fears
Consider Publicizing Your Rascal Image

Saturday, October 2, 2010

Inform Your Staff Where Sales Dollars Go

In a Bloomberg Businessweek opinion piece, McGill University’s Jody Heymann recommended opening up the financial books to your staff. There is abundant research evidence that when employees feel a sense of ownership in a business, they find their jobs to be more rewarding. They’ll work harder and more creatively.
     My impression is that many first-line retail employees would prefer not to spend their time regularly tracking the fortunes of the business. But Prof. Heymann might be getting at something more fundamental: Those first-line employees often are woefully inaccurate in estimating where a retailer’s product sales dollars go.
     See if I’m right. Ask some of your employees this question: “For every $100 our store makes in sales, how much of that is profit after expenses?”
     My colleague, hardware/home improvement retailer Art Freedman, says that the answers he gets are in the range of $30 to $50. These employees think that for every $100 sale, the business gets to keep $30 to $50 in final profit. Many employees fail to realize that the real margins are much thinner than that.
     To start, they forget what’s usually the largest cost—inventory replenishment. When you sell an item, you’ll be buying more in order to replace the item on the shelf. Art says that in his business, inventory replenishment consumes about $50 of the $100 sale. And money needs to go for salaries, rent, marketing, and the rest. If you think the numbers alone will bore your staff, use charts or tell it in the form of a story.
     You might not want to take Prof. Heymann’s advice to keep the bookkeeping open to all employees all the time. You might not want to implement her other advice—profit sharing. Still, occasional business literacy lessons for your staff could be quite helpful. Tell your staff where the sales dollars go. It will build their trust, motivate their job performance, and allow them to appreciate how even small mistakes, if made repeatedly, could drive you out of business, eliminating the jobs for them and their coworkers.

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

Click below for more:
Ask Customers & Staff for Ideas
Coach Your Staff with Stories