Miniaturize for Profitability

A Cincinnati Enquirer article this week announced that hometown heavy hitter Procter & Gamble is now selling compacted powder laundry detergents at Target stores nationwide. Concentrated powders are more popular in Europe and less-developed countries than in the U.S., where progressively more concentrated liquid detergents have been sold for some time.
     As with the liquids, the concentrated powders allow for smaller, lighter packages. Miniaturizing has many advantages for retailers. For instance, you can carry and store more products in the same space. To realize the full profitability advantages, though, frame any advantages as benefits for consumers.

• Smaller, lighter packages mean lower transportation costs when you order from suppliers and mean lower expenditures when you ship to your customers. With many products, like toys and games, smaller size generally means lower manufacturing costs. Look for ways to use these economies to drop item prices and then advertise the reductions to shoppers.
• Smaller packages mean less packaging material. Although consumer interest in going green has eased somewhat in this recession, environmental consciousness is still a selling point.
• Because of the popularity of consumer electronics, reduced size is associated in the shopper’s mind with innovative improvements. Leverage those associations by introducing at least a small product advance in the miniature. P&G says that the Tide formula removes stains better than the older version, and the new Gain features “perfume microcapsules” to boost the aroma of freshness.

     When introducing miniature versions of products, make it easy for the consumer to adjust usage habits in ways that will allow them to realize the full advantages. The scoop that P&G places inside each concentrated powder detergent box has revised marks for amounts to be used. Unless such changes are abundantly clear, shoppers will readily say you’re charging them the same for less.
     Miniaturizing works not just with products, but also with services. If you can deliver the service more quickly, that can be more valuable to today’s multitasking consumer.
     Here, though, pointing out the benefits can be challenging. Consumer behavior research at University of Singapore and University of Toronto found that when service duration is shorter than the customer expected, the customer thinks the service is inferior. But researchers at University of Michigan found that quickness can imply higher quality to the consumer when the retailer points out how each person and each process was so refined that no time was wasted.

Click below for more:
Explain How Quick Service is Worth More
Explain Delivery Time as Quality/Talent
Look to Toys & Games for Retailing Trends