Wednesday, June 8, 2011

Replace Exclusivity with Substitutability

A recent posting discusses product substitutability—products in your assortment mix which the shopper feels comfortable substituting for other products they might consider. The examples in the posting are types of milk, so I’ll build on those:
  • The dad who is coming down the aisle looking for nonfat milk to keep the family healthy might be comfortable purchasing 1% fat milk, or maybe even 2% fat milk, if you’re out of stock on the nonfat. This allows you to keep the inventory of nonfat milk itself slim when you carry the 1% or 2%. It also means that you might not need all three types.
  • However, the mom who is coming down the aisle next and looking for chocolate milk to convince the kids to drink up probably won’t be satisfied with purchasing whole milk, nonfat,1%, or 2% as a substitute. Unless you have chocolate syrup directly adjacent to the dairy case. By adding a product and managing product adjacencies, you’ve developed substitutability in the shopper’s mind.
     But what about convincing the consumer to accept the substitute? Our natural tendency when thinking about how to make a switch worthwhile is to tell the shopper the ample positive benefits. This is a good start. People need to see the potential gains in order to put out the energy to form and maintain new habits.
     However, we too often forget about the importance to the consumer of the costs of the switch. Researchers at National Kaohsiung University of Applied Sciences in Taiwan found that thoughts of these switching costs significantly interfere with the positive value a person sees in the change. For instance:
  • “How difficult will it be for me to master the skills necessary to use the substitute?” If we’re talking about substituting 1% fat milk for nonfat or one package size for another, skill mastery isn’t an issue. But in substituting one type of club for another, there will be golfer concern. Demonstrate the substitute, emphasizing the similarities to the original.
  • “What social costs would I need to pay? If the substitute doesn’t carry the prestige of my usual item, will I find myself going through the bother of hiding from my friends what I‘m doing?” In selling socially visible items, select substitutes with the right prestige quotient.
     The overall message from the research findings: Introduce the item by saying with enthusiasm, “Give this one a try!”

Click below for more:
Monitor the Sales Floor to Avoid Out-of-Stocks
Prime Customer Interest with Adjacencies
Minimize Switching Costs

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