Sunday, June 30, 2013

Broaden Survey Response Scale Intervals

The answers you get from consumers are determined by what you ask and how you ask it. That’s true with the content of the items and also with the breadth of intervals on a response scale.
     An example comes from scales used to assess the price sensitivity of different demographic groups. You could be asking if regular customers are willing to pay more than infrequent customers or if those who live downtown consider a $10 price point to be expensive, while those who live uptown don’t.
     Shopping frequency and residence area are demographic variables. A general rule of thumb on consumer surveys is to put the demographic questions toward the end, since respondents become cautious in answering as soon as potentially identifying information is requested. However, because asking about prices is even more sensitive, you’d probably ask about the demographics first.
     In asking about shopping frequency, you could, for instance, have a scale with intervals “1-3 times per month; 4-6 times per month” and so on or have a scale with “1-6 times per month; 7-12 times per month” and so on.
     For the price sensitivity items, you might adapt the four questions pioneered by Dutch behavioral economist Peter van Westendorp and used by a great many retail pricing specialists. Your adaptations might be, each beginning with the words “At what price would you consider this product or service to be…”
…inexpensive enough that you’d think hard before deciding not to purchase it?
…expensive enough that you’d think hard before deciding whether to purchase it?
…so inexpensive that you’d think there might very well be something wrong with the item?
…so expensive that you’d immediately reject the idea of buying the item?
     Again, the response scale for each item could have a fewer number of broad categories or a greater number of narrow categories.
     Research at New York University, University of Southern California, London School of Economics and Political Science, and survey firm Vision Critical indicates that you’ll obtain more useful information from the pricing items if you make the demographic item response categories broad rather than narrow.
     When a retailer or consulting firms is designing the scale intervals, there’s a natural tendency to make them narrow. The thought is that the intervals can always be combined later during data analysis, but you can’t afterwards divide up a broad category. The research evidence argues for questioning that natural tendency.

Click below for more: 
Answer Van Westendorp Pricing Questions 
Decide on Your Segmentation Objectives Early

Saturday, June 29, 2013

Repent with Recycling

Hennes & Mauritz, better known as H&M, is rolling out a program to all of its stores to accept used clothing of any brand for discount credits on new purchases. The idea isn’t new. Many retailers accept used merchandise in this way. Still, the H&M motivations and program rules are instructive.
     According to Bloomberg Businessweek, one motivation for the program is to give H&M shoppers back feelings of social conscientiousness. Among apparel retailers, H&M had had the highest amount of clothing made in Bangladesh, the site of over 1,000 garment worker deaths in factory building collapses earlier this year.
     Then there was the incident a few years ago: A graduate student at City University of New York found bags of unused H&M clothing on the streets of New York. It turned out that staff at the 34th Street store had taken box cutters and razors to excess merchandise and then trashed the remains.
      Why weren’t these clothes donated to charity? How could the fingers be cut off gloves and insulation ripped from jackets at a time when NYC had been struggling to open up shelter space for the homeless in the face of freezing winter temperatures? Outrage exploded in the media and across the internet. Considering that H&M has stores in about 35 countries, reaction was international.
     H&M replied that over the prior year, they had donated about 500,000 clothing items to myriad charitable organizations. A spokeswoman said destroying unsold clothing was against company policy, she was unaware that it was being done, and the company would check to be sure no other H&M stores were doing it.
     The outrage over the incident faded over time, but did not disappear. It was mentioned in another recent Bloomberg Businessweek piece.
     There are times you might choose to use recycling as repentance. If so, check that it also makes good business sense.
     First, in the rules for the program. The H&M configuration gives a 10% to 17% discount on a subsequent purchase. This is well within acceptable ranges for other types of promotional discounts. To prevent the discount moving to unacceptable heights, restrict the shopper from using another discount on top of the recycling voucher.
     Second, take care when giving away merchandise: The unscrupulous could get hold of items and try to return them for store credit. If the donated merchandise works its way to potential customers, this would undercut sales.

Click below for more: 
Honor Social Responsibility 
Aim to Donate, Not Destroy, Merchandise 
Trash Ineffective Appeals to Recycle 
Consider Having Resale Merchandise

Friday, June 28, 2013

Tip Off Shoppers Before Manipulation

A vendor might offer you a cash incentive to push the selling of certain items. When accepting “push money” or “spiffs,” you might consider it proper to notify shoppers of the arrangement. If so, results from studies at University of Colorado-Boulder, Colorado State University, and University of Amsterdam indicate advantages in giving your notification early on.
     The studies had to do with product placements in media seen by consumers. The placements were sufficiently subtle for the people to often not notice them. Yet brand attitude was about 25% more positive with the product placement.
     In another set of studies, consumers were exposed to the media with product placement, but also told about the effort to manipulate their attitudes. When this disclosure was made afterwards, the brand attitude was about 16% less positive, while when the disclosure was made beforehand, the drop was 1%.
     Actually, even a drop of 16% could seem small when considering that the people were being told, “We’ll try to change your attitude.” It might seem that a reactance against influence would be triggered.
     Maybe the reason the resistance was minimal had to do with another effect: According to findings from research at Yale University and Carnegie Mellon University, in a transaction between a buyer and a seller, when the seller feels they’re being honest with the buyer about one aspect of the transaction, they’ll tend to give themselves permission to be dishonest with the buyer about other aspects of the transaction.
     Let’s assume a vendor says to you, “I recommend you try out a different brand. The cost to you will be the same as for what you’ve been carrying in the past, but my figures indicate you’ll sell more units more quickly.”
     With you being a retailer, you’ll be aware of the seller’s motivation that is shared by you and your vendors: In a transaction, the more money you spend with the vendors, the more money they make. Since you’re a smart retailer, you’ll aim to correct for that bias as you decide whether to start carrying the new brand.
     But the research indicates that if the vendor says before the pitch, “I’m recommending the changeover because my commission will be higher,” the vendor’s estimate of unit sales is likely to be much more inflated.
     With both your vendors and your shoppers, be aware of both the advantages and the distortions from early disclosures.

Click below for more: 
Sell to Fit Story Product Placement 
React When Faced with Reactance
Correct for Corruption from Candor 
Disclose Ethically

Thursday, June 27, 2013

Tease with Incongruities

Incongruity draws attention, and attention facilitates making the sale. And your attention to the influence of incongruity can help you understand how and when to violate scientifically-verified profitability tactics.
     There’s the realm of celebrity endorsements. A match between the nature of the product or service and the acknowledged expertise of the celebrity is helpful. Researchers at University of Cergy-Pontoise, BEM Bordeaux Management School, and market research firm CSA, all in France, say a close match is as important as the degree of likeability of the celebrity in influencing consumer behavior.
     A set of more recent studies, at University of Arkansas and Louisiana State University, supports this conclusion. The researchers were interested in the effects on memory for an endorsement of the celebrity praising a number of different types of products. Study participants were shown such ads and then later asked to recall from memory what products had been endorsed by a named celebrity. Sure enough, the product types which had a good fit with the expertise and/or personality of the endorser were substantially more likely to be remembered by the participants than those with only a moderate fit.
     But that wasn’t the whole story. Good fit trumped moderate fit. And so did poor fit. When the match between the product type and the expertise and/or personality of the celebrity seemed incongruous, the endorsement was remembered better than with a fair fit.
     Consumer psychologists explain this as a desire to resolve incongruities. Incongruity tickles us cognitively and emotionally, so we want to scratch. This can be used in the store as well as in advertising. According to research findings from University of Houston and Boston College, when a customer concludes that there’s an aesthetic mismatch between a purchase and their belongings surrounding it, the customer will consider returning the product, and this return visit can be turned into making a sale.
     We’ve heard the stories about a woman who starts out buying a pair of shoes, then decides she has to get a dress to fit with the shoes, and next a new hairdo to fit with the dress. The researchers found that an urge for congruity arises strongly with designer product lines, luxury branded items, and unusual consumer goods. 
     When consumers conclude that an item doesn’t fit in and the distinctive design had been behind the decision to buy, consumers want to purchase additional items to buffer the incongruity.

Click below for more: 
Select Celebrity Endorsers Who Fit 
Resolve Incongruity via Additional Sales 
Shock Consumers, But Morally

Wednesday, June 26, 2013

Calibrate Your Shoppers Well

Ask camera shoppers easy-to-answer questions about photography, and they’ll end up selecting more complex equipment than if they’d been asked difficult questions. Having successfully answered the easy questions leads shoppers to overestimate their expertise.
     If you encourage shoppers for golf clubs to practice putting from a distance of three feet rather than ten feet, they’ll sink more shots and, as a result, choose, on average, the more expensive golf balls marketed to expert players. Our impression of what we know—our subjective knowledge—is often more important in consumer decision making than is our actual, objective level of knowledge.
     Researchers at University of California-Los Angeles found that interest in enrolling in a retirement savings program involving some risk was increased by asking the consumer an easy instead of a difficult question about finance. Further, when people were given an abundance of technical information about a particular mutual fund, the people reported a drop—not a climb—in their subjective knowledge, and thereby became less willing to invest in that fund.
     Being flooded with information made people less confident and more wary. Caution was also stimulated, in another of the UCLA studies, when investment prospects were reminded of what they did not know about the mutual fund, again decreasing the self-reported subjective knowledge.
     We’d like our customers to feel confident about their purchases. Still, we don't want customers making misinformed investment decisions or misusing what they buy. They could hurt themselves. When it comes to the cameras and golf equipment, they also could damage the merchandise. If they wreck the equipment and then come to return it to you, you'll either accept the return and take a loss on the item or worse, one of your staff will refuse to take the return, thereby losing that shopper as a customer.
     So we’d prefer our patrons to be not only confident, but also what consumer psychologists call “well-calibrated.” In well-calibrated customers, the discrepancy between subjective knowledge and objective knowledge is small. Their shopping confidence is deserved.
     Allowing shoppers to play around with the possibilities has been found to improve the calibration. The distortion in the golf putting study, completed at University of Michigan, was produced by having participants try out just the three-foot challenge rather than both the three-foot and ten-foot challenge. With financial decisions, calibrate consumers by providing them tools to play around with various scenarios at their own pace.

Click below for more: 
Match the Product to the Customer's Skill Level 
Heal Shattered Confidence with Playthings

Tuesday, June 25, 2013

Lobby Politicians with Statistics

As a rule, stories are more effective than statistics in persuading shoppers. However, when convincing government officials of the importance of small to midsize retail businesses, research indicates you’ll want to also have numbers in hand.
     The National Retail Federation has compiled statistics to get you started:
  • 95% of retail businesses have only a single location. 
  • More than 3,000,000 Americans are employed by a small to midsize retail business, where “small to midsize” is defined as the business having under $5,000,000 in annual sales. 
     For politicians at the federal level, these nationwide numbers can work well. For local legislators and regulators, you’ll want to gather indices from closer to home.
     Cities are hungry for tax revenues. Big Box stores and industrial parks often produce more tax revenues than do small to midsize retail businesses. As a result, cities these days may be overlooking the value of keeping local retailing corridors robust
     To make your points, show how you help your community’s economy.
  • Sales revenue impact. An increase in profitability can mean maintenance or increases in sales tax and property tax revenues. The dollar figure for sales per square foot varies widely even within the same type of retailing, such as fashion varying between $510 and $1,731 in one sample. This variation indicates there is the opportunity for growth with the proper profitability tactics. 
  • Job income impact. What is the median annual salary of a retail salesperson in your local area? For the U.S. overall, it’s currently only about $21,000. Still, for each retail job in your local area, how many more jobs are added in a community because of the income of the retail employee? In my home state of California, it’s about 0.53 job positions. To calculate the value of this addition, determine the median income for all jobs in your local area. Use those numbers to calculate the economic value of keeping or adding each retail job in your community. 
     Research findings from University of Illinois and Northwestern University indicate that when lobbying, the retailer should be sure to acknowledge opposing points of view. Smart politicians want to be ready for what will be argued by constituents who are against your proposals. You’ll have more credibility with the politicians and earn their appreciation when you equip them to better respond to the objections they’ll encounter. Leading with your statistics helps because numbers seem more objective than stories.

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

Click below for more: 
Craft Powerful Stories 
Crow About Helping the Local Economy 
Lobby by Acknowledging Opposing Views

Monday, June 24, 2013

Rebel Against Pat Notions of Rebellion

Water cannon, tear gas, and police batons are being used against citizen protests by Turks. At least four deaths have been attributed to the demonstrations. In using this chapter of rebellion to kick off today’s posting on how your store can be more profitable, I do not want to minimize the gravity of the current events in Turkey. I selected this time and that place because events there show the unexpected forms rebellion can take.
  •  A few years ago, researchers from Bilkent University in Ankara asked why an increasing number of Turkish women are now wearing veils in a secular country in which the practice has been banned in public buildings. The answer? Rebellion. Although the veil is generally seen by Westerners as repressive, many Turkish women adopted it as a sign of deviance from the values of their mothers. 
  • A few months ago, a Bloomberg Businessweek article analyzed the success of Etesettür.com, the retailer of fashionable clothing cuts, colors, and patterns which completely cover a woman’s hairline, legs, and arms. 
     Your opportunities for selling to rebelling extend well beyond clothing. For instance, findings from research at University of Pittsburgh and University of South Carolina suggest that self-perceived experts are especially likely to shop at retailers who categorize foods in rebellious ways.
     Shoppers seeking rebellion tend to be young, hold values strongly, and/or perceive themselves as experts in the product or service category. But not all young people are strong rebels. Researchers from Laval University in Canada and University of Sousse in Tunisia identified adolescent girls who could be classified as either progressive or conservative.
  • The progressive girls formed brand images most directly based upon their self-esteem. The implication for retailers is to appeal to what the shopper believes will make her feel better about herself. Because what we think of ourselves is determined in part by what others think of us, this also was a factor. However, it was an indirect effect, much weaker than the self-esteem. The progressive girls are relatively independent. 
  • With conservative girls, the retailer does best to appeal to whatever the shopper believes will help them fit in well. The conservative girls tune into trends in a transitioning culture to decide what they need to hold out against. But they also trace the paths of change in order to decide when to make monumental instead of incremental changes in order to maintain social acceptability. 
Click below for more: 
Sell to People Who Want to Rebel 
Transition As Entire Cultures Transition 
Enable Shoppers to Revisit the Already Done

Sunday, June 23, 2013

Line Up for Extension Sales

People usually become as firmly attached to product brand names as to the name of your store. When your store features certain national supplier brands, then, you can extend the shopping basket totals by adding on brand extensions—products in new categories carrying a favored brand name.
     According to research at University of Pennsylvania and Duke University, this succeeds most spectacularly with consumers who have psychological boundaries in their lives. The explanation seems to be that such consumers are more willing to broaden the limitations on what is an acceptable brand extension.
     We’ve only limited influence on the psychological boundaries in a shopper’s personal life. For instance, other University of Pennsylvania studies found strong religious beliefs reduce a need for retailer-provided boundaries.
     This finding was part of a study which exposed study participants to loud sirens, bells, and alarms. Some of the participants were allowed control over the amount of the anxiety-producing noise, while the rest were not.
     Later, each of the participants was asked to express preferences between two sorts of items. Some of the items had borders; the others did not. For instance, the participant could choose a postcard to keep. The sole difference between the two cards was the thick border around one of the cards.
     The study participants who had been granted no control over the noise were more likely to select the postcard with the border around it. In subsequent experiments, people who felt little control preferred retail settings characterized as “highly bounded.”
     Brand extensions are a form of psychological noise. Here are research-based ways to establish comforting boundaries in store areas where you’d like shoppers to purchase those extensions:
  • Keep shelves orderly and fully faced with items lined up neatly. That’s like avoiding gaps in a fence. 
  • Regularly unclutter aisles. This doesn’t necessarily mean to have wider aisles, though. Narrow without crowding is best. 
  • Establish time limits on sales promotions and return policies, and then remind customers of the time limits. “Please remember that this offer is good for the next three days.” 
  • Wherever shoppers need to wait, make it abundantly clear who has what place in line. 
  • Pose questions which remind shoppers of psychological boundaries they themselves have set. Ask, “How did you decide on the item with that brand name?,” and then after listening to the answer, “Have you seen these new items we’re introducing which carry that same brand name?” 
Click below for more: 
Fence In Consumer Anxiety 
Maintain Customer Faith 
Evaluate the Viability of Brand Extensions 
Let Go of Irritating Brand Extensions 
Counteract Problems from Similar Brand Labels 
Draw Out Advice & Opinions from Shoppers

Saturday, June 22, 2013

Warm Up Shoppers with Communal Norms

Store shelves and windows can signal shoppers to expect both to pay high prices for the merchandise and to receive extraordinary service. Such signals include luxury brand names on display, stylish décor, and a creative store layout. Researchers at Florida State University and Pennsylvania State University say that obvious evidence of wealth in a sales setting also can lead shoppers to conclude the retailer doesn’t have the shopper’s best interests in mind.
     It has to do with the distinction consumer psychologists make between communal and market-driven exchange norms. In a communal retailing relationship, customers feel they are paying the provider because the provider requires the income to stay in business, but the provider sincerely cares about the customer’s well-being. In an exchange relationship, payment is proportional to the stated value of the specific item. No emotional warmth is assumed.
     If you want to impress your shoppers that you care about their welfare, avoid ostentatious store displays. This is true for attorneys, dentists, and financial advisors as well as hardware stores. The dress shop appealing to a luxury market rather than a bargain market will certainly want to show off luxury items. But for a warmer relationship with repeat shoppers, eschew what would be perceived as wasteful conspicuous consumption in the store.
     Researchers at University of Colorado-Boulder, Tulane University, and University of Pennsylvania applied the communal/exchange distinction to nonprofits. Imagine the situation where a church announced they’d be outsourcing backlogged prayer requests to priests in India in order to save on operating expenses. Based on results from their studies, the researchers say consumers of the services offered by the church would be disturbed by the prayer outsourcing. Yet consumers would generally accept a bargain dress shop announcing that, in order to keep selling prices lower, the shop sells clothes produced in India.
     Or consider the retailer selling pharmaceuticals who announces special programs to allow those without adequate funds to get the drugs at a reduced fee. Most consumers would consider this to be ethical, although not surprising. On the other hand, if the dress shop said they’d charge less to the economically disadvantaged, consumers would consider this surprising. If the consumers thought other customers were being charged more as a result of this policy, they might even consider the discount pricing to be unethical.
     People expect communal ethics from churches and medical offices, while accepting market-driven ethics from commercial businesses.

Click below for more: 
Adjust Ethical Expectations to Surroundings 
Set the Moral Tone Which Fits 
Elucidate with Close Business Friends 
Use Store Windows to Build Sales 
Brag About Your Retailing Humility

Friday, June 21, 2013

Precede Gender Attributions with Competence

Female concert music sounds better when conducted by a woman, and male concert music sounds better when conducted by a man.
     “Male” and “female” concert music? Yes, those listening to recordings of unfamiliar music with decisive rhythms and dynamics judged it as sounding better when told the conductor was male than when told the conductor was female. The ratings were about 14% higher. Not a huge difference, but enough to possibly affect future ticket sales.
     With music having delicate rather than decisive qualities, the participants in these University of Southern California and Ohio State University studies gave higher ratings if told the conductor was female. The difference was about 15%.
     However, these were not the findings for study participants who, before listening to the music, were convinced that the conductor—whether female or male—was highly competent. Here the rating of the powerful music didn’t depend on the supposed gender of the provider.
     This indicates that gender stereotypes at the retail level can be sidestepped by establishing competence as early in the process as possible.
     In fact, when convinced of female competence, the consumers changed their perceptions of the male-female nature of the music. The same piece was reported to be more delicate by those told the conductor was a competent female than by those told it was a competent male.
     The order of timing of gender attribution and evidence of competence made a difference. The same point showed up from a different angle in a set of studies at University of Minnesota, Canada’s Concordia University, and Korea’s Yonsei University: Many women avoid situations like automobile shopping, financial planning, and tax preparation because the women fear male salespeople will try to cheat them. These women believe that the men would assume the women’s science, technology, engineering, and math skills are inferior to those of the men.
     Among the ways to change the women consumers’ perceptions of their own competence:
  • Have women salespersons available and show more female salespersons in ads. This was one of the methods Lowe’s used to make their home improvement stores more female-friendly. 
  • Make the store environment less exclusively masculine. Go gently with the renovation, though. Otherwise you risk chasing off your male customers. 
  • Arrange and publicize women-only special events at your store. Harley-Davidson has had success with this method at their 650 U.S. dealerships. 
  • Have salespersons include more explanations in their selling. This eases anxiety. 
Click below for more: 
Stem the Tide of Female Shopper Discomfort 
Cancel Out Implications of Female Inferiority 
Plant Seeds to Grow into Purchase Desires

Thursday, June 20, 2013

Store Goodwill with Seniors

What’s your guess as to the largest age cohort among U.S. consumers? Based on the media attention devoted to Millennials, you might think it’s them. But according to yesterday’s Marketing Daily commentary, it is instead those who are at least age 65.
     And a report from eMarketer says senior citizens are significantly less interested than younger adults in making purchases online. Where about 77% of the general population use the internet regularly, only about 52% of seniors do. While about 57% of mobile phone users are smartphone users, the figure is only about 24% for seniors.
     The eMarketer report suggests communicating with seniors via TV, since this cohort spends nearly twice as much time watching television as do young adults. But an even better alternative for the small to midsize retailer is to communicate in-store. To maximize the effectiveness, keep it easy for senior citizen shoppers to come by early in the day.
  • Seniors are more concerned about their physical security than are younger shoppers. They feel more comfortable being out and about earlier in the day than later in the day. 
  • As the eyes age, they require more light. Marketers are wisely moving to the use of bolder colors and more contrast in product packing. But for stores that let daylight enter, the morning brightness can help seniors tell the blues from the greens and the foregrounds from the backgrounds. 
  • When older adults are in your aisles in the AM, they are better able to analyze selling points in detail rather than depending on global impressions. As a result, the morning shoppers are more likely to make purchase decisions they’ll later think about favorably. 
  • Seniors can be a valuable source of advice for retailers. When they complain, it is often with the intent to continue to do business with the store, not to start shopping elsewhere. This is more true than with complaints coming from younger consumers. Seniors are less mobile than younger customers and therefore have more of an investment in continuing to shop at the same stores. Another explanation is that age brings tolerance for imperfection. In any case, you—the retailer—can pick up some good ideas about improving your business from seniors. Morning is better than afternoon both because the seniors are likely to have more energy to talk and because you've more opportunity to listen than during busier afternoon and evening store hours. 
Click below for more: 
Offer the Time of Their Lives to Senior Citizens
Brain It on Home with Senior Citizen Emotions
Help Seniors to Shop Early

Wednesday, June 19, 2013

Help Powerful Shoppers Attend to Good Advice

It might seem you’d want to always make shoppers feel powerful, since powerful shoppers tend to spend more on purchases for themselves, according to Northwestern University research. However, recent studies at University of Calgary and University of Texas-Arlington find that a potential downside for the retailer of increasing a consumer’s sense of power is that the consumer thereby becomes more resistant to following social influences like purchase recommendations from friends. You’d prefer your shoppers to be attending to good advice given by others.
     The mechanism of action for the resistance depends on the level of certainty with which the consumer holds opinions of a retailer and of the retailer’s offerings. With high attitude certainty, people who feel powerful will decide that others who disagree with them don’t have sufficient expertise to deserve consideration. If you encounter this situation with a shopper and find it best to have the shopper listen to the others, start by acknowledging both the individual’s power and expertise. Then ask them to again evaluate what others are saying. Evidence is that your acknowledgements will increase the shopper’s receptivity to others’ recommendations.
     On the other hand, when consumers feeling powerful have relatively low confidence in their own opinions about your store or the products or services you sell, the Calgary/Texas research indicates the consumers will consciously react against others’ recommendations in order to signal their distinction from potential followers. To sidestep this one, offer sufficient variations of what you sell so that the customer can still get what’s best while maintaining distinctiveness.
     Or you could decide to make the consumers feel less powerful. Research finds that this tends to increase the amounts spent on purchases intended for others.
     Participants in a study at Northwestern University placed bids on items like a T-shirt and a mug. The participants had been exposed to a manipulation to influence the sense of power. Some of the study participants were asked to imagine an actual episode in the past when they possessed high power in a situation. The others were asked to imagine an actual episode in which they experienced little power.
     When purchasing the item for themselves, those feeling greater power bid about 86% more for an item, on average, than those feeling lower power.
     When purchasing the item for someone else, those feeling less powerful bid about 52% more for an item, on average, than those feeling higher power.

Click below for more: 
Manipulate the Shopper’s Sense of Power
Unbox the Resistant Customer
Offer Variations to Ease Fear of Conformity 
Build Buzz with Market Mavens

Tuesday, June 18, 2013

Evolve the Most Basic Sales Pitches of All

What are the most fundamental benefits we can present shoppers?
A pair of psychologists from University of Minnesota and Arizona State University addressed that question by using the Fundamental Motives Framework, a tool from evolutionary psychology. The question became, “What are the basic consumer motivations which lead to propagation of the human species?
     Here’s my adaptation of that framework along with ways retailers can use it:
  • Evading physical harm. We evolved from ancestors who faced much higher homicide rates than encountered in almost any current consumer society. As a general rule, then, people overestimate the probability of danger and are willing to pay to reduce very small odds of death to even smaller odds. As with the other four motives, there are important exceptions among consumers. Some people seek danger for the stimulation. Most people will endure danger in order to care for their families. 
  • Avoiding disease. When activated, the evolution-developed trigger for a fear of disease results in consumers becoming less interested in foreign products, ideas, and people. A hint for retailers is to have a hand sanitizer dispenser available in the area of merchandise from less-developed countries. Just the presence of the dispenser can ease the prejudice. 
  • Making friends. But we’ll chance disease to form up with buddies. Propagation depends on affiliation. An attraction for many consumers is the ability to share a purchased item with others. The retailer who helps a shopper decide what a gift recipient would like is building on the evolutionary drive in consumers to fit in with others who might be different from themselves. 
  • Attaining status. In looking at consumer behavior from an evolutionary point of view, we must acknowledge that the marketplace in which we live is little like that of our ancient ancestors. What we see now may be remnants of propagation aids. People who know their high status is recognized may not want to show it off with their acquisitions. However, primitive cues can activate primitive drives: People insecure with their status who have just accomplished an important achievement yearn to show off using their purchases. 
  • Acquiring a mate, keeping a mate, and caring for family. We’re genetically programmed to nurture others. In tight economic times, adults will sacrifice their own comfort in order to provide adequately for a mate, their offspring, and even the household pets. These last items in the Fundamental Motives Framework are central to propagation. 
Click below for more: 
Scare Customers into Buying 
Acknowledge the Power of Cycles 
Discover What the Gift-Giver Expects in Giving 
Let Lonely Consumers Know They Belong 
Position the Logo Like a Handshake 
Fish for Broader Pet Market Profits

Monday, June 17, 2013

Brush on the Blush for Revelations

When I sin, my cheeks get red, according to conventional wisdom. Moreover, when I see red all around me, I become more willing to sin, evidence suggests. Think of Amsterdam’s red light district, and ask why the devil chose his particular color scheme over all the alternative possibilities.
     Still, researchers at Hogeschool-Universiteit Brussel and Ghent University contend it could be another color as well. Participants in a set of studies were shown different colors, one at a time, while for each color there was a depiction of either socially proper or socially improper behavior. Afterwards, it was found that the participants judged undesirable behaviors to be more acceptable when shown the negatively-valanced color while making the judgment.
     The implication for retailers is that shoppers are more willing to admit to socially undesirable flaws when shown a negatively-valanced color. Red is the easiest example.
     Suppose I present you with a questionnaire saying I’d like to get to know more about you so I can better meet your needs. An item on the questionnaire asks specifically about those socially undesirable flaws. On one version of the questionnaire, the header has a store logo on the left and on the right reads, “Survey on Strengths & Weaknesses” in a professional black font. On the other version of the questionnaire, the header has on the left a cartoon devil logo and on the right reads, “How BAD Are U???” in a bright red font.
     On which of those two would you be more likely to admit to the flaws? The questionnaire with the professional look or the one with the very casual look?
     Researchers at Carnegie Mellon University explored this issue of people revealing their shortcomings. If you are like most of the people who were in that study, you’d be more likely to admit to your flaw when the questionnaire is casual.
     With our shoppers, elicit information about flaws by loosening them up. We don’t want to leave the impression of an unprofessional business, though. In some retail settings, the “How BAD Are U???” approach works fine, but in other settings with other sorts of customer expectations, you’ll want to use techniques like gentle humor and casual conversation to do the loosening.
     Then once the flaw is revealed, describe the remedy you can provide. People shop to correct shortfalls. When somebody admits to a flaw, there’s the opportunity to make a sale.

Click below for more: 
Loosen Up Shoppers to Reveal Flaws 
Steal Attention with Rascal Appeal

Sunday, June 16, 2013

Announce Limits on Item-Based Loyalty Programs

Loyalty programs can be configured to serve a range of functions:
  • To encourage positive word-of-mouth for your store, give loyalty program points to customers whose recommendations result in first-time purchasers. 
  • To attract shoppers who identify with Asian cultures, use loyalty programs which offer relatively large rewards earned with an element of fate. This differs from loyalty programs which, research finds, customers with a Western mindset tend to prefer: Assured rewards come incrementally. For each dollar or euro spent, you get points. Smaller rewards are available for a small number of points and larger rewards are available to those who save up their points. 
  • Like Kroger Co., you could publicize that you’ll use the sales databases to notify each customer if an item the customer previously purchased is being recalled for safety reasons. Evidence from consumer studies suggests that many will consider this use of data as showing a caring attitude, which further enhances the loyalty from a loyalty program. 
     Researchers at University of Maryland and Belgium’s Lessius University College explored another adaptation of loyalty programs—what they called Item-Based Loyalty Programs (IBLPs), in which bonus points are earned for purchases of specific items. IBLPs enable the retailer to promote those selected items without needing to discount the price. In fact, the study results showed consumers overall were more responsive to reward point promotions than to price discounts of the same monetary value.
     However, the effects of IBLPs differ for customers who have been participating in the store loyalty program for some time before versus those customers who have not. After introduction of the IBLP, the longer-term participants continued to shop with the store, but they began spending less. The shorter-term participants began spending more. The bulk of the store’s revenue gains came from the power of the IBLP to attract and retain newer customers. The Maryland/Lessius researchers suggest that a retailer introducing an IBLP be sure to offer ample inducements for the longer-term loyalty program participants.
     Another danger I see with the IBLP arises when the additional largesse is reined back in. There are likely to be disgruntled customers. The beliefs, feelings, and intentions of the consumers can resemble what happens when you raise prices. You could make the IBLP permanent, periodically changing which items earn the extra points. Or avoid the problem by clearly and continually proclaiming from the start a set time limit on the augmented program.

Click below for more: 
Tailor Loyalty Programs to Customer Culture 
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Sell Upgraded Loyalty Programs

Saturday, June 15, 2013

Decoy the Indecisive Without Getting Decoyed

A shopper comes into your store to buy a printer, narrows the choices to two and pulls out an article with a bunch of ratings of printers. Model A, at a price of $180, has a rating of 50. Model B, for $260, received a rating of 70.
     The shopper can’t decide between the two and finally says she wants to look at other stores. The salesperson replies, “May I show you one more model that I think would help you decide? We carry a complete selection of printers, so I hate for you to need to bother going somewhere else.” The shopper agrees to look at one more printer.
     The salesperson presents a model from a manufacturer that does a lot of advertising, but has recently not received high ratings for their printers. If asked, store staff don’t give the model high recommendations. Still, they carry the model because people ask for it based on familiarity with the advertising. The salesperson says, “The price for this model is $180, like Model A, but if you check your article, you’ll see that it received a rating of 30, not the 50 which Model A received.”
     University of Toronto researchers report that the introduction of the inferior alternative often dislodges the tie and results in a purchase decision. With this set of facts, the choice is most likely to be Model A.
     Psychologists call this phenomenon the “decoy effect” or “attraction effect.” Studies have verified that the decoy effect operates with consumers choosing among microwave ovens, television sets, cars, apartments, beers, airline tickets, and even political candidates. It is nearly a universal rule of consumer behavior.
     But, it turns out, not absolutely universal. Researchers at Vanderbilt University, University of Iowa, and Washington University in St. Louis warn that in deciding whether to use the decoy effect, you know when to duck away.
  • When the shopper has substantial expertise regarding the product category. Sincerely praise such people for their knowledge and learn from them how they make their purchase decisions. 
  • When the choices the shopper is wrestling with possess many undesirable features. You’re most likely to have the shopper return if you agree they might want to look elsewhere for that printer. 
  • When you don’t have a suitable decoy. An effective decoy has at least one important attribute in common with that of the choice you want the shopper to make. 
Click below for more: 
Dislodge Indecision with New Choice 
Woo Item Experts

Friday, June 14, 2013

Buoy Your Business Against Boycotts

If people announce a boycott of your store or of specific products you sell, an understanding of the social psychology of consumer boycotts can provide useful guidance.
  • To cool down the fervor of a boycotter, allow the person to express their anger in bursts of up to about thirty seconds. This gives you sufficient time to understand the boycotter’s points. But beyond about thirty seconds, there’s the risk of the person getting more wound up rather than easing off their anger. 
  • Realize that the reasons you hear might not be the true reasons for the boycott. Researchers at Germany’s University of Kiel find that the arguments consumers give for a boycott are often devised to rationalize the decision and then convince others to join in. They are arguments which you may choose to address, but because these arguments are devised, they’re not good guides for you making significant changes in your store operating procedures. The power behind the arguments may fade with time, even when you don’t make changes. 
  • Distinguish impromptu from organized boycotts. A few years ago, hordes of people were angry at BP for the massive and continuing oil spill in the Gulf of Mexico. I was struck by a photo of two women which appeared at the time in the media. The women were standing at a BP service station. Based on the smiles and the shorts, I’d stay these supposed protestors were much more interested in having their picture taken repeatedly than in raging against the corporate machine. Impromptu boycotts draw attention to your business. The boycott can draw sympathy as well, especially if the protest is prolonged. Turn all this to your advantage. Your initial reaction to an impromptu boycott could profitably be, “Let’s use any media attention to show how good a retail business we run.” 
  • If it is a boycott initiated and maintained by a community action group, determine the group’s boycott objectives before deciding what actions to take. According to researchers at University of Texas-Austin and University of Southern California, community action groups organizing a boycott are usually less interested in doing economic damage to a business than in forcing changes to the behavior of all businesses engaging in the offensive action. If you find this is the objective of an organized boycott of your retail business, publicize any of the ways in which you share common ground with the group. 
Click below for more: 
Cool Down Customer Temper Tantrums 
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Thursday, June 13, 2013

Picture the Power of Visual Metaphors

Cleaning up bird droppings is dangerous. The website at histodisease.org sells that idea using visual metaphors. Representations of an eye, heart, and lungs have flocks of birds populating branches. The one for the eye, pictured here, carries the text, “Bird droppings can lead to a fungal infection that gets in the eye and can cause blindness…. Visit histodisease.org.”
     Among the most effective devices for introducing ideas and items to consumers are metaphors and similes. “This new item will be a jet pack for your success” is a metaphor. “This new item will be like a jet pack for your success” is a simile. Because of the stronger thrust of the metaphor wording, it’s usually more persuasive.
     As long as the meaning is clear to the consumer, a visual metaphor is more persuasive yet. There are two reasons for this. First, images are remembered better than words. Keep adding incidental details to verbal descriptions and soon some of the important elements are forgotten. Keep adding incidental details to images, and those extras actually enhance memory for the important elements.
     The second reason visual metaphors are more persuasive than verbal metaphors is that visual information usually enters the consumer’s brain below the level of conscious awareness, avoiding mobilization of the consumer’s resistances.
     The operating principle behind you using metaphors is that it helps the new idea or item feel like an old friend. Meeting new people—as well as new products and new concepts—can be absolutely stimulating. Consumers seek novelty and variety. Still, most consumers also find a special comfort in being with the familiar.
     Consumer psychologists talk about “the mere exposure effect.” Shoppers tend to have more favorable attitudes toward something they’ve seen before. Southern Methodist University researchers lied to study participants in telling them the participants had seen brands previously. The people who were convinced they had seen the brands before showed the same sorts of favorable attitudes as if they actually had.
     I don’t advocate lying to your customers. So instead, when introducing a new product or brand, in ads, signage, and face-to-face selling, work in phrases like, “…the same way as with the brand you’re accustomed to using…,” and “…once you do this a few times, it will be as second nature to you as what you’ve been doing up to now….”
     And when it would make sense, also show them the similarity so it’s visual.

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

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Clock Customer Actions to Fit Time Metaphors 
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Wednesday, June 12, 2013

Stay One Step Ahead of Retail Crime

Most store-based retailers recognize the draw for shoppers of a liberal return policy. With that in mind, retailers have been issuing gift cards when someone returns an item without a receipt. This seems better than giving cash or refusing outright to take back the item.
     However, the National Retail Federation’s “2013 Organized Retail Crime Survey” results indicate the thieves are already a step ahead: About 78% of retailers of all sizes report having been victims of a scam in which people exchange for a gift card merchandise which they’ve stolen, and then sell or exchange the gift card—perhaps at a discount—online, at a pawn shop, or at a check cashing store.
     Other studies have shown that people are less likely to steal from small to midsize retailers than from large retailers. Therefore, your chances of being victimized with this scam might be much less than 78% if you do choose to use gift cards for returns-without-receipts. Still, you’d be wise to use a research-based, experience-tested method to get ahead of the crooks:
     When someone comes to the returns counter, ask them to tell you the reasons for the return, and then record those reasons along with the person's identification information. Never make this procedure a prolonged inquisition, but your request should be more than the formality of checking a box for the category of reason. It should be a brief interview. As word gets around that you do this, the dishonest consumers become more likely to decide to take their business elsewhere. And that's fine with you, since their business is fraud.
     NRF suggests you consider tracking how often a shopper asks you to confirm the value of a gift card. This could give you insight about how often you’re subject to the scam. The logic is that people who obtained a card from a source other than the store itself will be unsure of what it’s worth.
     I agree that tracking could be informative. You also could ask how the gift card was received. That’s different, though, from becoming suspicious of shoppers who check the value of a gift card. As the “NRF ORC Survey” report says, many who get these cards don’t realize the cards are the fruits of criminal activity. We certainly don’t want to offend innocent shoppers. The vast majority of those coming into your store have no interest in stealing from you.

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Ask for Specifics on Merchandise Returns 
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Tuesday, June 11, 2013

Confuse Consumers When It Satisfies

There are retailing sales circumstances in which confusing the consumer will produce greater customer satisfaction, according to researchers at University of Warwick and Glasgow Caledonian University-London. If the confusion comes from having too much information to filter through or from what seems to be evasiveness by the salesperson, the shopper will be less satisfied with decisions they feel obliged to make. However, if the shopper becomes confused about which of a set of good alternatives is best, the shopper usually ends up confident in the purchase decision and therefore quite satisfied.
     In addition, researchers at University of Maryland, University of Chicago, and Yale University make a case for processing difficulty sometimes implying that an item is exclusive, and therefore of higher quality. This is most likely, the researchers say, with special occasion gifts which the consumer doesn’t buy regularly.
     Consumer behavior findings about gifts do often differ from findings about other purchases. For example, findings from Stanford University, University of California-Berkeley, and University of Chicago suggest that when a gift is expected, the givers who wait until the last minute get increasingly interested in avoiding pain. The result is that they’re willing to pay more for a gift and often more willing to upgrade to a fancier gift.
     And packaging counts with gifts, including a bit of difficulty in opening the present. Anthropologists at University of Florida observed how important admiring the gift wrapping and the unwrapping of the gift are as cultural rituals. Consider offering gift wrapping as a value-added service.
     The notion that processing difficulty can draw special attention is not new. 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 suggest putting commercial notices upside down in order to attract the consumer’s close attention to the content, thereby increasing the likelihood of purchase.
     When shoppers are evaluating possible acquisitions, they usually associate ease of understanding with familiarity, and familiarity stimulates liking. Therefore, it would seem we’d always want our advertisements and sales presentations to be easy to understand. In ads, we’d want to use high contrast and in sales presentations, we’d want to make our points succinctly, it would seem. However, maintaining a retailer’s edge requires mastery of the exceptions to the general rules.

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Monday, June 10, 2013

Give Away Sample Advice & Experiences

Retailers who maintain an online channel can find themselves fretting about people putting items into the online shopping cart and then leaving the website before completing the purchase. But for the multichannel retailer, shopping cart abandonment can be great news: Studies over the years have found that about one-fourth of the customers of hybrid store/website retailers like to do their browsing online, but prefer to make purchases in the store.
     A related, current finding comes in a survey report from The Integer Group, collaborating with M/A/R/C Research, regarding beauty products. Of the 641 shoppers surveyed, 63% said they like to research the category online before deciding whether to make a purchase. Then once they’ve decided it’s time to buy, 83% of the shoppers say they go straight to the store rather than do more research.
     Where do the shoppers do their online browsing? About 24% include brand websites in the mix. Yet more, at about 30% of the survey group, include retailer websites. Beauty product shoppers believe they’ll get better advice from the retailer than from the brand.
     Check that in your online marketing, you do give advice. Make it clear, however, that it’s sample advice. To best advise the shopper, you’ll want to collaborate with the individual by having that individual come into your store.
     Once the beauty products shopper arrives, you’ll also want to give samples. Not of advice, though. You’re ready to give the full serving of advice. This time, give out samples of the experience arising from using the item. Regarding beauty products, the Integer survey found that, of the various selling tactics considered, free samples of the products were most influential in convincing shoppers to try a new item. About 60% of the shoppers said so, compared to about 34% for in-store coupons and only 10% for in-store educational materials. After all, most of the beauty product shoppers have already done comprehensive research.
     When selling other sorts of merchandise and services, the relative importance of sample advice and sample offerings will differ. Still, in all cases, samples are influential. With the shopping cart abandoners, throw in samples of peripheral items, too. A few years ago, REI reported that when an internet customer came into one of the stores to pick up an item ordered online, as more than one-third of them chose to do, those customers, on average, bought an additional $75 in merchandise.

Click below for more:
Integrate Multiple Shopping Channels
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Sunday, June 9, 2013

Bag Consumers with Future Images

Stanford University psychologists said some young adults are no more motivated to save for retirement than to give money to a stranger. This is because those young adults view a self in the distant future to be like a stranger. Using functional magnetic resonance imaging, the psychologists were even able to identify which area of the brain is involved: Consumers who plan less well for the distant future show distinctive activity patterns in the rostral anterior cingulate.
     Acknowledge such individual differences in consumers. At the same time, don’t discount your ability as a retailer to change these patterns. When I start throwing around terms like “rostral anterior cingulate,” it might seem a retailer interested in having consumers think about their future can’t exert much control. Shoppers either have it set in their brain physiology or they don’t.
     It turns out, though, that is an oversimplification. In follow-on research, a team from New York University-Stern, Stanford University, and Microsoft Research showed adults digitally-altered photos of what they’d look like decades later—with jowls and bags under the eyes. A parallel group of study participants were not shown the aged self-images.
     The study participants were then asked to allocate $1,000 among four options—buying a nice gift for somebody special, planning a fun event, putting the money into a checking account, and investing in a retirement fund. Those exposed to the photos of aged selves allocated nearly twice as much of the $1,000 to the retirement fund as did those not shown the aged selves.
     Maybe those shown the aged photos promptly decided, “I’d better put a bunch of money away for when I get old and need cosmetic surgery to eliminate the bags and jowls!” Or maybe it was no more than a prompt to think acutely about the decades ahead. In any case, the tactic effectively connected consumers to their future selves. The researchers report that an adaptation of the method is now being used by Merrill Lynch in financial planning with clients.
     Columbia University and University of Chicago research also indicates a shopper’s connection to a future self can be strengthened by a retailer. Participants who, in the studies, were coached to think about how what they will be in the future is largely shaped by what they are now became more likely to choose high-value gift certificates good after one year than lower-value gift certificates usable immediately.

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

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Saturday, June 8, 2013

Interact with Shoppers Like a Person

An Adweek article this week says a number of retail stores are incorporating interactive digital technologies. The main example given by the article is an AT&T store located in Chicago’s Magnificent Mile where you can play games on a video wall equipped with motion-sensing capabilities. Then there’s the Pep Boys outlet in Tampa, with its digital lounge, and the plans JPMorgan Chase has to hand off most banking functions to self-serve kiosks.
     The Adweek article also reports on concerns some retailing analysts harbor that all these devices might not be worth the investment. Opportunities for interactions with salespeople, not computers, are what distinguish store-based from online selling, and it is those opportunities which draw consumers away from online transactions and into the stores.
     Reading about this reminded me of how, in the 1980’s, the Social Security Administration got concerned about the amount of eye contact the claims representatives were making with their clients, the benefits applicants. SSA was installing computers in all the field offices and wanted to be sure that taking claims with an on-screen form didn’t keep the claims reps from delivering the personal touch of looking at the consumer. Eye contact communicates interest, confirms understanding, and allows checking for signs of dishonesty.
     During the transition from paper to computer, I was the chief outside consultant to SSA on human factors. We learned that proper positioning of the terminal and ongoing coaching of the staff accomplished our objectives. We all wanted the retail staff—in the case of SSA, the claims reps—to interact with the clients like people, not digital devices.
     Proper eye contact continues to be a success tool for every organization aiming to provide products and services face-to-face. During the time Ron Johnson achieved his sterling successes as Senior VP of retail at Apple, he emphasized the importance of Apple Store staff looking around to spot shoppers and then communicating commitment to the shopper’s interests by looking at the shopper.
     The Adweek article says the changes at the stores have been inspired by the triumphs of Apple’s retailing. It’s good to know, then, that management has heard the rest of the story. JPMorgan Chase plans to still keep the teller windows. Paul Roth, President-Retail Sales & Service at Apple, is quoted as saying success from the upgrades is contingent on more than the new playthings: “Retail always depends on how good your people are.”

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Friday, June 7, 2013

Probe Beneath Sugary Answers

Today marks the nationwide rollout of Dunkin’ Donuts’ Glazed Donut Breakfast Sandwich, consisting of a fried egg and cherrywood-smoked bacon inside a split glazed yeast ring donut.
     What a striking reminder that today is National Doughnut Day, a commemoration with origins in a 1938 fund raiser by The Salvation Army to honor the women who served free doughnuts to World War I soldiers, coincidentally known as Doughboys!
     And what a compelling reminder that although consumers say they want health, many love less healthy indulgences. The general point is that you need to work through the glaze to get to the truth.
     A while back, Taco Bell asked customers about new items to add to the menu. The replies included suggestions like, “We want you to put on your menu a burrito that’s much healthier than the ones on there now.” So the company gathered together a group of the customers and gave them the tools to design such a burrito. The customers could choose from among ten categories of ingredients, including three preparations of chicken and eleven different sauces.
     The amateur burrito designers settled on a three-cheese rich-tasting high-calorie entrée. Not notably healthy. What happened here? Some consumer researchers explain the Taco Bell contradiction by saying consumers are unable to tell you what they want. Don’t ask them questions. Instead, watch what they do.
     I agree that limiting yourself to asking is a bad idea and watching what consumers do is valuable. Still, I believe there is another important lesson: In addition to consumers sometimes being unable to tell you the truth, they sometimes are unwilling to tell you the truth. The Taco Bell customers probably felt better about themselves saying they yearned for healthy entrees, knowing all along that great, rich taste was much more important.
     When you ask people in your target audiences what they’d like you to offer, give them time to think about their answers and give them time to provide you full answers. After a suggestion is offered, ask, “And what else?,” or, “What more can you tell me?”
     Then assign more weight to the answers that come later. Unless customers are clearly dissatisfied with you, they’re likely to start out by giving you the answers they think you want to hear. After doing this, they’re more willing to tell you their actual preferences. Stay with the consumer to probe beneath the sugary replies.

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Facilitate Customer Truth-Telling 
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Thursday, June 6, 2013

Keep Out the Competition Judiciously

There are few cities as protective of local-based retailing as San Francisco. In the Hayes Valley and North Beach corridors, no retailer with more than eleven U.S. outlets can set up shop. In certain other corridors, such a retailer needs to obtain a conditional use permit following a Planning Commission public hearing. The net is cast wide: Retail financial services like banks are included in these neighborhood restrictions.
     One argument is that the city’s economy benefits from tourist dollars and visitors want offerings different from what they can find at home. Another argument is that San Francisco residents pride themselves on living in distinct neighborhoods, each neighborhood with its own personality.
     Keeping out competition might offer indirect advantages for consumers. With fewer and smaller businesses bidding on storefronts, rents inflate more slowly, giving an opportunity to retailers to keep item prices lower or put more money into décor and customer service. On the negative side, an absence of competition can instead lead to exploitive pricing and neglect of décor and customer service, since the retailer is the only game in town.
     Public support for the sorts of restrictions San Francisco has implemented will prevail in your neighborhood only if the retailers make it worthwhile for the consumers by offering them both direct and indirect advantages from limiting the competition.
     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 play poker there?” The clerk replies, “It’s the only game in town.”
     Why might you aim to be the only game in town? Because the hotel desk clerk’s answer to the traveler was incomplete. People played poker at that bar considering it was the only game around going on whenever you wanted to play. People were willing to accept losing their money in order to have fun playing cards, drinking, and socializing. Customers came back because they received value.

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

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Wednesday, June 5, 2013

Create Sales with Creative Ads

Research findings from University of Cologne indicate that adding creativity to ads builds business, whether for a store or the products and services sold by the store. In the studies, money spent on a highly creative ad campaign bounced sales up nearly twice as much as did a campaign with little creativity.
     That creativity in ads sells is a conclusion also reached in the past by sets of researchers who identified, named, and described five dimensions of ad creativity. The dimensions are related, but look at creativity from different angles.
     What the more recent studies provide is a rigorous analysis of the relative effectiveness of these five dimensions in moving consumers beyond remembering an ad to actually deciding where to spend their purchase money:
  • Originality. How different is the ad from other ads about similar consumption choices which are available to the consumer? 
  • Flexibility. To what degree does the ad shift from one idea to another? 
  • Elaboration. In the ad, how many different details are presented at the same time? 
  • Synthesis. How well does the ad conceptually join together divergent ideas and details? 
  • Artistic value. How well does the ad use words, music, sounds, colors, and/or images to produce aesthetic pleasure? 
     Of these five dimensions, elaboration and artistic value had the largest relative impact on diverting consumers’ purchase choices. In last place was synthesis. It may be that requiring the recipients of the ad to put the pieces together on their own optimally stimulates both memory for the ad’s message and an impetus to take action.
     You’re not limited to using only one of the creativity dimensions in an ad. The researchers found that although originality on its own was not particularly effective, originality did add notably to selling potential when paired with certain other dimensions. The most effective two-dimension combination was originality plus elaboration.
     Originality on its own may qualify as creativity, but it’s not sufficient to make the retail store sale or sell the shopper on going to a certain retail store.
     Sometimes the objective of your ad is to persuade the consumer to buy from you a specific brand they could purchase from many other sources. Here, the creativity of the ad gives a bonus appeal to you as the place of purchase. The Cologne research suggests this would work best with items which are tied to personal preferences and least well with categories bought routinely.

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Tuesday, June 4, 2013

Mind the Bargain Hunter’s State of Mind

Pay attention to how your shoppers who are searching for a bargain understand the nature of discounts you offer. I give you that advice after reading last month’s decision in Hinojos v. Kohl’s Corp. But since I’m a consumer psychologist, not an attorney, the context for my advice to you is the state of mind of consumers, not how your retail business should avoid legal exposure.
     The issue in the case before the U.S. Court of Appeals for the Ninth Circuit was whether Antonio S. Hinojos has standing to sue Kohl’s on his claim that Kohl’s fictitiously inflated the “original” price amounts of items advertised as discounted. Mr. Hinojos alleges that he purchased, as one example, Samsonite luggage advertised as discounted 50% off its “original” price of $299.99, but that the item was routinely sold by Kohl’s at what Kohl’s said is the discounted price.
     The court decided that Mr. Hinojos does have standing to sue, so Mr. Hinojos can now proceed to file suit if he chooses to. The basis of the decision was that, if his claims are true, he may have suffered economic harm. How could he suffer economic harm if paying no more for the items than if he’d bought them when not on sale? Because, said the court, in part, if Mr. Hinojos’ claims are upheld in a trial, he was being given a false impression of the items’ resale values.
     Although the decision was made in federal court, the applicable laws were California’s. Therefore the geographical scope is limited. Still, this federal court did note a range of advertising claims which could, because of a bargain hunter’s state of mind, lead to economic harm. Among these are “available for a limited time only,” “the same model of shoe worn by LeBron James,” “50% of customers who purchased product X also purchased our product,” and “more doctors recommend our product than any other brand.” If these claims are fictitious, they might be construed as causing the shopper economic damage, the court appears to me to be saying.
     Intentionally lying to consumers should be illegal. But shoppers also might misunderstand what is, in fact, a true statement. Even if that’s not illegal, it’s bad business. If a shopper in your store seems puzzled by a percentage discount or a time-limited offer, take the opportunity to clarify so you will maintain the shopper’s trust in you.

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