Wednesday, July 31, 2013

Dog Decision Rigor During Dog Days

“Dog days,” the hottest time of the year wherever in the world, get their name from the rising of Sirius, the Dog Star, just before dawn during summer months in the Northern Hemisphere. As to how Sirius got the name “Dog Star,” that’s a whole different story, since most dogs I know are far from serious in disposition once they get to know you.
     With more scientific backing, “dog days” also refers to a time of sluggish activity and lazy thinking. A recent posting on The New Yorker blog references studies which show why shoppers during hot summer months prefer mental shortcuts to detailed analysis in making purchase decisions.
  • When the weather is temperate, people would prefer to get their necessary shopping done with so they can move on to leisure activities. 
  • Pleasant heat after a time of less pleasant cold raises people’s spirits, and happier people get more interested in shopping. 
  • Prolonged high heat wearies shoppers’ muscles, thereby making them less alert and less resistant to spotting weak reasons for buying or not buying. 
     For the dog days in and around your store, be ready to present succinct arguments for buying, and have bullet-keen counterarguments to any flawed reasoning previously presented to your shoppers by other retailers.
     In some parts of the world summer days and at other times of the year up north, colder temperatures prevail. These also influence consumer decision making. In an article from a few years ago titled “Weather to Go to College,” business professor Uri Simonsohn of University of Pennsylvania analyzed the enrollment decisions of 1,284 college prospects at a campus known for its academic strengths and recreational lacunae.
     It’s been known that people spend more time in serious pursuits during cloudy weather. Prof. Simonsohn’s study showed that the effects of this phenomenon can have broad consequences. If the day of the college prospect’s exploratory visit to the campus was especially cloudy, the odds that the prospect would choose to apply to that campus increased markedly. It seems that when the dog days are missing and perhaps missed, consumers are more interested in getting serious.
     Please notice that in these research studies, what makes the most difference is the change in the climate. Pleasant heat after a time of less pleasant cold raises our spirits. Degree of cloudiness higher than average affected college enrollment decisions.
     Dog how climate changes influence your shoppers’ decisions.

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Profit from Shoppers’ Positive Moods 
Cool Summertime Shoppers

Tuesday, July 30, 2013

Post Dramatic Tales for Post-Experience Goods

A Stanford Graduate School of Business newsletter posting presents tips from Professor Jennifer Aaker on how to tell a story which will sell. Here’s my adaptation and summary of her “Do this instead of that” advice:
  • Organize your story so the events build on one another, rather than freezing yourself into always starting at the earliest point. 
  • Use ample quotes and verbs in place of descriptions and adjectives. 
  • Select simple words instead of an abundance of technical jargon, especially if your story will be translated into different languages. 
  • Spend more time in your story on people than on objects. 
  • Resist urges to stretch the truth to where you’re breaking out in lies. 
  • To prolong interest, leave a few loose ends in your tale instead of tying it all neatly. 
     All these propel your story toward compelling drama. This is particularly helpful when you are selling what behavioral economists refer to as “post-experience goods.” Post-experience goods are different from search goods and experience goods.
  • Search goods have features, the value of which can be relatively easily assessed before purchase. A refrigerator and a car are search goods. Conciseness and humor add power to stories about search goods more than to stories about experience goods, according to researchers at National Tsing Hua University, National Central University, and Wistron Corporation, all headquartered in Taiwan. 
  • The values of experience goods are more difficult for the shopper to assess until they’ve been purchased and used. An insurance policy, gym membership, or unfamiliar food is an experience good. Authenticity and contrast are especially important in stories about experience goods. Money-back guarantees from a retailer increase purchase probability, according to studies at University of Texas-Austin, University of Muenster, and Catholic University of Eichstaett-Ingolstadt. At the same, the research findings indicate it’s more important to set clear conditions for returns with experience than with search goods. 
  • Vitamin pills and investment portfolios are examples of what are generally post-experience goods. These are items for which it is difficult to evaluate the advantages of having made the purchase even after the use. Consumers look to third-party information, such as government bodies and rating agencies. Another term behavioral economists use for post-experience goods is “credence goods.” And another place consumers attend to in making purchase decisions about these items are stories, the more dramatic the better, as long as authenticity is maintained. Personal testimonials along with the names do well. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Craft Powerful Stories 
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Monday, July 29, 2013

Coordinate Client Care with Other Providers

Why would your customers, clients, or patients go to another provider when you’re available to serve them? Researchers at Washington University in St. Louis and St. Louis Children’s Hospital diagnosed this issue as it applied to pediatric care. Why would parents who had an ongoing relationship with a pediatrician take their children to a medical clinic located in a retail store? The researchers surveyed about 1,500 parents who used one or more of nineteen pediatric practices. Of these, about one out of four had also used a retail clinic (RC).
  • The most common reason given was the parent’s impression that the RC had more convenient hours. This was true in almost 40% of the cases. Notably, almost half the visits were during hours the regular pediatrician’s office was probably open. 
  • For about 25%, the reason for using the RC was that no office appointment was available soon enough to satisfy the parent. 
  • Other reasons for using the services of the RC included a hesitation to bother the regular pediatrician after hours because the problem wasn’t serious enough. 
     Are retail clinics attempting to handle medical problems which need specialist care? The evidence so far is that they are not. Research indicates that, as a rule, RCs honor their limitations, with pride in what they do well and with knowledge of how to refer clients for problems best resolved elsewhere.
     But do they follow through on the referrals and otherwise coordinate care with the patient’s other providers? In the St. Louis researcher’s questionnaire sample, only about one out of fourteen of the parents said they recalled the RC indicating the regular pediatrician would be informed of the RC visit. If the parents were recalling this correctly, the RCs were not serving the clientele well enough. Regardless of your retail endeavor, you’ve a responsibility to provide coordinated care.
     This is true for ethical—and perhaps legal—reasons. It’s also true for business reasons. From the perspective of the RCs, reminding the pediatric clinics of your existence could lead to additional referrals. The pediatricians might like to be able to take time off in the care of their ongoing patients. From the business perspective of the pediatricians, hearing from the RCs could generate ideas about how to be more convenient to the current patient load and thereby attract new patients.
     Parallel advantages hold for other types of retailers who discuss clients they share.

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Sunday, July 28, 2013

Allow Shoppers to Ask Themselves Why

While shopping, consumers seeking convenient fulfillment are likely to be repeatedly asking themselves:
  • “What are good reasons for me to buy this product?” 
  • “What are good reasons I should make the purchase at this store?” 
     You’d very much like every one of those consumers to have sufficient answers to motivate all to complete transactions with you. Unfortunately, because of how much you want that to happen, research indicates you’re at risk of heading it off happening. This is because a nonstop, pressured sales presentation can interfere with the shoppers answering the questions for themselves. And whatever answers they give to themselves are probably more influential than what you’ll give.
     Pause during selling to decide what questions you should be asking next and allow shoppers to ask themselves why to buy the item and buy from you.
     This doesn’t mean you should refrain from priming the pump by asking the questions yourself. According to research at Hong Kong University of Science and Technology, asking questions like these is useful for changing brand, item, and store preferences the consumer has been following without any real thought. Reason-to-buy questions make the shopper stop to consider, therefore increasing your opportunities to influence them. Most people rise to the challenge when asked a question. They might not answer aloud, but at least they’ll start thinking.
     Continue to assess if you’re probing for the right amount. Researchers at University of Arizona and University of Iowa looked at what happens when you ask for information about a product or service item from consumers who know either a little or a lot about it.
     As you might expect, they found that with consumers who have limited knowledge, asking for large amounts of information causes unpleasantness for the person, with the result that the item is evaluated less positively. As you might not expect, the researchers also found that with experts, asking for only a little information also resulted in unpleasantness for the shopper, again leading to less positive item evaluations.
     More generally, research findings from Universität Heidelberg and Universität Mannheim indicate that if you ask a consumer to generate loads of reasons to buy a particular product or to shop at your store, the task becomes more difficult for the customer, and this actually makes your preferred alternative less attractive.
     Asking the questions personalizes the selling arguments. People make purchase decisions for all sorts of different reasons. 

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Ask Shoppers for Reasons to Buy 
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Saturday, July 27, 2013

Cultivate Referred Customers

Your customers who are loyal to your store become more likely to refer others to you. But it’s valuable to realize it also works the other way around: Customers who participate in a referral program become more loyal because of making the referrals.
     That’s the conclusion from research at University of Arizona, University of Victoria, University of Wuppertal, and University of Paderborn. The data came from customers of a global cellular telecommunications provider. The effect of program participation on customer loyalty was highest for newer customers.
     The researchers defined customer loyalty as praising the retailer and as renewing the contract with the retailer. When rewards for making referrals were relatively large, both signals of loyalty were increased by the act of referring. With relatively small rewards for referrals, defection rates went down, but degree of praise for the retailer did not change significantly.
     Another set of studies about customer referrals, these at Goethe University Frankfurt and University of Pennsylvania, tracked the referral patterns and purchase behavior of 10,000 retail customers over a period of almost three years.
  • Across all customer segments, the revenue value from a referred customer averaged about 16% higher than that from a non-referred customer. 
  • Compared to customers who came without a referral, customers coming via a referral were more likely to return repeatedly. 
  • At the start, referred customers spent more than did non-referred customers. However, this difference faded over the months. 
     Cultivate referred customers to maintain high shopping cart totals.
  • Encourage referred customers to come with those who referred them. Give “Bring a Friend” discounts. Ask customers how they learned about you, and if they reply that a friend recommended you, give a discount coupon with the name of the referring person and the name of the customer in front of you, to be used next time the two visit your store together. 
  • Arrange product and service knowledge sessions in which couples, families, and groups of friends can participate. Wine tasting. How to plan a vacation. How to set up a model railroad. You might charge a fee to make this a direct source of profit or at least to defray expenses. Or you might offer activities at no fee in order to build referral footsteps into your store. 
  • Grab on with weak links. Beyond saying to customers, “Please recommend us to your friends,” say, “Please recommend those friends talk about us to their friends.” 
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Go Beyond Retention with Referred Customers 
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Friday, July 26, 2013

Get Out of the Way of Individual Donations

Something strange happened when businesses offered to help out funding Mardi Gras following the Hurricane Katrina destruction in New Orleans: Although it was the New Orleans city government which had asked for the help, the city’s residents didn’t like the offers.
     Consumer behavior researchers at Northwestern University and University of Arizona-Tucson say the resistance came from feelings outsiders would be ruining traditions of individual, local ownership of Mardi Gras. Although most of the world might consider Mardi Gras crass debauchery, most locals see it differently. They look forward to socializing at the parades in the ways that they and those they know have been doing for a long time. Without commercials. There’s a longtime ban on corporate funding and business logos in the parades. Funding comes from wealthy New Orleans benefactors and the Krewes—individuals who band together.
     Five studies at Sungkyunkwan University in South Korea, University of St. Thomas, and University of Minnesota indicate this phenomenon is by no means limited to New Orleans residents or city parades. When prospective individual donors are told that a large corporation is contributing to a nonprofit organization, donation interest among those individuals wanes. The feeling sets in that the individual donations won’t make as much of a difference as with nonprofits who are not benefactors of corporate largesse.
     Small to midsize retail businesses are not large corporations, so the effect is weaker when you donate. Still, be aware that you want to donate in ways which will encourage, not discourage, individuals from donating on their own. One way, say the researchers, is to describe how the objectives of your retailing match the objectives of the communities in which the prospective donors live and work.
     Related to this, studies at University of Minnesota, University of South Carolina, and University of Georgia support the importance of pairing the charity partner with the personality of the business. But these researchers, too, found something strange happened: Shoppers in luxury stores were more comfortable when the store included among their main partners charities supporting traditional causes, such as basics and conservation.
     If these luxury stores include a symphony orchestra or art exhibit among their nonprofit grantees, those stores should also highlight their continuing association with a charity providing food, shelter, and education to disadvantaged populations.
     However, the research indicated that stores selling commodities don’t need to include charity partners promoting self-enhancement. Still, keep enough donations local.

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Thursday, July 25, 2013

Show an Attitude—Functionally

Decades ago, organizational psychologist Daniel Katz at University of Michigan posited that an attitude serves one or more of four functions for the person showing the attitude. That framework, which I’ve listed below using Prof. Katz’s names for the four, continues to help consumer researchers interpret findings from their studies, and the framework can help retailers better understand their shoppers’ attitudes.
  • Utilitarian function. Consumers will carry positive attitudes toward products and services which help them fulfill their goals. For some items, like paper towels, this means getting a job done. For hedonic items, like a massage, the goal is to experience pleasure. For many consumer items, such as toothpaste, the purchaser expects both types of payoffs—clean the teeth and taste refreshing. 
  • Value-expressive function. We buy some items because of what they say about us as people. Our positive attitude arises when others show us they’ve received the message. This attitude function applies to status-oriented products and services. 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. Attitudes held for value-expressive reasons are especially resistant to change. 
  • Ego-defensive function. Shoppers might develop a negative attitude toward items which label them as belonging to groups from which they want to dissociate. Or they might come to dislike items which give away their identity. When the consumer already belongs to an exclusive group or is confidently aspiring to belong, they’ll be looking for more subtle cues—what corresponds to the secret handshake that allows members to recognize each other while not tipping off the outsiders. This was a lesson learned some years back by Lacoste, which discovered that their crocodile logo stopped portraying as much status if it was displayed too prominently. Positive ego-defensive attitudes ensue when the item says clearly, “See for yourself that I don’t belong to that group!” 
  • Knowledge function. People hold some attitudes because the attitudes help make the world more orderly for them. Our mental capacities preclude us from closely analyzing every consumer item, so we form positive, neutral, and negative attitudes based on similarities among items, dividing our world into categories. Attitudes held mostly for a knowledge function are, of the four types, easiest to change. 
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Wednesday, July 24, 2013

Orient Shoppers to Appreciate Discounts

The physical orientation of price information influences the shopper’s emotional orientation toward discounts offered by your store.
     Researchers at Wayne State University, Indiana State University, and Babson College asked, “Is it better to place the sale price to the right or to the left of the regular price?” Their answer after doing multiple studies with a variety of consumers: If the discount is quite small or very large, it’s best to put the sale price on the left. It will draw the shopper’s attention to itself, then, rather than highlight a comparison of the sale price to the regular price.
     This works well with the quite small discount because a comparison would lead the shopper to say, “You call that a sale?” It works well with the very large discount because the most compelling information you’re giving the shopper is the low price.
     When the amount of discount is between quite small and extremely large, use what the researchers call “the subtraction principle” by placing the regular price on the left and the sale price on the right. This makes it easy for the shopper to appreciate the dollar amount of the savings.
     It would seem that subtraction is even easier with the regular price on top and the sale price below it. Clark University investigated that issue. Suppose an item you usually sell for $95.99 is now discounted to $75.99. Whether you present the price comparison in a horizontal or vertical format affects whether the shopper is more likely to think of the absolute value of the discount—the $20—or of the percentage discount.
     The horizontal arrangement, with the $75.99 to the right of the $95.99, nudges the consumer to think about the $20 off. In a vertical arrangement, with the $75.99 below the $95.99, the consumer’s mind turns toward considering the percentage of the discount and away from the absolute dollar amount.
     There’s a continuing controversy among consumer psychologists about whether you should emphasize the dollar amount of a discount or the percentage of the discount. The time-tested advice is that retailers should advertise “percentage discounts” rather than “dollar off” discounts. Among the most popular internet searches are percent-off deals.
     However, if your shoppers come to expect progressively higher percentage discounts, try switching the orientation to dollars saved. Many consumers are looking to trim every last penny off their purchases and therefore will attend to that.

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Try Out Dollar Over Percentage Discounts 
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Tuesday, July 23, 2013

Show Shoppers Selective Transparency

When my sister moved from Southern California to Northern California, following my migration path years earlier, I asked her if she was appreciating the cleaner air up here, compared to the smog she left behind. She quipped, “Actually, I prefer to see what I’m about to breathe.”
     But do people prefer to see what they’re about to eat? Researchers at Ohio State University and University of Texas-Austin aimed to answer that question by assessing the effects of transparent versus opaque packaging on attitudes toward foods in retail stores . They found two opposing effects:
  • Salience. Being able to see a food item facilitates imagination of consumption, usually making attitudes more positive. 
  • Monitoring. Seeing the actual food item activates scanning for flaws, usually making attitudes more negative. 
     Here’s how that tug-of-war played out in the studies:
  • For foods in large packages, monitoring won when transparent packaging was used. Opaque packaging with an illustration of the item resulted in higher sales. 
  • For foods with interesting colors and/or shapes sold in small transparent packages, salience won. The likelihood of purchase and amount consumed increased because of the transparent packaging. 
  • An exception to this was with any vegetables which consumers thought of more for health benefits than for tastiness. Transparent packaging resulted in lower sales than did opaque packaging. Salience had won over monitoring, but the result was contemplating consumption of a product which wasn’t especially tasty. To build sales, use opaque packages displaying spectacular graphics. 
     For other situations selling food, the Ohio/Texas researchers said the effects of transparent packaging on consumer attitudes were not—well—so clear-cut. The outcome does still seem to be influenced by the package size and the characteristics of the items.
     With non-food merchandise, shopper psychology research finds overall advantages in letting the shopper see the item rather than hiding it inside opaque packaging. Do allow enough package surface to list usage benefits, though. People buy things for the benefits offered more than for the physical characteristics of the items.
     Sales staff should be describing the benefits. However, they can too easily forget to do the job. Sales people can get busy, and staff who are thoroughly familiar with how well a particular item produces benefits can take it for granted that the customer knows, too. Let the packaging help.
     Complete transparency in retailing has advantages. Still, when it comes to complete transparency in product packaging, sometimes refrain.

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Help Shoppers Use Their Imagination 
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Monday, July 22, 2013

Isolate Loneliness & Materialism

People think of materialism—defined as a consumer placing unusually high importance on acquiring and owning material items—as associated with loneliness, according to researchers at Tilburg University. That’s because materialistic people are seen as self-centered. This assumption of an association has led to recommendations that retailers assume their materialistic shoppers yearn for social interaction.
     But it’s not so simple. After gathering data from about 2,500 consumers over a span of six years, the Tilburg researchers say there are subtypes of materialism. Some consumers seek possessions for the mirth of hunting them down, negotiating for them, and at times sharing them with others. For these people, the materialism decreases loneliness. They might welcome social interaction with salespeople because they find any social interaction joyful. But they don’t yearn for social interaction.
     Other materialistic consumers buy in order to ease sadness or as a way to meter their degree of success. These habits do increase isolation, so it can be said that the materialism is a cause of loneliness. These shoppers will welcome nurturing interactions from retail salespeople.
     Further, consumer behavior experts from Arizona State University and Erasmus University in the Netherlands conclude that when adults are feeling lonely, they become interested in nostalgia.
     Study participants played a ball-tossing game on a computer. The game was rigged so that some participants were told they’d been eliminated. Dropped participants were more likely to say that belonging is important to them. And they also made more consumer choices which reminded them of their personal history. This included preferences in cars, food brands, TV shows, movies, and shower soap.
     At another point in the research, people who had been dropped from the game were offered a cookie carrying a brand name popular in the person’s past. Those who ate the treat complained less of loneliness than they did before.
     We can’t exclude the possibility here that simply eating the cookie—any brand of cookie as long as it has chocolate in it, of course—would ease the pangs of loneliness. Still, the researchers say their methodology leads them to conclude that the taste of nostalgia was what did the trick.
     Children can get lonely, too, and researchers at Cardiff University, Lyon Business School, Knox College, and University of Missouri-Columbia have described what they call “childhood materialism.” With these consumers, a nostalgia appeal could involve items from when the little consumer was even littler.

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Sunday, July 21, 2013

Acknowledge Your Subliminal Powers

A loco logo dustup. “Loco” as in crazy fuss about nothing important. The Huffington Post says “many” people are wondering why the current logo for Wendy’s quick-service restaurants has the word “MOM” written on the girl’s collar in a way which appears to be a hidden message. The Stock Logos website says it was done intentionally to create associations between the Wendy’s menu and Mom’s home cooking.
     Suspicions of subliminal influence never cease to draw consumer attention. What would your customers think of you if you said you wanted to influence them to make certain purchases? My guess is that they’d consider you as fulfilling your proper role as a retailer. Contrast that with what your customers would think of you if they overheard you saying to one of your staff that you wanted to manipulate the customer into making certain purchases. My guess is that the customer would promptly become uncomfortable shopping in your store.
     Researchers at Stanford University point out how retailers have reported success getting customers to make a purchase by having text—such as on signage and packaging—set in narrow adjacent columns. The reason this is said to work: In order to read the text, a shopper needs to slowly nod his head up and down, and this sign of yes subconsciously produces even more positive evaluations of products the customer already likes.
     Is the head nodding production tactic manipulation? And what if you claimed it was subliminal? That would easily frighten consumers.
     The reality is you can sway consumers by using cues below the level of conscious awareness. Psychologists at Princeton University had study participants watch an episode of “The Simpsons.” During the program, phrases and pictures related to thirst were shown to some of the participants, but each phrase and picture was presented too quickly for the human brain to consciously recognize what it was.
     Those participants shown the subliminal thirst prompts reported being more thirsty after than before the program and more thirsty than the group not shown the prompts.
     Yes, we can influence consumers subliminally. According to the Huffington Post piece, The Wendy’s Company says they didn’t aim to do this with their logo, though. Still, maybe the fuss wasn’t loco after all. The dustup did get potential Wendy’s customers to look closely at the logo and gave both Stock Logos and The Huffington Post something to fill column inches.

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Saturday, July 20, 2013

Look Widely for Retailing Inspiration

A Wired posting last Thursday marveled at the innovativeness and courage of Hil Davis in finding and implementing a model for retailing: He didn’t set up for e-tailing. He didn’t open a bricks-and-mortar store. No, instead, J. Hilburn salespeople—or more accurately, J. Hilburn “Style Advisors”—go into shoppers’ homes.
     In doing this, Mr. Davis borrowed from the Tupperware business format, which built on the quality of the product. But this again evidenced courage, since the Tupperware model has gotten tattered over the years. Mr. Davis also showed innovativeness here because the in-home shoppers for Tupperware, Mary Kay, and Avon have been mostly women and often home shopping parties. J. Hilburn sells custom-tailored men’s shirts and accessories to one man at a time. As of this week, they’d sold 300,000 of them.
     Both male and female shoppers like their products and services personalized. But as a rule, women are more patient in having the personalizing done. A man’s willing to pay a premium price for a shirt when the shirt is built to his individual dimensions and the measurement comes to him. Most men hate shopping for clothing. Even the thought of clothes shopping gets men to become highly goal-directed.
     Like with other direct sales firms, J. Hilburn Style Advisors can increase their income by recruiting others to sell the merchandise. A difference is that J. Hilburn has set a maximum of five direct reports. This rule encourages an emphasis on quality over quantity in the salespeople.
     One takeaway is that face-to-face selling still thrives. Another is that looking and thinking widely for retailing inspiration can be highly profitable. In doing this, the central questions are why your model will work. Mr. Davis’s previous job was as a hedge fund manager analyzing the retail industry. To start, he figured that e-tailing wouldn’t work well for selling custom-made apparel because of the high costs of returns and remakes. He figured that selling clothing to men goes better with personal contact from somebody local. He figured that independent contractors would fit better than salaried salespeople. He figured he could do quite nicely without the expenses and commitments of bricks-and-mortar shops.
     Then, providing further evidence of the sort of innovativeness and courage which can serve you well, Mr. Davis changed his mind. There’s now a J. Hilburn e-commerce site and plenty of stores. The custom-fit concept was adapted into ready-to-wear “size buckets.”

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Friday, July 19, 2013

Shadow Dark Tourism

Set up your shop adjacent to the site of the World Trade Center 9/11 tragedy or the Auschwitz concentration camp, and you’ll draw bonus foot traffic. Take retailing tips from how vendors built sales using tie-ins to the recent sesquicentennial of the horrible Battle of Gettysburg. Make a killing from devising your local version of “The Helter Skelter Tour,” a three-hour multimedia visit to the sites of the multi-murders carried out in the 1960s by the Charles Manson Family.
     Or decide how your retail business might otherwise profit from understanding the fascination consumers have with visiting places where atrocities occurred. The draw has been so well documented and has such a stable historical foundation that an Institute for Dark Tourism Research maintains an active agenda at University of Central Lancashire in the UK.
     An International Business Times posting speculates that the motivations for the fascination include:
  • An intellectual curiosity about history 
  • A wish to preserve lessons from the past 
  • A desire to honor those who have died 
     Consumer behavior research also suggests a related motivation—to build self-esteem in order to handle the fear of our own deaths. This motivation is embedded in what’s called Terror Management Theory, which has implications for all types of retailing.
     TMT says that our realization we will someday die leads us to build legacies. Stanford University researchers find that a protection against death anxiety is high self-esteem. The colloquial phrase “I was so embarrassed I could’ve died” reflects a relationship between threats to self-esteem and one’s demise.
     To get the most from TMT:
  • Be ethically comfortable with using an underlying fear of death as a sales motivator. In my opinion, it’s fine to deliver value by relieving your customers’ anxiety. The three caveats for me are: Don’t violate the law to make customers feel good. Don’t gouge people by charging excessive prices. And don’t pressure people to buy when they’re seeming to struggle with temptation. But those are my rules. You need to decide for yourself. 
  • Recognize that TMT motivation is reserved for adults. Reminding children they’ll inevitably die is nothing if not ghoulish. And teenagers—those reckless rascals—behave and misbehave on the assumption they’ll never die. 
  • Praise consumers of dark tourism and other retailing after a purchase is made. Researchers at London Business School and Cornell University found that when praise is given before the purchase, the TMT motivation fades away. 
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Thursday, July 18, 2013

Go for BOGO Free Over BOGO Discounted

Beware BOGO, retailer! The most common form for a BOGO is “Buy one, get one for free.” The problem is that 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. They’ll resist paying full price for it afterwards.
     Based on results from their studies, researchers at Monash University agreed. Then, more recent results from Monash indicated there’s an even worse version of BOGO: “Buy one, get one at a deep discount.”
     What people were willing to pay for a product after the BOGO promotion ended was higher when it had been offered for free than at a very low price. The reason is that when the companion item is offered for a very low price, this becomes the reference point for consumers. They then perceive the regular price as inordinately high. But people have a hard time assessing the value of “free.” Therefore, they’ll usually consider the reference point to be the price they’re paying for the qualifying part of the BOGO offer. As long as you keep that price close to what you’ll be charging for the free item post-BOGO, shoppers resist less.
     To decide if a price is high or low, shoppers set in their mind an anchor for what they consider to be a medium price. To have the customer purchase a higher-priced item, move the anchor point higher.
     Often, you’ll want to increase the shopper’s willingness to pay a higher price for a specific category of items, such as shoes, but not leave the shopper with the impression that your store policy is to charge high prices. Researchers at Hong Kong University of Science & Technology and Chinese University of Hong Kong suggest you encourage the shopper to deliberate on high-priced items in that category and make their purchase decision before looking at other categories of items.
     Or you might want to position your store as offering superior quality across categories, charging premium prices for the assurance. Here, before you introduce the shopper to the specific category sought, walk the shopper by high-priced items in other categories as you discuss how higher quality often comes with higher prices.

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

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Wednesday, July 17, 2013

Sign for Quick Comprehension

Think of the downtown streets in any big city where multitudes of taxi cabs are cruising horizon to horizon, each cab festooned with one or more colorful ads. Now add in your imagination images of the private cars, not only the taxis, carrying ads.
     Dreamers Media and Advertising in India will make the monthly payments on your new car for three years on a five-year contract if you agree to have up to 60% of the auto exterior carry ads and drive your car at least 1,500 km (about 930 miles) monthly. There are other limitations for the car owner, such as the maximum cost of the vehicle.
     Then there are the limitations for the advertisers: How much will the influence of the ad be lost in that multitude of other ads? If your store was an advertiser in the program, you’d want to be sure to design the signage for comprehension quick enough to require less than conscious awareness.
     In fact, that’s what you’ll want to do even if not participating in the program. With an inexpensive magnetic sign, a carpet cleaning retailer parked in a customer’s driveway could proclaim, “Here I am doing work for someone who selected me from the available alternatives, and here’s how to contact me to do quality work for you.” But this would be far too many words to have on signage you expect people to read as they drive or walk by your van or truck. You’ll probably want to limit the text on a vehicle to a name, tag line, website address, and phone number. You’ll also want good contrast between background and foreground.
     Whether inside or outside your store, signs should project helpfulness. Good signage answers questions customers commonly have. This saves irritation for staff who quickly tire of being asked where the rest rooms are. It also allows shoppers to avoid needing to ask questions of sales staff. This is important to newbies to your store who fear a question will launch an aggressive sales pitch.
     For store directory signage, researchers at Columbia University found that an important element is placing product choices into categories for the shopper. Categories help us break down the decision into more manageable steps. That soothes shoppers most dramatically when they're unfamiliar with the products they're selecting from. It speeds up decision making, and time is money for both you and your customers.

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Sign On for Effective Signage

Tuesday, July 16, 2013

Arouse Emotions to Drive Online Sharing

These past few years, consumer behavior researchers have been busy determining what leads to online advertising and publicity going viral. What those researchers are discovering should guide your marketing of your retail business. Here’s a compilation of findings from different sets of studies.
  • Arouse emotions at the start. Television ads have often been designed to build toward a laugh or a revelation. The rules are different with the online video format. Harvard University researchers analyzed viewer’s facial expressions to spot smiles, frowns, and signs that the viewer had stopped paying attention to an online ad. The conclusion: Dropout happens fast unless there’s a jolt of emotion promptly after the video begins. The best emotions to use are joy and awe, which are both upbeat feelings. Best of all is to use them in combination. 
  • Negative emotions work, too. University of Pennsylvania findings indicate that outrage and fear increase the odds online content will be passed on to many others by the recipient. Outrage could be used in a political campaign against a candidate or pending law. Fear could be used to encourage consumers to protect themselves against a risk. Recognize that both outrage and fear are high arousal. In the research, the low-arousal emotion of sadness didn’t help propagate online content. 
  • The level of arousal is more important than the practical usefulness of the information conveyed. Still, it helps when you give viewers substance to share. The Harvard researchers suggest targeting ads to people exhibiting two personality characteristics associated with forwarding video links to others: Egocentrism and extroversion. The egocentrics want to impress others with their knowledge. The extroverts want to share their knowledge with others. The rule for propagating any sort of virus: Give people something they’ll pass around. 
  • Make your store name and logo informative, not intrusive. Using eye-tracking cameras, the Harvard researchers discovered how the viewer’s attention is drawn to a store name and, even more, a well-designed logo. However, if the name or logo are too prominent, consumers will feel like they are being manipulated. One alternative is for you to weave your store name and logo into the marketing piece, showing them repeatedly, but not continuously. A better alternative, in my opinion, is to put the name or logo in the lower right corner of the video, where it serves as information for the viewer without getting in the viewer’s direct field of vision. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Catch the News About Viral Video Ads
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Monday, July 15, 2013

Build Post-Decision Trust Using FITD

How fair do your shoppers consider the world to be? To what degree do they think the people they know generally get what those people deserve?
     The answers to those questions influence how much trust your shoppers place in the recommendations you make to them. But the way it works has three twists. Moreover, although you’ve limited influence over your shoppers’ perceptions of fairness in life, you do have some influence.
     As to the twists, the effect sets in after, not before, the consumer makes the purchase decision. Researchers at Saint Mary’s College of California and Canada’s York University surveyed perceptions of life fairness among about 500 study participants. Along with this, the participants were asked to choose between digital cameras, both of which had been recommended by the salesperson. Prior to the choice, the consumer’s degree of trust in the recommendations had little to do with life fairness beliefs. However, after having made the choice, those with high life fairness beliefs were more likely than those without to say they trusted the salesperson’s recommendations.
     A second twist is that if the consumers believe the salesperson is intentionally misleading them, the life-fairness effect on trust disappears. And a third is that the effect is much stronger when consumers are considering purchases they’re making for themselves rather than for others.
     Putting it all together: If you can convince your customers that life is fair, they’re more likely to trust your recommendations for a series of decisions they make in purchases of items for their own use.
     As to how to increase belief in life fairness, establish a record of keeping your promises. Research at Athens University of Economics and Business in collaboration with National Bank of Greece suggest using one of the oldest selling tactics in the world—the foot-in-the-door technique.
     FITD consists of starting out with such a small request that the shopper is very likely to say yes and then using this yes as a base for presenting a series of larger requests. Prove you deserve a little trust and the customer is willing to extend you more rope.
     The twist in this one is that to grow trust most efficiently, get the consumer to behave in a trusting way. Not only keep your promises to your customers, but also point out to the customers that the promises have been kept and there have been benefits from this.

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Sunday, July 14, 2013

Subject Shoppers to Compelling Subject Lines

In face-to-face selling, you’ve the opportunity to gather information from the prospect before making your pitch. But people will want you to get to the point once you do begin the pitch. They don’t want to spend time needlessly, and they get skittish if unsure about where you’re heading.
     To soothe the shopper’s nerves, start with a good subject line, stating what you plan to offer. The words you use for this determine whether the prospect opens up to you. It’s something like what happens when a consumer receives an email and decides whether or not to open it up. Email marketing consultants Adestra say the subject line makes all the difference there, too.
     For their 2013 Adestra Email Subject Line Analysis report, Adestra analyzed results from more than two billion email messages produced in over 90,000 marketing campaigns. Although email selling has its own rules, the size of the Adestra data set is impressive enough to consider what might be learned for face-to-face selling.
  • The word “sale” improved the odds of an email being opened by 23% and the chances of a click-through by 61%. In your face-to-face selling, don’t assume the shopper has spotted all that’s on sale which might benefit her. Early in your pitch, use the word “sale” if there is one. The word “new” also increased open and click-through rates, and, similarly, you and your staff could mistakenly assume that the shopper knows what’s new. 
  • In the Adestra survey, the words “free delivery” raised the open rate by 51% and more than doubled the click-through rate. In your store, those items customers place into the shopping cart or basket will have free delivery, since customers take the items with them out the door. But there might be other services—such as product training or installation—which you do provide for free. Work that into the subject line of your sales spiel. 
  • However, the word “free” on its own depressed open and click-through rates. This argues for you saying specifics in your face-to-face selling. Better yet than the word “sale” on its own was stating the size of the discount, according to the Adestra analysis. 
  • The Adestra experts recommend action words in your subject lines. “Alert” raised open rates by 38% and click-throughs by 62%. “Learn” eroded the rates by 36% and 61% respectively. 
  • Consider the subject declaration to be a headline. Keep it brief. 
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Spark with Afternoon Delight Email

Saturday, July 13, 2013

Make Virtual Bundle Shoppers Feel Smart

Let’s say you offer a price discount almost identical to one offered by another retailer except that yours requires more work to obtain. In most cases, consumers will steer toward the other retailer’s offer. If they do accept yours, the “smart shopper” feelings from getting a good deal may fade fast when the consumers think about the extra work they put into getting it.
     Researchers at Paris West University Nanterre La Défense saw this phenomenon in their studies of what are called “virtual bundles.” Virtual bundles are promotional offers where a savings is received when the shopper purchases a certain number of designated products shelved separately in the store. Contrast this with “physical bundles,” for which the items to be purchased at a discount are all packaged or shelved together. In France, where virtual bundles are popular, a common variant is “Buy One of These and Get One of Those at Half Price.”
     Compared to a physical bundle, taking advantage of a virtual bundle is more complicated for the customer, and this is what later detracted from the “smart shopper” feeling, according to the Paris researchers. The virtual bundle customer must devote mental energy toward figuring out the terms of the offer and then physical energy and time to retrieving the components of the offer. It’s like a scavenger hunt. That’s the game where you give participants a list of items to find and maybe clues to finding the items. The first player or team to fulfill the list wins.
     But lots of people like scavenger hunts! In fact, putting out an effort can make the purchase more attractive. In a classic study based at University of Texas-Arlington, researchers found that people offered potato chips in a difficult-to-open polyvinyl bag rated the taste of the chips more positive than did people offered chips from the same batch in an easy-to-open wax-coated bag.
     Maybe those results would have been different if the people could have chosen from chips in the easy-to-open and the hard-to-open bag, where the people could realize the chips were all the same. They’d be bothered by the additional work in opening the polyvinyl bag in the same way that consumers who could have gotten the discount without the extra effort would feel less smart.
     If you use virtual bundle promotions, keep it easy enough. Some French retailers provide special bags labeled with instructions for the hunt.

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Friday, July 12, 2013

Let Mother-Daughters Shop at Leisure

Prepare your shelves and yourselves for increases in mother-daughter social shopping. Bloomberg Businessweek reports that the percentage of women who shop with their young adult daughters has tripled since 2007 and that a major component is the opportunity for interpersonal interaction.
     Studies at Michigan State University and Australia’s Deakin University find that the effects of mother-daughter shopping endure even after the mother has died. The researchers systematically interviewed a sample of women ages 21 through 70 about shopping experiences with their mothers. The overarching themes were transmission of values, establishment of comfortable rituals, and increased confidence in the mother-daughter relationship when a store provides for leisurely shopping.
     How to best provide this?
  • Always be visibly available to assist your shoppers, but give mother-daughter pairs time to settle into your store before asking what you can help them find. 
  • Even if you carry commodity items—such as in a supermarket—be sure to have items which are conversation pieces. 
  • In item categories likely to appeal to mothers and daughters shopping together, place more emphasis on high-end and low-end items than on the middle. This facilitates discussions about values and value. 
  • Serve food, locate your store close to where food is served, and/or carry food-related items. During a time that total book sales have dropped 6%, cookbook sales have increased 10%. In drug stores, the product categories showing the fastest sales growth are edibles. 
     Other ideas might come from considering reasons for the uptick in mother-daughter shopping:
  • Economic necessity. The Bloomberg Businessweek article quotes daughters who appreciate the willingness of their moms to purchase for them items they can’t afford to pay for on their own and the mom’s pleasure in purchasing treats for their offspring. Due to the economic downturn, many daughters moved back in with Mom. The unemployment rate for Americans aged 16 to 24 has been more than double that for the entire labor force. 
  • Tighter bodies and looser restrictions. With the increased emphasis on physical fitness, today’s mothers are more likely than those of past generations to fit into clothes designed for the daughters. Along with this, fashion requirements for older women have eased, allowing moms to cross over in their clothing choices. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Thursday, July 11, 2013

Add On to Giveaways

Once again, the calendar has rolled around to 7/11, declared by 7-Eleven to be the retailer’s eponymous birthday, this year celebrated with free twelve-ounce Slurpee drinks from 11 AM to 7 PM at participating stores.
     When you feature freebies as part of a celebration in your store, check that there will be add-on sales.
  • Spread the word. 7-Eleven has posted a video of The Slurpee Dance and invited the public to post their own versions via YouTube, Vine, Twitter, or the 7-Eleven Facebook page. If you’re giving away items, you don’t want your regular customers to feel they missed out on it or prospective customers to overlook the opportunity to come by your store to visit. 
  • Sell to the celebration. Many of the 7-Eleven stores will be selling Slurpee-themed hats, sunglasses, shirts, and sandals. What can you sell to serve as mementos of the fun time when the dream of something for nothing did come true? 
  • Emphasize sampling. 7-Eleven is using today to feature a different flavor—Strawberry Lemonshade—and a sugar-free version—Lite Mango Lemonade. Research results from University of California-Berkeley, University of Southern California, Stony Book University, and Indiana University indicate that prominently labeling a free item as a sample of a new product avoids devaluing the product. Otherwise, people may become less likely to purchase the full-priced item afterwards. 
  • Stimulate the thirst for more. In past years, the free drink size was not twelve ounces, but rather seven. That size was chosen in order to arouse a shopper’s appetite without satisfying the craving. The senior brand director for Slurpee had said, “You get a taste of it, and you choose to have more.” If the product and amount are at that sweet spot, you giving it for free can increase profitability from the add-on paid sales. Let’s watch this year to see if the twelve-ounce giveaway builds paid sales of Slurpees. 
  • Drink in the complete serving. Looking at a climb of 38% for July 11 isn’t sufficient. If you experience that sort of boost when giving away a product, assess if it was a move of sales from surrounding days, such that the net gain is not substantial. Watch that your giveaways pay off. Offers of free products surely can draw in crowds for a day. However, don’t find yourself wanting to believe, “We lost money on every sale, but we made it up in volume.” 
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Wednesday, July 10, 2013

Prompt Analytical Thinking About Complaints

If your customers have had a bad experience with a product purchased from you, your first priority is to offer to remedy the problem. After that, you’d like to accurately assign responsibility for the shortfall. How much is due to the manufacturer of the product, and how much to you, the retailer? How does the customer allocate the responsibility?
     Researchers at Bryant University in Rhode Island reply that the customer’s initial allocation of blame depends on whether the customer is an analytical thinker or holistic thinker. This distinction between analytical and holistic thinking pops up in lots of consumer psychology research. Analytical thinkers would consider the details of the product’s shortfalls and what may have caused those shortfalls. Holistic thinkers would be more likely to consider the overall shortfall of the product and the overall consequences for the consumer.
     The Bryant researchers say that analytical thinkers place relatively more blame on the manufacturer. The analytical thinkers may pull back on purchasing items from that manufacturer even if the problem is resolved satisfactorily, but there’s little effect on the consumers’ intentions to do future business with the retailer. On the other hand, holistic thinkers place relatively more blame on the retailer for a bad experience with a product, and this can affect these consumers’ intentions to purchase again from the retailer.
     Other research has found that if the retailer resolves an initial complaint to the satisfaction of the customer, loyalty to the retailer can actually increase. However, the Bryant research indicates that purchase intentions will fade quite sharply for holistic thinking following a repetition of bad experiences with products.
     To prompt more analytical thinking about complaints, present explanations in ways which slow down the processing by those receiving it. For example, according to studies at University of Washington, University of Illinois, and DePaul University, text is better than video.
     When the information was presented in a text format, there were no significant differences in rated trustworthiness of the business leadership, whether or not the leadership took responsibility. On the other hand, in the video format, the trustworthiness rating was about 54% higher when the leadership took responsibility than when not.
     Video gets a message out quickly and captures attention better than does text. But if you’re wanting consumers to realize an error was beyond your control because of the actions of others, you’re better off with a text press release.

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Tuesday, July 9, 2013

Wash Your Hands of Warmed-Over Lore

Researchers at Vanderbilt University and University of Texas-Austin present evidence that washing your hands in warm or hot water doesn’t clean away germs any better than washing your hands in cold water. What sanitizes your hands is time spent rubbing the soap thoroughly on your skin, not the temperature of the water during the rub, says the research. Yet 64% of the people in a survey of 510 adults said they use warm or hot water.
     Retailers, too, will frequently adhere to procedures which research claims is wasteful. Why?
  • Lack of knowledge. The hand washers and wasteful retailers might not know what the research says. 
  • Hand-me-downs. We learn so many of our actions through imitation of people we respect. Among retailers, hand-me-down reasoning is seen most often in family-run businesses. The adult kids take over the reins, having grown up doing things in certain ways because that's how their parents said things were to be done. Hand-me-downs also happen when inexperienced retailers purchase a business and are coached by the former owners. 
  • Old habits. We’ve been washing our hands for almost all of our lives. If we’re accustomed to warm water, we resist changing our routine for what seems to be a highly routine task not worth thinking much about. Old habits are always a driver of retailers’ actions because retailers are so busy that they find it hard to carve out the time to build new habits. 
  • Superstitions. “There was one time I washed my hands in cold water and came down with the flu afterwards. Never again will I wash my hands in cold water.” The retailer says, “A few years ago, I tried out exactly what you’re suggesting I do. I lost a lot of money. Never again will I do that.” 
  • Superior knowledge. Maybe the research conclusions are wrong or incomplete. People might find it more pleasant to wash their hands in warm or hot water, and if pressured to wash in cold water, they’d stop washing their hands as often. Moreover, there are stains which require a high-temperature scrub. Considering only germ removal is an incomplete assessment of the value of hand washing. Retailers also can consider research findings to be wrong or incomplete. To be convinced, they’ll need to hear more. 
     Look out for any of these drawing you to warmed-over lore and getting in the way of you facing the cold truths.

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Log How You're Handling the Bad Economy

Monday, July 8, 2013

Cool Summertime Shoppers

Most Sundays, The Columbus Dispatch has been publishing a bullet-point “Did You Know?” feature about one or another central Ohio business. Yesterday’s article was about the F&R Lazarus & Company flagship store in Columbus.
     Retail historians know Lazarus as a founding member of Federated Department Stores. Historians of holidays might recall how, in 1939, Lazarus president Fred Lazarus, Jr. spearheaded the successful campaign to have Congress set Thanksgiving as the fourth Thursday of November rather than the last Thursday of the month. This made the start of the holiday shopping season a more predictable event and the length of the holiday shopping season sometimes longer.
     But until yesterday’s Dispatch feature, many people might not have known that the Columbus Lazarus was the very first department store in America to have air conditioning. Learning that reminded me of a recollection my wife, Irene, enjoys sharing: She spent her teen years living in a small Garden Grove, California house sans cooling. Many summer days, her mom and the five kids would go shopping at the local J.J. Newberry store. Being a five-and-dime, Newberry was filled with items for all ages to peruse for purchase. And there was always plenty of time to peruse, since the Newberry store was air conditioned.
     Climate control attracts shoppers and keeps them shopping longer. For summertime retail business, cooling is de rigueur. Still, what about the utility bills?
     To improve your profitability, know that there are ways beyond cold air to keep customers cool. Blues and greens instead of reds and oranges. The fragrances of spearmint, peppermint, and holly. Less cluttered aisles.
     And accent lighting. More than twenty years ago, researchers at Texas Tech University reported that shoppers became more likely to handle the bottles in a wine store when the brightness of the interior lighting was increased. Other researchers had been finding that when customers handle a product, they're more likely to buy it. Bright lights build sales.
     Sounds fine for winter, yet how about summer? If we're going to jack up the wattage of the lighting system, profits from added sales could be eaten away by utility bills.
     You don't need to up the wattage and the heat in the whole place. In fact, accent lighting directs attention to particular areas and items if you pull back on the overall brightness of the store lighting. You can end up lowering your costs.
     That’s cool!

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Sunday, July 7, 2013

Censor Brain Porn

Adam Waytz of Northwestern University and Malia Mason of Columbia University, with credentials in both management science and neuroscience, hate “brain porn.” That’s what they call people’s fascination at attributing consumer beliefs, emotions, and behaviors to activity in very specific areas of the brain. The truth is that most areas of the brain are activated by a variety of thoughts and most thoughts produce activity in multiple areas of the brain.
     Professors Waytz and Mason give business advice derived instead from what they see as a proper contribution of state-of-the-art neuroscience. I’ll share with you my adaptation of their points and incorporate my notes so I can ask you a question.
  • Take a broad view of what serve as benefits for your shoppers and rewards for your employees. For example, neuroscience indicates that a sense of fairness in the store is a reward, even in the absence of monetary payoffs. This argues for maintaining perceptions of equity for shoppers who are waiting in line. With employees, be clear how salaries and commissions relate to the quality of performance. The neuroscience findings are compatible with prior research which indicates the importance of respect, concern, and empathy in business dealings. 
  • Recognize how emotions determine beliefs to a greater extent than beliefs determine emotions. This is an old idea in psychology, beginning with William James in the late 19th century and on through Leon Festinger in the mid-20th century. The first impressions of your store gained instantly and subconsciously will affect what shoppers believe about your business practices and what your job applicants think about your employment practices. At the other end of the transaction for your customers, informed people who make purchases which “feel right” tend to be happier with you in the longer term than those people who buy after complicated cost-benefit analyses. 
  • Limit stimulation. Different brains are wired for different optimal stimulation levels. Some of it has to do with learning. People who work in noisy environments develop a tolerance for busy store environments. Some of it has to do with age. Older shoppers are more easily distracted than are younger shoppers. Consumer researchers have known for some time that shoppers are attracted to broad assortments, but seek aids in filtering through the choices so they can focus. 
     Now my question for you: Since the neuroscience reinforces what we already knew, is the advice above just additional brain porn?

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Saturday, July 6, 2013

Condemn Snowball Samples to Hell

A snowball’s chance in Hell is mighty slim. Unless you have along with you a perpetually-powered refrigerator. Almost as slim are the odds of a snowball sample providing a retailer adequate guidance from consumer survey findings. Unless you have along some high-powered statistical expertise.
     A snowball sample is gathered by asking people who take your survey to convince their friends to also take the survey. Snowball samples are used most often when the types of people you’re aiming to question are difficult to find or would probably refuse to participate unless invited by a trusted pal. In criminal justice research, snowball sampling has been used to survey drug addicts and prostitutes.
     In the current issue of International Journal of Consumer Studies, researchers from University of Georgia report findings about people who regularly buy at private sale sites. The main conclusion was that these shoppers excel in innovativeness.
     But the 164 respondents were mostly obtained with a snowball sampling methodology, and there are two big problems with snowball sampling:
  • Bias which snowballs. You’d like your survey findings to represent what’s true for as broad a swath as possible of your current and potential shoppers. Each time you ask someone to participate in your survey, there’s some bias, since that person is almost certainly not completely representative of the whole population. To the degree that you can select survey respondents at random, you reduce this bias. But a snowball sample makes the bias progressively worse. People will invite others like themselves to accept your invitation to participate. 
  • Unknown population parameters. Statistical analyses of the replies adds to the validity and reliability of survey findings. The standard statistical analyses make assumptions about the size of the population, such as the approximate number of all consumers who use private sale sites. With snowball sampling, it’s difficult or impossible to accurately estimate the population size or important characteristics of the population aside from the one you’re most concerned about. 
     As a general rule, the larger your sample size, the less serious will be those two problems. So if you must use a snowball sample, go large. In addition, there are sophisticated statistical techniques—requiring the skills of an expert consultant—which can reduce the distortions from snowball sampling.
     But your best alternative is to consider findings from snowball sampling survey projects to be tentative and subject to confirmation by more rigorously conducted consumer surveys.

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Friday, July 5, 2013

Pin Interest on JIT Inventory Management

Nordstrom uses Pinterest in a way that might stimulate ideas for your profitability. Bloomberg Businessweek reports that the retailer is employing the pinboard-style photo-sharing website to facilitate Just-In-Time (JIT) inventory management.
     The beginnings of JIT were in manufacturing, where the objective was to have raw materials arrive no earlier or later than when the materials would enter the production process. The manufacturer thereby saved on cash outlays to pay for the materials, storage expenses, and spoilage or damage. The advantages for a retail business are similar. Plus with JIT, you reduce the chances you’ll be stuck with last season’s fashions.
     Nordstrom staff monitor which items are pinned most often on Pinterest, check that there’s sufficient depth in inventory of those items, and order more when necessary to be there just in time for the shoppers. This works for Nordstrom because of its compelling presence on Pinterest. The retailer has 4.5 million followers. By comparison, Macy’s has 47,000, and your store probably has fewer yet.
     Still, the idea of monitoring social media sites to inform merchandising decisions could work even more cleanly for you than for Nordstrom. As the Bloomberg Businessweek article points out, a most-pinned dress near one Nordstrom might not be so popular at another store. The locally-based small to midsize retailer should have more consistency in preferences.
     The whole idea of JIT is working in retailing because that’s how consumers are buying. The number of items American shoppers keep in their pantries has dropped. Households are getting smaller as more people choose to remain single or are living alone in their senior citizen years. And an aversion to preserved foods and yesterday’s technology leads our customers to wait until the need must be met. Because of the prolonged economic recession, consumers have taken on the habit of purchasing clothes in season rather than ahead of time.
     Much of successful inventory management depends on cycles. Annual weather cycles are somewhat predictable and they affect large segments of your target customers the same way. In early January, you can pretty much count on everybody being cold if they go outside when your store is in Buffalo, New York and quite warm when outside a store in Adelaide, South Australia. So you’ll stock more stay-at-home and go-out-protected items at one time of year than at the others.
     Nordstrom’s Pinterest-style method can add to the precision, bringing you closer to JIT.

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Thursday, July 4, 2013

Don’t Sweat the Small Stuff

In his book Don’t Sweat the Small Stuff…and it’s all Small Stuff, psychologist Richard Carlson urged everybody—including retailers—to keep a sense of perspective in life. This advice resonated with readers. The book spent two years on The New York Times Best Sellers list and ended up being published in over thirty languages.
     The reality of retailing, though, is that it’s not all small stuff. Some things do make a substantial difference to the shopper. A more accurate title—even if unwieldy—would be Don’t Sweat the Small Stuff…and realize you can influence what the shopper considers to be Small Stuff.
     Researchers at New York University and University of Florida looked at what happens with ads designed to promote consumption of an entire product category. Examples included the Florida Citrus Board’s ads for orange juice and the Midwest Dairy Association’s "Ah, the power of cheese" campaign. Such advertising intends to increase overall demand, but not selectively favor certain members of the advertising group funding the ads.
     The researchers verified that this objective was often not met. When the generic ads for orange juice emphasized nutritional advantages, this helped the Albertson’s store brand more than it did the premium Tropicana brand. The effect was the other way around when the generic ads emphasized the value of good flavor.
     We might assume that the value of a featured advantage—such as nutrition or flavor—will grow in the consumer’s mind, while the importance of the other advantages will not be disturbed. Talking about nutrition doesn’t decrease the value of flavor for the consumer, it’s said. But the research disproved the assumption. An ad highlighting nutrition will lead to the consumer placing less value on other attributes, such as flavor.
     In this case, the tone of the advertising transformed bigger stuff into smaller stuff. Another angle on this is how what the retailer might consider to be small stuff is actually the most important stuff.
     Researchers from Chinese University of Hong Kong and Fudan University in China found that showing attentiveness, friendliness, and empathy towards services customers influences customer satisfaction to a greater extent than does service outcome factors. Outcomes include how well the clothes dryer works after being repaired, if the cruise ship vacation met expectations, and even the extent of financial returns on investments.
     Service outcomes count for a lot, but this doesn’t mean customer relations are small stuff.

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