Monday, April 21, 2014

Tilt Toward In-Store Price Comparisons

You’ve almost absolute control over the pricing of items in your store and almost no control over the prices charged for equivalent items by other suppliers to your shoppers. From this perspective, it makes sense to interest those shoppers in price comparisons within your store rather than between stores. It also makes sense from the perspective of getting the sale whichever price point the shopper settles on.
     Researchers at Babson College and California Polytechnic State University identified factors that make consumers more receptive to within-store than between-store price cues. Using other consumer behavior research to extend those findings, here’s a tip for tipping the comparisons in your favor if a purchase prospect wants to keep the focus on price: Position the purchase as utilitarian rather than hedonic. 
     Consumers make decisions for a mix of utilitarian and hedonic reasons. The utilitarian is to get a job done. The hedonic is to feel pleasure. When buying a power saw, the utilitarian is to have a way to cut things and the hedonic is to experience pride in the clean cuts.
     Even though there’s always a mix of the two, either the utilitarian or the hedonic often predominates. With the power saw, the utilitarian is probably more important to the shopper. With a ticket to a concert, it’s probably the hedonic. The Babson/Cal Poly research finds that a utilitarian mindset tilts evaluation toward within-store price comparisons so guide the shopper’s thinking there.
     Once the shopper’s focus shifts away from price, though, tilt toward the hedonic:
  • Consumers seek more variety in their purchases when there are hedonic than when there are utilitarian objectives. Researchers at University of Pennsylvania used the term “hedonic treadmill” to refer to the ways in which people get bored with hedonic purchases. They buy more. 
  • Researchers at University of Maryland-College Park, Rice University, and Carnegie Mellon University find that after completing a purchase to meet hedonic objectives, the purchaser is more likely to want to add on an extended service contract than if the purchase was to meet utilitarian objectives. ESCs are a high margin item for retailers. 
  • Researchers at London Business School and University of Chicago report that when people shop for hedonic purposes, they’re more likely to follow the retailer’s suggestions. Shoppers love to have choices available to them, but with hedonic items, the choice they’re more likely to make is to let you choose for them. 
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Cultivate Customers’ Hedonic Objectives 
Sharpen Your Price Image

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