Thursday, October 1, 2015

Long for Simplicity in Short-Term Promos

Announce that the sales promotion is available for only a short time and shoppers’ ears will perk up. But if you tell those same shoppers that what’s being promoted requires a long-term commitment, they’ll hesitate taking advantage of it.
     Bundle components together as a package, and shoppers often appreciate you doing the matchup for them. But unless those components each carry a similar retail price, there’s a good chance those shoppers will estimate the value of the package to be substantially less than the total of the retail prices individually.
     Now what happens if you combine these methods intended to build sales? Researchers at Deakin University in Australia offered consumers a three-item bundle, but the consumers were told the offer was available for only a limited time. With some of the consumers, getting the offer required signing a two-year contract, while with the others it did not.
     The result was that the consumers considered the three-item package to be a good deal, but not as much when a two-year commitment was required. The research findings indicate that the consumers would have been more attracted to purchase if a contract wasn’t required or if the offer was for a single item rather than for a package. With so many moving parts in the offer, the shoppers perceived more risk.
     Maintain simplicity in offers you make to consumers when the offer requires a quick decision.
     Also stay aware that your regular customers who choose to avoid the risk and so decline the offer may have regrets afterwards. The regret might reveal itself in a way which leads the customers to dislike the retailer and criticize the merchandise. Maybe it’s because people blame the retailer for what was their own fault. Maybe it’s because people want to avoid reminders of the opportunity they missed.
     Studies at University of Miami and University of Kentucky uncovered two ways that a retailer could shortcut the consumer irritation about missing out on a big sale:
  • Use what the researchers call “steadily decreasing discounting.” Before returning the item to its pre-promotion regular price, offer one or more additional discounts on the same merchandise, each discount at a progressively lower percentage than the deep discount. 
  • Offer customers another opportunity to purchase merchandise on sale. If this follow-up is on merchandise different from what was offered before, the amount of the discount does not need to be nearly as deep. 
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Show Them What They’ll Never See Again
Follow Big Discounts with Smaller Discounts
Reduce Unwanted Risks for Your Shoppers
Simplify for the Shopper

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