Thursday, March 31, 2011

Punch Up Offerings with Distinctive Labeling

Having spent childhood years living across the street from Southern California orange groves, I couldn’t pass up the opportunity to discover how orange crates hold lessons for retailers. The opportunity came with a feature article in last weekend’s Los Angeles Times about the history of California fruit crate labels.
     You see, the challenge for Southern California citrus packers in the early 1900s was to establish a distinctive brand image. Why buy Villa Park instead of Borden when an orange is an orange? At first, the crate labels’ function was to encourage the shopper to develop brand loyalty.
     Here are some lessons from then and from what developed from there:
  • Pay particular attention to how you present commodity items. Even if the manufacturer’s packaging is the same from one retailer to another, something as small as the way the boxes are angled on the shelves can make your product look more attractive than a competitor’s.
  • Be aware of what the label is actually selling. The early California Fruit Growers Exchange orange crate labels portrayed snow-capped mountains and beaches dotted with sun umbrellas. Then around 1922, the packer realized the labels were establishing a distinctive image, all right, but were selling California more than selling the fruit. In fact, the labels didn’t even include a picture of an orange. A redesign changed that. Then around 1935, the labels were again redesigned, this time to give greater highlighting to the brand name, which itself has changed from California Fruit Growers Exchange to the single emotion-packed word “Sunkist.”
  • Use shelf tags with comments to add to what the manufacturer’s label portrays. The packinghouses created particular names and labels for fruit that was small or off-color. One objective was to distinguish these from the top-grade premium-priced citrus. These lower-grade offerings had labels with names like Mutt and Camouflage. However, another objective was still to sell the fruit. So taglines were developed like “The Quality is Inside” and “Not much for looks, but ripe, sweet, & juicy.” You can do the same sort of thing on your store shelves to add the appeal of personality to each offering.
  • Consider the labels as a profit center in themselves, so trade-protect them. Portraits of Campbell’s Soup Cans and Coca-Cola bottles made money for pop artist Andy Warhol. The LA Times article says that the crate labels have sold for as much as $6,000.
Click below for more:
Counteract Problems from Similar Brand Labels

Wednesday, March 30, 2011

Moderate Discounts to Project Quality

When putting items on sale, set the discount at a price low enough to draw in customers, but not so low as to make the customer think the item is of unacceptably low quality. The price is itself a compelling signal. That second part of the formula—“Don’t set the price too low”—is especially important when the product is purchased for its effectiveness.
     Researchers at Stanford University asked two groups of study participants to try out an “energy drink.” One group was told that they were imbibing a full-price, no-discount drink. The other group was told that the cost of the drink was at a substantial discount off the regular price. Sure enough, although the two groups received the identical potion, the participants with the “discount” drink performed about one-third less well than did the “full-price” group on a task requiring mental agility.
     In a parallel study, consumers were asked to taste five wines and to rate their quality. They also were told the costs of the wines—five prices which ranged from relatively inexpensive to relatively expensive. What the study participants did not know was that the five wines tasted actually came from only three different bottles. One pair was presented as two different wines, one at a $45 price point and one at a $5 price point. This was also true for another pair of wines.
     Yes, the identical wine was rated by the consumers as being of higher quality when the price was higher. But there’s more to the story: Brain scans showed that when the people were tasting the more expensive wines, there was enhanced activity in the medial orbitofrontal cortex. That’s an area of the brain associated with consumer decision making based on emotions. Compared to when a study participant tasted a wine identified as low priced, the participant tasting the identical wine identified as high priced experienced greater pleasure of the sort that translates into an increased likelihood of buying the wine.
     …if the price is low enough to be attractive. There’s the rub. The price needs to be low enough to pull the shopper and convince them they’re getting a good deal. When you’re discounting merchandise to clear it out fast and save on storage costs, cut pricing to the bone. But when you’re discounting to draw in footsteps or to encourage sampling a new offering, show moderation in the cuts.

Click below for more:
Allow Modest Expectations of Discounted Products
Give Free Samples of New Products
Answer Van Westendorp Pricing Questions

Tuesday, March 29, 2011

Humor Your Customers

It was June 1941. Mr. John Joseph McNamara handed the final draft of his doctoral dissertation in Psychology to Prof. Joseph Tiffin at Purdue University. That dissertation, which caused a major redirection in consumer psychology research, had to do with something now called the Purdue Eye Camera.
     Up to that point, most advertising researchers would evaluate the power of an ad to grab attention by asking consumers to say how effective the ad was. Mr. McNamara suspected that this sort of self-report was flawed. So rather than ask the study subjects, he photographed their eye movements when looking at magazine pages containing ads of various sorts and in various surroundings. In my opinion, not the perfect measurement tool for the task, but an excellent addition to the consumer researcher’s tool kit.
     After receiving his degree, Dr. McNamara collaborated with Prof. Tiffin to use their Purdue Eye Camera to answer a quite specific question: “Does a funny cartoon on a magazine page draw attention to an otherwise interesting adjacent ad, draw attention away from it, or have no real effect?”
     They found that people spend significantly less time looking at an ad when there’s a funny cartoon next to it. If a prospective customer would have spent fifteen seconds mentally processing the ad’s message when there was no cartoon, they’d spend a total of about only ten seconds when the humor was competing for attention. And with an ad, each second of processing makes it more effective.
     How about humor in the ad itself? Subsequent research found that humor does help sell.
  • It draws attention and generates word-of-mouth about the ad.
  • Humor heads off mental counterarguments. The shopper is too busy chuckling to challenge the sales pitch of the ad.
  • When happy, customers are more likely to make a decision to buy.
     The same sort of thing happens in face-to-face selling. Gently and briefly kid around with the customer.
     You can give yourself lots of reasons not to make jokes with customers: The shopper on a tight schedule doesn’t want to take the time to hear you tell your favorite dozen funny stories. Everybody wants their dignity respected, so if the humor takes the form of teasing a customer, you’ll lose that sale and probably any opportunity to make a future sale.
     To avoid offending, build on what you discover the customer considers to be funny.

Click below for more:
Joke Around to Facilitate the Sale
Use Humor in Unexpected Ways
Soften Rhetoricals Around Cautious Customers

Monday, March 28, 2011

Lobby by Acknowledging Opposing Views

There are times when you as an individual retailer or member of a retailer coalition want to influence the political process. Politicians are consumers, so the tools of influence derived from consumer psychology findings can help.
     A current case study for this dynamic is the effort of Walmart Stores to open a little shop in New York City. Well, a little shop, considering that it would be about 30,000 square feet rather than, say, the average 180,000 square feet of a Walmart Supercenter.
     The effort to get a NYC store is by no means new. A number of years ago, Walmart retreated from the drive to open stores in Queens and Staten Island because of the thoroughgoing political opposition.
     What would attitude change experts advise to Walmart in their situation and to you in situations where you want to influence politicians? Research findings from University of Illinois and Northwestern University indicate that when lobbying, the retailer should be sure to acknowledge opposing points of view.
  • Respect the heartfelt beliefs behind what often shows itself as overly emotional demonstrations. Walmart acknowledged that they were seen as environmentally unfriendly and as an exploitive employer. A recent New York Times article points out how Walmart offered maternity leave and pressured their product suppliers to cut down on pesticide use.
  • Specifically mention as many of the arguments of your opponents as you can, and give your counterarguments. You might be concerned that in doing this, you’re bringing up points of view damaging to your case—points of view the politicians wouldn’t have thought of otherwise. The research evidence is that this isn’t the case. 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.
  • Engage in debates that the politicians can see. The research punctured a couple of other myths about this. First, it’s commonly thought that with people already convinced of your point of view, bringing up the opposing opinions won’t build your credibility further. But in fact, it does, with the result that it helps inoculate your supporters against subsequent attitude change. Second, it’s often thought that balanced arguments will confuse people who have limited education about the issue. The truth is that these people usually process what they can from what you say. The two-sided presentations help clarify rather than confusing the listeners.
Click below for more:
Restrain Your Overreaction to Criticism
Encourage Balanced Customer Reviews
Make Your Product Reviews Credible

Sunday, March 27, 2011

Excite Consumers with Nature

“Natural is much better than artificial.” Perhaps that preference resides within our DNA, so basic is it in the choices our shoppers make. It’s why green product packaging and store décor have a special appeal to our shoppers. Show consumers from throughout the world green product packaging and you'll probably hear descriptions like new, organic, healthy, and refreshing.
     The attraction of nature is multifaceted. There’s much more, but some of the psychology involves simplicity and some involves adventuresomeness. The natural alternative feels simpler than the artificial one. That’s one conclusion from a study conducted by international advertising agency Euro RSCG Worldwide and as reported by online Marketing Daily. Study conclusions were based on responses from 5,700 adults residing in France, the Netherlands, England, the U.S., Brazil, Japan, or China. In that study, about 60% of the respondents felt consumers should be more connected to nature.
     As to adventuresomeness, the Center for Culinary Development noted a few months ago how chefs at white-tablecloth restaurants are incorporating new flavors into their preparations by foraging in forests and along seashores. A prime example from CCD is the use of sprigs of Douglas Fir not only in entrees, but also in cocktails. Other examples include the bright orange, strikingly tangy sea buckthorn and the alpine/arctic cloudberry, traditionally the theme of jams and liqueurs, but now being seen in beer, wine, and sparkling drinks.
     CCD has predicted that the excitement of the foraged, adventurous herbs, flowers, and other ingredients found in nature will spread from use at fine-dining restaurants to eventually influencing overall consumer preferences.
     Perhaps the prototype is wasabi, best known in Japanese cuisine, now a not uncommon addition to mashed potatoes, and having spread its stimulation to be the basis for a fire alarm for the deaf. Researchers at Shiga University of Medical Science rigged up a device to spray wasabi fumes when suitably activated.
     The shopper’s current attraction to both excitement and simplicity sometimes conflict. Applebee’s restaurants hang all sorts of conversation starters on the walls. Cracker Barrel restaurants position board games around for customers to play. It adds stimulation by adding atmospheric complexity to the dietary carbohydrates.
     Then there’s the Bass Pro Shop and Scheels approach, in which the excitement is better digested because the excitement arises from the wonders of the natural world.
     How can you best introduce both the simplicity and the excitement of nature into your retailing?

Click below for more:
Exercise Cultural Sensitivity in Color Use
Offer Fundamental Indulgences
Use Store Decor to Create Shopper Excitement

Saturday, March 26, 2011

Welcome Me to Your Store with Enthusiasm

An article in this last week’s Cincinnati Enquirer reports on the “Red’s Way,” an initiative by the Cincinnati Reds baseball franchise to equip employees who have responsibilities for fan contact to quickly establish welcoming connections. The objective is to maximize loyalty to the team and increase ticket sales.
     As part of the initiative, more than 2,200 Red’s employees are being trained to answer customer questions well. Another part of the initiative includes recognizing employees for doing it well with rewards that range from $5 gift cards to flat screen TVs.
     It’s to the credit of this sports retailer that they’ve recognized the importance of answering customers’ questions. It’s also to their credit that those in charge of implementing “Red’s Way” are cautious about how quickly the changes will produce profitable results. They’re clear that they’ll focus not only on the words to say when answering fans’ questions, but also the enthusiasm with which the answers are given.
     What are the lessons of all this for you and your store? Well, after you’ve heard the same customer question a dozen times, do you look the next customer who asks you that question straight in the eyes and say, “Good gosh. Don’t you know anything”? Maybe not, but I’ll bet your staff who are asked the same question repeatedly can forget how important it is to enthusiastically welcome customers’ questions. After all, questions signal the customer’s interest in making a purchase from you.
     Whenever you answer a customer’s question with enthusiasm, expect the customer to become enthusiastic. If that doesn’t happen, analyze why. Perhaps you misunderstood the question. Maybe you’ve not noticed whether the customer wants your answer to consist of product specifications or general reassurance. According to researchers at Stanford University, University of Utah, and University of Iowa, customers usually want specifications pre-purchase, but after making the purchase, they’re usually seeking reassurance.
     Essential to enthusiasm is a smile. Unfortunately, some people otherwise qualified to do retail sales have great difficulty putting a smile on their face or in their tone. They don’t belong on the sales floor, at least until their clinical depression eases. For others, the depression is temporary and will disappear if you have the employee start working in a different department, where they’ll be energized by getting a whole new set of questions.
     Just as with the players on the field, the magic is in the delivery.

Click below for more:
Answer Customer Questions with Enthusiasm
Learn the Relationship B2B Customers Want
Help Product Novices & Experts Learn
Consider Your Store a Sports Stadium

Friday, March 25, 2011

Synch with Your Shopper’s Brain Before Influencing

With ecommerce predicted to grow at a double-digit rate each year, what’s the brick-and-mortar retailer to do? Incorporating ecommerce into your marketing mix is one answer. In addition, consider how you can sharpen your selling skills in ways that outpace ecommerce capabilities.
     Research findings from Princeton University indicate that one distinctive tool you have in face-to-face selling is the ability to reflect each shopper’s brain activity. The researchers found that when communication between two people is at its best, the brain waves of the two people actually come to have similarities. Along with this, the listener—such as the retail salesperson—begins to anticipate where the speaker—the prospective customer—is going next in their thoughts, and can therefore better influence those thoughts.
     The enhanced understanding of the shopper boosts your powers in guiding the shopper’s purchase decisions. It works best with customers you already know, and there are significant differences among salespeople in the ability to do this sort of mindreading. But the research findings do suggest ways to get better at it.
  • First, build a common vocabulary with the shopper. Words are the fundamental tools for you to communicate well. Consumer researchers talk about helping customers develop a consumption vocabulary so they can better describe to the salesperson what they're looking for.
  • Listen carefully not only to the words, but also to the tone of voice. Watch the shopper’s gestures and their facial expressions. Figure out how they all go together so you can get good at reading the brain.
  • Be aware of when you’re in sync. The researchers say you’ll feel visceral signals letting you know you’re now tuned in.
  • You can redirect, but don’t suddenly interrupt, the shopper’s thinking, such as by finishing off their sentences. When you’re reading somebody’s mind, tipping your hand makes it seem creepy, and the shopper gets guarded.
     Much of this advice isn’t new. Salespeople have always been advised to tune into the customer. Terms like “neurolinguistic programming” and “mirror neurons” have been bandied about by retailing gurus. What the Princeton research adds is a better understanding of how this all works and a few additional tips about how the B&M retailer can achieve an advantage over the ecommerce retailer.
     Well, at least until ecommerce includes the shopper putting on the special helmet which reads and transmits all the details of the person’s brain activity.

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Give a Vocabulary for Richer Shopping

Thursday, March 24, 2011

Keep Up-to-Date with Nostalgia Appeals

Is it more than coincidence? Within a three-week period,
  • Heinz Ketchup said they’re bringing back the eight-sided glass bottle from the 1990s.
  • Current Hostess Cakes snack brands premiered retro packaging, and Twinkies cupcakes reincarnated the same style banana filling of old.
  • PepsiCo announced throwback versions of Pepsi, Mountain Dew, and Doritos.
     The explosive blast from the past wasn’t limited to food, snack, and beverage brands. Retailer brands like Restoration Hardware and L.L.Bean, which reek of tradition, were targeted for extraordinary growth, too.
     So do you want to revise your store name to reek of tradition, too? Maybe all that’s necessary is to add the words “Old School” in front of whatever you’re calling yourself now. Or you could require that all the sales help dress like the characters from “Mad Men.” Well, okay. More realistic alternatives are to remind shoppers of your store’s history (“Serving our community since 1948”) and dressing up the shelves with assorted nostalgic products.
     Whatever you do, remember that the nostalgia appeal, ironically, has a limited freshness date. The special edition of Heinz Ketchup disappears after five months. The Hostess Cakes items made their Brigadoon-style appearance for only one month.
     In 2004, Pacific Cycle brought out a redo of the Schwinn Sting-Ray, arousing memories of a bicycle loved by kids growing up a generation before. That bicycle garnered an award as the 2004 Toy Industry Association Outdoor Toy of the Year. But two years later, Dorel, the Pacific Cycles parent company by then, decided to take a loss of $3.5 million on its remaining Sting-Ray bicycle inventory in order to convince retailers to sell off the bikes.
     Among consumer psychologists, there’s a sense that nostalgia appeal is due to feelings of uncertainty, such as from economic downturns or social isolation. Researchers from Arizona State University and Erasmus University in the Netherlands concluded that when people are feeling lonely, they become interested in nostalgia. When made to feel socially uncertain by the experimental manipulation, consumers became more likely to prefer automobile makes, food brands, TV shows, movies, and even shower soaps which reminded them of their personal history.
     Use the nostalgia appeal now, but keep up-to-date on when the appeal is due to fade because your shoppers’ social uncertainty is easing.

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

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Meet Customers’ Desires for Nostalgia
Suggest Nostalgic Items to Lonely Shoppers

Wednesday, March 23, 2011

Curb Your Enthusiasm About Economic Recovery

Optimism and the enthusiasm accompanying optimism are essential drivers of retailer success. Still, the optimism must be tempered by attention to the marketplace and a realistic analysis of the signals. Results of “The Harris Poll” announced last week offer a fine proving ground for that balance.
     Market research firm Harris Interactive surveyed about 3,200 U.S. adults in February, asking, “Have you done or considered doing any of the following over the past six months in order to save money?” The responses were then weighted so that the conclusions would better reflect the composition of the entire U.S. population in terms of age, gender, race/ethnicity, education, geographical region, and household income.
     Here are the major conclusions with implications for your retailing practices:
  • Over the past six months, there have no substantial changes in what consumers overall see themselves as doing to save money. Although many indicators of consumer confidence have been upbeat, most consumers are still staying cautious. The implications for you: Watch your expenditures. When expanding inventory or operations, do so gradually and monitor the results. Do SKU rationalization by pooling product images. That is, in advertising and signage, use different marketing messages for the same product.
  • Older consumers allow themselves more expenditures in certain categories than do younger adults. These categories include going to a hairdresser/barber and subscribing to cable TV. One explanation is that senior citizens are less worried about the unemployment rate and the residential foreclosure rate than are the younger adults. The seniors are often retired from employment and have had their home loans for many years. The implication: Increase attention to the senior market. Research at University of Michigan, Singapore Management University, and Ben-Gurion University finds that older consumers are better able to analyze selling points in the morning than in the afternoon. As the eyes age, they require more light. For stores that let daylight enter, the morning brightness can help seniors tell the blues from the greens and the foregrounds from the backgrounds.
  • Of the twelve techniques the Harris questionnaire presented for curbing expenditures, the consumers’ most popular one, by far, was to purchase generic brands instead of name brands. About 72% of the respondents have either done this or are considering doing it. The implication: Carry house brands, especially in product categories shoppers might hesitate purchasing. A house brand label can sway the consumer toward selecting the item.
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Rationalize Your Inventory by Pooling
Help Seniors to Shop Early
Dissolve Cautions About Private Label Goods

Tuesday, March 22, 2011

Celebrate the Celebrity Appeal

Why would somebody pay £78,000—about $126,000 in the U.S.—for a dress designed by a woman who works in an aquarium and whose name is certainly not well-known inside or outside fashion circles? The answer is that the dress was worn by someone whose name has celebrity-quality recognition: Kate Middleton, who is due to soon marry Prince William in Westminster Abbey.
     The phenomenon is nothing new. In year 2004, an eBay buyer dropped $14,000 for a gob of gum chewed by Britney Spears. Somebody paid $48,875 for Jackie Kennedy’s tape measure, and a year ago last November, convicted swindler Bernie Madoff’s blue Mets jacket, looking very much the same as many other blue Mets jackets, sold for $14,500.
     Consider the ways you can use the celebrity appeal to improve your profitability:
  • Celebrity appearances at special events held at your store or at your retail center
  • Photos posted in your store of past visits by celebrities
  • Store endorsements by people well-known in your community
  • Brand names and models associated with celebrity names
     Researchers at Yale University and Israel’s Bar-Ilan University explored the shopper psychology behind the phenomenon. They asked study participants how much they’d like to own specified common artifacts like clothing and furniture that had previously been used by celebrities or non-celebrities. Some of the celebrity names were well-regarded. George Clooney, for instance. Others had a less positive reputation. Saddam Hussein, for example.
     As expected, the participants assigned higher value to celebrity-associated items. When the association was with a well-regarded name, the consumers’ explanation was prestige by physical association. The consumers felt they could actually absorb some of the remnants of the original owner. The study participants said that if the item had been thoroughly cleaned, it was nowhere near as valuable to them. On the other hand, if purchase of the item was with a condition it could not be resold, this didn’t decrease the attractiveness much at all.
     With the negatively regarded celebrities, like Madoff and Hussein, the effect was reversed. Sterilization of the item before purchase was all to the good. But prohibitions on resale dramatically decreased the valuation by the consumers in the study. Here the purchase was being made as an investment.
     It seems that shoppers would be more tempted to put Britney Spear’s gum inside their mouth than to run Saddam Hussein’s sweater against their cheek.

Click below for more:
Select Celebrity Endorsers Who Have Credibility
Consider Publicizing Your Rascal Image

Monday, March 21, 2011

Donate In Ways that Encourage Others to Donate

According to a recent posting, many retailers who are currently contributing to disaster relief efforts for Japan are no more than self-serving. The evidence is the press releases they’re issuing to announce their contributions.
     But what if the publicity motivates others to contribute as well? Or what about the situations where a retailer uses contributions to build sales?
     For instance, among the more effective techniques for convincing customers to start using an unknown brand is to tie their trial to you contributing to a charity. Findings from University of South Florida indicate that pairing charitable contributions with the sale of brands unfamiliar to the customer will boost sales of those unfamiliar brands.
     When a vendor asks your business to purchase a selection of the unknown brand, negotiate with the vendor to share with you in sponsoring the charitable contributions. After all, building sales is in the interest of both the supplier and you. However, you’ll get better results in convincing others to join you in donating if you publicize the sponsor as being your store. Research at Michigan State University, Illinois Wesleyan University, and University of Texas-Austin suggests that when a store rather than a brand is publicized as the sponsor, consumers are more likely to see the sponsorship as a charitable act rather than only a selling technique.
     Limit how frequently you announce that you’ll be pairing a contribution to charity with the purchase of an item. Just as with price discounts, if it’s done too frequently, it becomes less likely to boost sales.
     One way to encourage others to donate along with you is to get senior citizens involved as volunteers. Researchers find that altruism is especially important to elderly consumers. Seniors like to give their business to retailers who are compassionate, and they like to view themselves as generous. Whenever you organize a charitable activity, offer a variety of ways for your older customers to pitch in to help.
     In all of this, remember to explore your motivations for the promotion. If a retailer believes that this pairing of contributions with sales completely fulfills the ethical obligation to help others, the retailer might be flimflamming themselves. Then it is no more than a ploy. On the other hand, if the donations are part of the retailer’s program of charitable giving, I’m thinking that meets the concerns about shameless self-promotion expressed in the piece.

Click below for more:
Pair Contributions with Purchases
Introduce Unknown Products with Charity
Peddle Unfamiliar Brands Using Contributions

Sunday, March 20, 2011

Tell Questioners Now When You’ll Answer

Should you give each of your customers a good reason to come to you with a complaint? You see, the shopper psychology research finds that when a customer comes to you with a complaint and you decisively resolve the complaint, the customer’s loyalty to you gets greater than it was before the complaint.
     Beyond the first complaint, though, loyalty starts to fall apart. Fortunately, you don’t need to cause complaints in order to gain a distinctive advantage. Accomplish it by encouraging other inquiries from customers and then responding promptly. However, researchers at lead management supplier, Harvard University, and Korea’s Sungkyunkwan University are saying that retailers fail to respond quickly enough to inquiries. They looked at internet contacts that could turn into leads for B2C (business-to-consumer) and B2B (business-to-business) sales. Let’s start there and then see how it applies to in-store contacts.
     The researchers reported results from an audit of 2,241 U.S. companies. About 35% of the companies responded to inquiries, on average, within one hour, but more than 45% took more than 24 hours to reply. The average response time to online inquiries was 42 hours. That’s understandable when you consider the likely reasons behind the finding:
  • Availability of internet inquiries at any time, but lack of knowledgeable staff around the clock and calendar
  • The time consumed in referring the inquiry to the right person in the business to reply
  • Allowance of time for the consumer to look over materials they’ve already received and for the retailer to prepare a knowledgeable reply
     It’s understandable, but the effect is a striking loss of potential for profitability. U.S. firms that responded to inquiries within one hour were about sixty times as likely to move clearly toward a sale than those waiting 24 hours or longer.
     Respond to internet inquiries with immediate internet acknowledgements that include an estimate of when you’ll be back with a substantive answer. Make it as soon as possible. Then keep to the commitment.
     With in-store inquiries, use the same guidelines. If you don’t know, say you’ll find out and tell the customer now when you’ll get back to them. Encourage the person to shop for their other needs. Arrange to meet the customer at another part of the store. If it will take you more time than their shopping trip, ask how you can get in touch with them by phone or e-mail.

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

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Get Second Chance for Good Impression
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Saturday, March 19, 2011

Segment Your Data for Profitable Conclusions

A Bloomberg Businessweek article this week takes note of how managers are increasingly slicing and dicing data in order to identify opportunities for improving profitability. For instance, instead of looking at consumer survey results for all respondents together, you might pull out the results for all respondents who report a household income greater than $100,000 and say they are grandmothers interested in giving your product to a girl under the age of 5.
     To do such segmentation, you’ll need to think out in advance what criteria you might be using. If you didn’t ask respondents for household income, grandparent status, or age and gender of intended gift recipients, you won’t be able to segment the results for the example I used.
     A tag line from consulting firm dunnhumbyUSA is, “Average customers don’t exist. Success lies in knowing individuals.” Based on that advice in the past, grocery retailer Kroger, probably the best known dunnhumbyUSA client, segments the data gathered from Kroger frequent shopper programs in order to customize promotions and rewards.
     The tag line serves well to remind us to personalize our interactions with customers and avoid preconceived stereotypes. Still, for most retailers, it’s helpful to place customers into groups rather than require ourselves to think of each shopper as wholly unique. Consumer Generated Ads (CGAs) are great, but few retailers currently would aim for having a separate media ad for each potential customer. And staff training about servicing customers is possible only if we place people into groups so we can talk about them.
     The division probably best supported by consumer psychology research is into promotion-focused—consisting of shoppers looking to enhance their current situation—and prevention-focused—consisting of shopper wanting to avoid losses. Another popular grouping is into Mission Shoppers—who burst into your aisles looking for a specific item or for advice on solving a specific problem—and Possibilities Shoppers—who stroll the store considering what they might buy now or maybe during a future visit.
     Whatever categories you use should reflect genuine differences important in you improving your profitability. How to determine that? A statistical technique called “cluster analysis” and its cousin, named “discriminant analysis,” can accomplish this when used by experts working in collaboration with you. Applied to a matrix of customer response measures—such as item selection, point-of-sale data, and questionnaire answers—cluster analysis and discriminant analysis can help you identify the best groupings.

Click below for more:
Use Cluster Analysis on Customer Data
Phrase Consumer Survey Questions Carefully

Friday, March 18, 2011

Speak Languages of Mexican-American Consumers

The consumer behavior researchers from Texas State University-San Marcos and Practica Group, LLC say Isabel, a Mexican-American grandmother, illustrates their message to retailers: In her kitchen working under a picture by American artist Norman Rockwell portraying the American holiday of Thanksgiving, Isabel cooked scratch tortillas on her earthenware griddle. Wearing her apron glorifying the state of Texas, Isabel told the researchers she considered it very important that her children know how to competently speak Spanish. When the researchers asked why, Isabel answered that this skill would enhance their employment opportunities in America.
     Isabel is an example of how most Mexican-Americans straddle two cultures in their consumer behavior. They aspire to assimilate into American society, but that assimilation is slowed because Mexican-Americans often stay in Mexican-American neighborhoods. Marketing experts at Heinrich Hispanidad speculate that, for the foreseeable future, Spanish is likely to be preferred over English among Mexican-American consumers.
     Almost two-thirds of Hispanics in the U.S. are Mexican-American. Researchers at Baruch College and University of Wisconsin-Milwaukee studied what happened to bilingual Hispanic women as they switched between speaking English and speaking Spanish in American settings, like stores. The women felt more assertive when speaking Spanish than when speaking English. And when these women read Spanish text, as might be used in ads or on signage, the women were more likely to think of acting independently and taking educated risks. An assertive willingness to take educated risks is the sort of thing that can lead to larger purchases and therefore more profitability for you.
     So arrange to have Spanish available for your Mexican-American shoppers. However, also speak the language of aspirations to be an American:
  • Emphasize direct mailings in your marketing mix. While other consumers often consider direct marketing pieces to be no more than junk mail, research finds that Mexican-American consumers often welcome these marketing mailings as a tool for becoming better-informed Americans.
  • Along with a selection of Mexican brands for functional products—such as for cooking Mexican cuisine—feature prestige American brands, especially for indulgence products—such as fashions and accessories. Researchers at University of Texas-Pan American and University of South Florida found that, when compared to other American consumers, Mexican-Americans exhibit more favorable quality evaluations and purchase intentions toward Mexican brands. But research also finds that compared to other consumers, Mexican-Americans are more likely to maintain loyalty to American brands that satisfy their needs.
Click below for more:
Have Bilingual Staff for Bilingual Shoppers
Accent Values of Your Hispanic Target Markets

Thursday, March 17, 2011

Keep Your Eye on Merchandising to the Right

During a retailing seminar I conducted a while back funded by the U.S. Small Business Administration, the Northwest Area Foundation, and the Iowa State Legislature, I gave a quick bit of advice which led to questions from participants afterwards: I was discussing product adjacencies—how to arrange products on the store shelves—in the situation where you’re featuring a deeply discounted item. I said that immediately to the right of the deeply discounted item, you should have products priced for a healthy profit margin that are natural accompaniments to the deeply discounted item.
     It’s the peanut-butter-and-jelly principle of product adjacencies: When you’ve assigned the peanut butter a bargain price to draw footsteps into your store, then shelve the popular jelly flavors—priced for your profitability—just to the right of the peanut butter.
     Why to the right? It’s only an overall tendency, of course. If the shopping cart is to the left or if the small child the shopper is carefully attending to has now walked in back of the shopper, it might very well be that the shopper’s eyes will dart to the left or to the rear. But when aiming for the retailer’s edge in profitability, it’s the small tendencies we’ll leverage for big profits.
     Still, why to the right? Because that’s where the shopper’s eyes tend to go the instant after they recognize that they’ve gotten a really good deal on a purchase. Our eyes move rightward when the left hemisphere of the brain gets active. It’s that left hemisphere which specializes in doing the math and telling the whole brain, “Hey, we saved some real money here!” and gets more likely to ask, “Are we ready to splurge?”
     The fact that the left and right hemispheres of the brain process information differently can also be used to introduce featured products as a shopper enters your store. Have a display of one package of each of the featured products to the left of the shopper as they come on in. Have signs with brand names in large letters and very brief statements about product benefits on the right side of the customer who is entering.
     Product shapes and brand name fonts influence purchasing when they come in from the left side of the eyeballs. The brand names themselves and very brief product benefit claims are most effective when caught subconsciously from the right side of the eyeballs.

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

Click below for more:
Introduce Featured Products as Customers Enter
Notice Where Your Shoppers Look as They Enter

Wednesday, March 16, 2011

Change Up How You Do Business

In the New Yorker cartoon, the devil himself is standing behind the host station at the entrance to Hell, preparing to write on a clipboard as he asks the new arrival, “And lastly, for all eternity, French, blue cheese, or ranch?”
     How hellish it would be to endure the same routine forever. We all like variety. People buy more jelly beans when they’re offered an assortment of colors. This is true even if all the different-colored jelly beans taste exactly the same. After reviewing fifty experiments involving more than 5,000 people, researchers at University of Basel in Switzerland, University of Mannheim in Germany, and Indiana University in the U.S. concluded that the more choices for the shopper and for the retailer, the better.
     However, although retailers like variety, many are too slow to initiate the changes in habits that variety makes possible. Are you one of those retailers? Do you feel as if you’re already being forced to accommodate enough changes without introducing more. Do you adhere to outdated habits because you find it hard to squeeze out the time just to sit and think, let alone strategically plan for change and then initiate the changes?
     Perhaps you’ll be surprised to hear about research findings from a team in Belgium: When handled correctly, our anxiety can make us more open to change. Here are some tips on doing it right:
  • Researchers at University of Minnesota, Emory University, and George Mason University suggest that you determine where you want to end up, and if this ending point is quite different from where you are now, then introduce at least one intermediate step. If you currently sell paint and you want to end up adding draperies, consider introducing wallpaper first. If you plan to phase out your entire stock of draperies, reduce the product assortment for a while before eliminating the product category completely.
  • It’s the changes we see as monumental which freeze us up. Research at University of California-Los Angeles, University of Cincinnati, and Miami University indicates that you can make an extreme change seem like a moderate change by stopping to notice ways in which the new is similar to the old.
  • Pace the change to fit your culture. Research indicates that people who identify with individualistic cultures (U.S., Canada, Australia) welcome more rapid changes than do consumers who identify with collectivist cultures (Turkey, Greece, China).
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
See Through Consumers’ Boredom Fears
Lead Your Customers Through Changes Gradually
Sell More By Adding Variety
Switch Brand Selection with Shopper Anxiety

Tuesday, March 15, 2011

Tamp Down Fear Points If Selling to Suppliers

My thanks to the RIMtailing blog readers who participated in my “Profitable Pricing Tactics for Small Retailers” webinar last week.
     During the webinar, I was asked about setting a higher price for a product or service that relieves fear for purchasers. Here’s a more complete answer than I gave at the time:
     Never overlook the value of a good scare. However, raise the fear because you’ve a product or service to offer that will substantially reduce the worry. Unless the customers come to believe that you’ve a remedy, many will ignore the risk in order to make the fear go away.
     Other customers won’t ignore the risk. They’ll stay afraid and become quite irritated with you for getting the fear started. Either way, you’ve lost a sale. Raise enough fear of a real danger to win the customer’s attention, but only to the degree that you’ve a guaranteed way to substantially reduce the risk. Don’t oversell.
     This point took a different tack because of the specifics of the question from my webinar participant. The participant wants to decide on pricing for a monitoring device which will reduce the possibility of residential damage, and therefore reduce the homeowner’s fear. The participant plans to sell the device to insurance agents and insurance companies, who would then, in turn, sell to the homeowners.
     Here, the fear appeal should take two channels:
  • The people doing your selling will benefit by you providing them marketing materials and sales scripts that dramatize the true dangers and show how what you have available can ease the worry. As long as you’re proposing the remedy, the degree of fear arousal can be relatively high. With the damage prevention device, you might talk of the average dollar cost and the emotional costs to a family when their home is severely damaged.
  • Those people doing your selling also will be motivated by fear you arouse in them. But tamp down the degree of fear you aim to arouse in your sales reps. Otherwise, their emotions will blind them to how to best craft fear appeals to their customers. The insurance agents could be reminded that unless they succeed in selling this sort of device to the homeowner, the insurance company underwriter might not approve the policy, thereby depriving the agent of their sales commission.
Click below for more:
Scare Customers Into Buying
Craft Fear Appeals

Monday, March 14, 2011

Position Yourself for Vending Machine Selling

RetailWire recently hosted an Internet discussion among retailing experts about the documented growth in popularity of the ultimate format for self-service brick-and-mortar retailing—vending machines. (Registration at RetailWire, which is free, is required for access to the posting.)
     Items named in a compilation by the NBC “Today” show as being sold from vending machines include products ranging from live bait worms to gold bullion bars. Most of the examples in the “Today” posting were from Japan. Among food items, the offerings included fresh eggs, ripe bananas, and live hairy crabs.
     Retail space, particularly in high-traffic areas, is very limited in Japan. A vending machine can keep the stock more compactly than on store shelving, and there’s no need to have a place for the salesperson or cashier to stand. Actually, those same arguments for vending machines apply—even if to a lesser extent—for retailing in most other developed countries. In the U.S., we’re renting DVDs from Redbox machines and buying airplane tickets from airport kiosks.
     Position yourself to take account of the increases in vending machine sales. The two primary models are:
  • Have vending machines within your brick-and-mortar store to sell certain items. Hundreds of Macy’s stores have had vending machines to sell electronics products about which consumers are likely to possess high familiarity. From a shopper psychology perspective, it’s important that consumers be told by signage that they can seek advice from sales personnel about what to purchase from the machines. In addition, train your staff so that when a customer asks a salesperson for a product that is sold only from the machine, the salesperson walks the customer to the machine or hands off the customer to another salesperson who will do that.
  • Extend your store name and your selling possibilities to locations outside your store by placing vending machines in locations likely to have large numbers of potential customers. Best Buy Express vending machines are located in airports, each machine selling electronics products with which, again, the customer has high familiarity. With machine placements outside your store, go beyond allowing customers to return unsatisfactory items to your store. Encourage them to do so. When customers come to a store and their problems are resolved smoothly, they become quite likely to make additional purchases. Chances are you’ll be able to offer them a larger selection of options than is available in the machine.
Click below for more:
Inform Customers, But Don’t Intrude
Simplify Item Returns for Customers
Keep E-Commerce Product Returns Pleasant

Sunday, March 13, 2011

Branch Out Scripts to Allow for Rituals

I’m a fan of scripting what we say and do with shoppers. It’s not that I expect the retailer to recite the exact words I suggest or carry out the precise actions I propose. It’s that I find scripting a good way to explain what I mean. Then I recommend the retailer be flexible in adjusting the phrasing and behaviors to fit their style.
     There’s also a need for flexibility on-the-fly when using scripts because many shoppers follow rituals. For instance, have you noticed how some shoppers will complain and complain about a product or service that seems ideally suited to the shopper's needs and desires, and then after all the complaining and what seems to be arguing with the salesperson, the shopper will go right ahead and buy the offering?
     Other shoppers come into your store asking for a specific product and brand, but before buying it, as they'll end up doing, they want to hear about at least a few alternatives, as if to convince themselves they're making the right decision.
     And then there are those customers who refuse to buy a product until they can take it out of the packaging and run their hands over it. This last group, not surprisingly, resist making purchases over the Internet, although, according to researchers at University of Kentucky and University of Wisconsin, rituals of the grasp-and-caress crowd can be satisfied with written or spoken descriptions of all the different textures the product has.
     The complaining, arguing, searching, and caressing are shopping rituals. I'm sure there are many others you've seen as well, some even more bothersome than my three examples. As salespeople gain experience, they learn to respect the customer going through the ritual—or if not respecting the ritual, at least staying out of the way of the ritual as much as possible.
     Most shopping rituals are quite deep-seated in the personality because they were introduced early in life as the child watched others shop and was coached by parents. Some shopping rituals, such as a need to handle or smell products, often have their origins before birth, being hardwired in as the brain developed in the womb.
     Researchers at New York University have verified how uncomfortable certain consumers become when retailers’ service scripts don’t take account of the individual consumer’s shopping rituals. Develop scripts that prepare sales staff to flexibly branch out with different alternatives.

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Let Shoppers Go Through Their Rituals

Saturday, March 12, 2011

Have Products & Services to Pamper Pets

People love their pets and have loved to spend money on them even through these tough economic times. According to a recent Marketing Daily article, U.S. pet food sales at retail in year 2010 were up almost 3% over the 2009 level. Yes, this was the lowest growth rate in years. But at the same time, the rate was notably higher than for most other retail product categories.
     Survey researchers at Eastern Washington University found that about 80% of dog owners said they were serious about selecting healthy food for their dogs, but only 65% of the same people said they were serious about their own food selection. Findings from an ethnographic study at University of Utah attributed trends like these to us considering our pets to be more defenseless than ourselves.
     The Humane Society of the United States says about 40% of U.S. households have at least one dog and about 35% own at least one cat. That’s a substantial market, even if you don’t add in the horses, birds, lizards, gerbils, and goldfish. Researchers at St. Joseph’s University report that about 90% of pet owners consider their pets to be members of the family and about 75% of household cats and dogs receive gifts on holidays and birthdays.
     Whatever your retailing line, it would benefit you to carry some products of special interest to pet owners. Almost any retailer can have at least a limited line for pets. Harley-Davidson, Ralph Lauren, IKEA, and Lands’ End have all done it. The emphasis should be on health benefits.
     Services retailers, too, would benefit by thinking about ways to serve the pet owner market, although this is more likely to require a business that’s completely gone to the dogs, not a limited-line add-on. From Wag Hotels, offering accommodations in two cities, to PetsHotels, with locations in most U.S. states and one Canadian province, the emphasis is on luxury.
     The Marketing Daily article predicts that if you carry products and provide services for pets, your suppliers will back you up with marketing support. In year 2009, the latest year for which figures are available, pet food and pet care advertising expenditures grew 22% over the prior year. There’s consolidation among the companies. Procter & Gamble/Iams snapped up Natura, Nestlé Purina digested Waggin’ Train, and Wind Point Partners acquired pet accessories company Petmate. This could mean greater marketing muscle from your suppliers.

Click below for more:
Go Upscale for the Pet Market
Honor Those Who Love Those Pets

Friday, March 11, 2011

Reenergize Gift Card Sales

This week, First Data—which establishes gift card programs for merchants—announced they’ve been granted a patent for technology that allows activation of multiple prepaid cards at point of sale. This could save time for your store staff who would otherwise need to activate each card individually if a customer wants to, for instance, buy a large number of gift cards as employee incentives.
     Such technologies might help you to reenergize gift card sales. Starting in year 2007, gift card sales dropped sharply. That was disappointing, since gift cards can be good moneymakers for retailers. The shopper with a gift card is more likely to browse your aisles than is the shopper without a gift card. At the least, they become better acquainted with the scope of your merchandise selection. At best, they’ll see a great many items they want, so they’ll spend some of their own money in addition to the gift card allotment. In addition, research indicates that when a customer purchases a product with a gift card rather than with other types of payment, the probability of them returning the item is lower.
     Gift cards are the single most requested item for the holidays. More than 55% of adults say that’s what they’d like. Because of the appeal of gift cards, the way to increase your sales is to find out what’s getting in the way. In a National Retail Federation survey, about 22% of respondents said their main reason for not buying gift cards is because the cards are too impersonal.
     So individualize your gift cards and holders, with a selection of themes—such as sports and travel, a range of colors, and enough space to write a message to the recipient. Current technologies even allow for the customer to add a photo of their choice to the card.
     Involve all sales staff, not just cashiers, in selling the cards. When a customer hesitates in selecting a gift, say, “We have gift cards available. As you look around our store, what do you think the recipient might like? You could make some suggestions in the message you write to them.”
     Are you surprised that I’m talking about gift cards when it’s not a holiday season? Well, the most common occasion for gift cards is not the holidays. That’s in second place. First place is birthdays, and birthdays come on every page of your retailing calendar.

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Help Customers Personalize Gift Cards

Thursday, March 10, 2011

Embrace Shopper Expertise

An increasing percentage of shoppers have built expertise about product categories before entering your store, and they want you to acknowledge that expertise. When shopping for bed sheets, they consider themselves to be highly knowledgeable about bed sheets.
     Here are tips on staying in the good graces of these self-proclaimed experts:
  • Respect them. Do your floor staff know where all the merchandise is located? Are they aware of the comparative features of brands in their department? Can they explain them to the customer if asked? Can they explain other things as well? Staff your store with experts who enjoy sharing their knowledge with customers in a team-oriented way. Customers want sales staff who know it all, but without acting like stuffy know-it-alls. Retired journeyman plumbers make terrible hardware store employees if they have trouble explaining the steps to replace a faucet. Teens with a wonderful sense of fashion style are bad clothing department advisors if they label some teen customers as beyond fashion rescue.
  • Surprise them. Research at University of Pittsburgh and University of South Carolina finds that experts are attracted to categorization in ways that surprise them. Sporting equipment might be categorized by the sizes of the items. Power tools might be categorized by the type of job they could be used to complete. Clothing might be categorized by color. Foods might be categorized by country of origin. How could setting up such strange divisions increase retailer profitability from selling to product experts? The answer: By surprising the expert, we get them to pay attention, and a customer who pays attention is more open to seeing the value in a higher priced option.
  • Impress them. Experts want to know technical specifications. At the same time, they often make product selections without prolonged thought. They don’t request features lists because the experts think they already know what the products can do for them. Experts are interested in technical specifications largely to justify to themselves and others that they’ve made the right choices. In fact, those University of Pittsburgh and University of South Carolina researchers say experts are notoriously complacent about using the technical information before choosing what they’ll purchase.
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Have Staff Who Show and Share Expertise
Give Experts Novel Product Categories

Wednesday, March 9, 2011

Feature Economical Justified Luxuries

Late last year, Estee Lauder reported a 14% jump in sales of organic beauty products quarter-to-quarter. By comparison, mass market beauty products from Procter & Gamble Co. and Unilever came in with a 6% climb. A 6% climb in sales was fine news—indicating consumers were feeling more optimistic and spending beyond bare necessities. Still 14% is substantially higher than 6%—indicating luxury had a special appeal.
     Now, survey research reported by the National Retail Federation documents that this same trend toward luxury continues. The research indicates it comes with a twist, though: In my opinion, your shoppers are likely to be looking to purchase luxuries they feel they’ve earned.
     The NRF-sponsored survey of more than 5,000 consumers was conducted last December by BIGresearch, so in the fast-changing world of retailing, the findings might be considered a bit old. Still, the implications are consistent with other data, so are worth your attention.
  • Product and service categories such as hair coloring and a daily dose of gourmet coffee are considered justified luxuries more often than was the case a year ago.
  • People want to eat out, but find it easier to justify going to casual sit-down restaurants than to white-tablecloth fine-dining locations.
  • Categories such as magazine subscriptions, satellite radio, and maid service are considered unjustified luxuries.
  • There are gender differences. Men are more likely than women to consider cable/satellite TV subscriptions and social memberships justified.
     Throughout this deep recession, the successful retailers have empowered shoppers to enjoy relatively inexpensive indulgences. Panera Bread offered specialty sandwiches and salads at a manageable price. Early on, Tiffany developed lower priced items to carry the luxury name, but for sale in mall stores that aren’t Tiffany’s.
     Some years ago, SRI Consulting Business Intelligence identified three major motivations for luxury quests:
  • Luxury as functional. Pay more for products which are well-made, designed by craftsmen, or with features customized to the customer.
  • Luxury as reward and show. Let others know that you are special.
  • Luxury as indulgence. Pamper yourself with the best available comfort, even if the item isn’t built to last. Get the most powerful, the most roomy, and the most capable, even if it looks absolutely clunky.
     Offer to your target markets product and services which fit the shoppers’ definition of justified luxuries. Then in your advertising and personal selling, up the emphasis on “You’ve earned it.”

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Offer Fundamental Indulgences
Satisfy Desires for Luxury
Stay Ready to Sell Luxury

Tuesday, March 8, 2011

Ditch Deep Discounts via Adaptive Pricing

Ditch deep discounts on deep dish pizza. See if you can say that sentence real fast five times in a row! Not so much as a tongue twister as a reminder of the main message in a recent Harvard Business Review Idea Watch article titled “Ditch the Discounts.” It’s a message that can help you improve your sales revenues.
     The HBR article describes the Great Pizza War. In year 2009, Domino’s Pizza, which had been charging about $9.00 for a medium two-topping pizza, offered a pair of the same for less than $12.00. Within weeks, both Papa John’s and Pizza Hut were also offering dishes at about a 35% discount. Then the discounts got even deeper.
     If you followed the path of deep discounting, your objectives of maintaining market share and helping out regular customers during the recession may have been met. But as the economy recovers, what are the best ways to guide consumers toward again paying more normal prices?
     One tactic to consider is adaptive pricing. Basically, adaptive pricing means adjusting prices to fit anticipated demand. The most sophisticated adaptive pricing systems use computer algorithms to crunch data at the level of the SKU on turnover, responses to promotions, anticipated stock levels, and product revenues in order to see where prices can be tweaked upwards without losing too many sales.
     Whether or not you have this computing power, another leg of adaptive pricing can help. It’s the recognition that different shoppers have different needs. Meeting those differing needs allows you to charge different prices for the same product or service. You guide each shopper toward accepting higher prices by starting with items for which that shopper is willing to pay a somewhat higher price. Then you extend the price increases to other items.
     Yes, that might sound like a recipe for trouble. The keys to doing it well are:
  • Begin with seasonal merchandise, since the demand generally increases for a large group of shoppers.
  • Present the premium price for an individual consumer in terms of a benefit. It might be a broader selection of options, expedited delivery, installation, or initial training, for instance.
  • If the shopper asks for a lower-priced item, be ready to accommodate them. Consider this as your having misunderstood their needs.
  • Be consistent. Otherwise, the customer might get angry, thinking that your store pricing is highly arbitrary or even discriminatory.
Click below for more:
Offer Exclusive Price Discounts Cautiously
Be Ready to Explain Price Increases
Allow Modest Expectations of Discounted Products

Monday, March 7, 2011

Pyramid Pricing Tactics on Retail Fundamentals

Like to watch or participate in a free webinar I’m conducting this Thursday, March 10? You’ll need a device with an Internet connection and the availability to log on from about 12:00 Noon to 1:00 PM U.S. Central Standard Time. You’ll want to register in advance and download the workbook. For details, please click here.
     The title of my webinar is “Profitable Pricing Tactics for Small Retailers.” The format is interactive, so you’ll have the opportunity to send in your questions using your computer or mobile device keypad. I’ll be doing the webinar with audio and video. The session is sponsored by MyEntre.Net, the online small business and entrepreneur community, in partnership with the University of Northern Iowa Small Business Development Center.
     I recommend this webinar to all retailing professionals responsible for pricing decisions in small to midsize businesses. Looking in at all or part of the webinar also could be useful for people who have not yet seen me do a presentation and are considering a contract with me to conduct a seminar.
     As with almost every “Retailer’s Edge” seminar I conduct, I’ll point out early on that profitable use of the shopper psychology tactics depends on having retailing fundamentals in place and keeping them current. You’ll then gain your retailer’s edge by pyramiding the tactics on the solid foundation.
     Among those retailing fundamentals are:
  • Market research
  • Strategic planning
  • Legal & regulatory environment
  • Financing
  • Budgeting & cash flow
  • Risk management, physical security, & insurance
  • Human resource management
  • Marketing, advertising, & publicity
  • Business ethics
     MyEntre.Net, SBDCs, business improvement districts, chambers of commerce, and cooperative retailer groups are among the many resources for maintaining the base of the pyramid. The last one on the list—business ethics—has a particular importance when it comes to pricing tactics. For instance, we know that a price point of $7.99 looks to the shopper to be noticeably lower than a price point of $8.00, even though the true difference is only one penny. A price reduction from $222 to $211 strikes the average shopper as a better deal than a reduction from $199 to $188, even though the first is actually a lower percentage discount.
     Are you being an ethical retailer if you make use of these cognitive distortions when pricing? In my opinion, yes, you are. But you’ll need to decide for yourself.

Click below for more:
Round Prices to Whole Dollars for Better-Best
Have Discounted Prices End In $1.99 or $2.99

Sunday, March 6, 2011

Distinguish Show-Offs from Connoisseurs

“If you want me to buy merchandise from you, show me an item or two I can show off to others.” “Or merchandise that lets me show off grandly when I give an item or two to others.”
     You’ll have shoppers who prioritize impressive appearance over refined quality. Turn those shoppers into regular customers by continually having the right merchandise prominently displayed. A posting about Stauer, the print catalog and ecommerce retailer of luxury items, describes how to do it. Owner Mike Bisceglia is quoted as saying, “We buy large stones with less clarity but at a better price. Guys like being able to afford a big, beautiful 50-carat ruby necklace.”
     Claiming you paid a good price is itself part of the showing off—even if not to the recipient of the gift. Mr. Bisceglia is also quoted as saying, “There are all different levels of pearls, but 99.9 percent of people can’t tell the difference between a string of pearls that goes for a couple hundred dollars and the thousand-dollar pearls.” Researchers at University of Alberta, University of Calgary, and University of British Columbia found that many consumers lie when asked by friends how much they paid for an item, and the lies are much more likely to be in the direction of claiming a bargain than inflating the actual price.
     Advertising and in-store displays for these show-off items should take the risk of being gaudy. Giving the customers stories to tell about the items will help, as well. The first words in the story count for a lot. In the Stauer catalog, the description for an item of jewelry begins, “This story breaks my heart every time….” and the one for a watch kicks off with, “When it comes to symbols that stir the heart, you can't beat the American flag.”
     In your merchandising decisions, do distinguish these show-offs from your shoppers who are connoisseurs. Researchers at University of Pennsylvania and Southern Methodist University note how consumers of very high-end products often prefer subtle, not obvious, signals in their purchases. Consider sunglasses. The researcher’s tally found that about 20% of sunglasses selling for under $50 included a brand name or logo easily visible to others. That increased to about 85% when the retail price was between $100 and $300, but for sunglasses selling above the $500 mark, the percentage dropped dramatically. It was only about 30%.

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

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Offer Aspirational Shoppers Subtle Signals
Analyze Gifting to Develop Opportunities
Tell Positive Stories About Your Products

Friday, March 4, 2011

Sense When Resistances Build About Paying

If your shopper conclusively decides the price of an item is too high, they’ll resist buying the item. In face-to-face selling, evaluate the decision process early enough to head off the resistance.
     Part of your evaluation will be an assessment of the shopper’s beliefs. A useful template for this is based on a set of four questions developed by Dutch behavioral economist Peter van Westendorp and used by a great many retail pricing specialists. Here’s my version of the four Van Westendorp questions:
  • Does the person believe the item is inexpensive enough that they’ll think hard before deciding not to purchase it?
  • Do they believe it is so expensive that they’ll think hard before deciding whether to purchase it?
  • Do they believe it is so inexpensive that they’d think there might very well be something wrong with the item?
  • Do they believe it is so expensive that they’ll immediately reject the idea of buying the item?
     But researchers at Universität Göttingen in Germany and Rouen Business School in France propose that an assessment restricted to beliefs is inadequate. Their findings indicate it is also important for salespeople to sense the emotional reactions of the shopper who might be conclusively deciding an item price is excessive. The researchers identified these emotions as important indicators resistance is building:
  • Anger becoming contempt toward the retailer
  • Guilt becoming shame at struggling with the temptation to make the purchase
     To prepare yourself and your sales staff to head off the problems, ease the frustration you yourselves are feeling about pricing. Researchers at UCLA and University of Southern California suggest two steps:
  • Describe pricing as subject to change. When your staff know you’re regularly reviewing your pricing—looking for opportunities to pass on savings—they’re less likely to stay frustrated. Give your staff examples of how you’re not keeping all prices high and higher. Then coach your staff to approach customers who are in the area of competitively priced items to say, “Here’s an item that might be of interest to you. Notice what we’ve done to the pricing.”
  • Give staff influence in pricing. Consider staff suggestions on what items to discount for specials and where to increase margins to balance it out. Coach staff to point out product alternatives to shoppers so everyone feels a sense of control. A sense of control helps wipe away frustration.
Click below for more:
Answer Van Westendorp Pricing Questions
Be Ready to Explain Price Increases
Tell Stories for Price Increase Acceptance
Ease Frustrations About Your Pricing
Sell Spendthrifts with Opportunity Costs

Thursday, March 3, 2011

Reach Out for What Will Touch Your Shoppers

Years ago, researchers at University of California-Los Angeles and University of Wisconsin-Madison found that having an undecided customer hold a product makes the customer much more likely to complete the purchase. Not only that, but the customer becomes willing to pay a higher price for the product.
     Why is that? Three reasons:
  • Touching the product gives the customer a sense of ownership. Have the shopper hold the puppy, and there’s no way they’ll want to let go.
  • Touching gives the shopper a sense of mastery from evaluating the product. Consumers poke the melons or rub the sweater, then put the item back and do the same to another one until they’ve decided it’s time to choose and they’ve sufficient information to make a choice.
  • Touching gives pleasure in itself, and people who are experiencing pleasure are more likely to make purchases. It works even when they’re touching people instead of merchandise. Researchers at Tel Aviv University assessed the results of a retail employee touching customers in settings that included a supermarket, a restaurant, and a bookstore. They reported that a brief touch on the arm of a customer led to the customer feeling more positive about the retailer.
     Although those three factors argue for you having customers touch products, there are challenges in you depending on touch as a selling tactic:
  • Some products are unpleasant for the customer to touch.
  • Adults vary considerably in the degree of pleasure they derive from touching.
  • There are cultures in which a shopper is offended by a salesperson touching them or asking them to hold products before making a purchase.
  • Customers have little interest in an item on a rack or shelf when they’re thinking about who else has touched it. They feel disgusted at the idea the product could have been contaminated by other shoppers.
  • Ecommerce allows few opportunities for the shopper to actually touch the product before purchase.
     Research at University of Oxford and University of Milano indicates that a salesperson can achieve the advantages of actual touch by emphasizing touch words—like soft, warm, or fluffy—and by the salesperson running their hands over products as they demonstrate them. The researchers coined the term “affective ventriloquism” to describe processes like these, in which vision and hearing evoke sensations of feeling the product.
     Reach out for words and sights that touch your shoppers.

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Touch Customers
Encourage Customers to Touch the Products
Head Off Concerns About Touching Products

Wednesday, March 2, 2011

Miniaturize for Profitability

A Cincinnati Enquirer article this week announced that hometown heavy hitter Procter & Gamble is now selling compacted powder laundry detergents at Target stores nationwide. Concentrated powders are more popular in Europe and less-developed countries than in the U.S., where progressively more concentrated liquid detergents have been sold for some time.
     As with the liquids, the concentrated powders allow for smaller, lighter packages. Miniaturizing has many advantages for retailers. For instance, you can carry and store more products in the same space. To realize the full profitability advantages, though, frame any advantages as benefits for consumers.
  • Smaller, lighter packages mean lower transportation costs when you order from suppliers and mean lower expenditures when you ship to your customers. With many products, like toys and games, smaller size generally means lower manufacturing costs. Look for ways to use these economies to drop item prices and then advertise the reductions to shoppers.
  • Smaller packages mean less packaging material. Although consumer interest in going green has eased somewhat in this recession, environmental consciousness is still a selling point.
  • Because of the popularity of consumer electronics, reduced size is associated in the shopper’s mind with innovative improvements. Leverage those associations by introducing at least a small product advance in the miniature. P&G says that the Tide formula removes stains better than the older version, and the new Gain features “perfume microcapsules” to boost the aroma of freshness.
     When introducing miniature versions of products, make it easy for the consumer to adjust usage habits in ways that will allow them to realize the full advantages. The scoop that P&G places inside each concentrated powder detergent box has revised marks for amounts to be used. Unless such changes are abundantly clear, shoppers will readily say you’re charging them the same for less.
     Miniaturizing works not just with products, but also with services. If you can deliver the service more quickly, that can be more valuable to today’s multitasking consumer.
     Here, though, pointing out the benefits can be challenging. Consumer behavior research at University of Singapore and University of Toronto found that when service duration is shorter than the customer expected, the customer thinks the service is inferior. But researchers at University of Michigan found that quickness can imply higher quality to the consumer when the retailer points out how each person and each process was so refined that no time was wasted.

Click below for more:
Explain How Quick Service is Worth More
Explain Delivery Time as Quality/Talent
Look to Toys & Games for Retailing Trends