Thursday, June 30, 2011

Rearrange When the Chips Are Down

What’s a retailer to do when the chips are down? Down the cafeteria line, that is.
     In his book Why We Buy, retailing consultant Paco Underhill tells of studying the effect of potato chip package placement on sales. In some cafeterias, the bags were at the head of the line, by where you picked up your tray, and in others, they were at the end of the line, by where you paid for the food you’d selected.
     Please look up from your reading for a moment, retailer, to guess which arrangement produced higher sales. Was it the head-of-the-line arrangement because consumers were more likely to add on a treat before seeing all the other food they’d selected? Or was it at the close-to-the-payment placement because the diner was more likely to know which style chips to pick to complement the entrée they’d selected?
     Mr. Underhill reports that the sales were higher when the chips were at the end of the line.
     If you’re feeling at the end of the line when it comes to figuring out ways to jump-start sales, rearrange the merchandise presentation. Here are a few research-based tips:
  • Studies at University of Hong Kong and National University of Singapore indicate that when a customer appears to be in an upbeat mood, they’re more likely to select either the first or the last alternative you propose than to select a middle alternative.
  • When the customer is sad, worried, or angry, but is determined to make the purchase rather than defer the decision, they seek the compromise alternative and will look for it as the middle alternative in the presentation order. Not the highest-priced or lowest priced, but the middle-priced. Not the highest quality or lowest quality, but the medium quality. Keep it brief, though. Findings from research at University of Maryland and Yale University indicate that too much talking will lock into the shopper's mind the bad feelings they're experiencing, and those negative memories make it less likely they'll buy from you in the future.
  • According to researchers from Hong Kong University of Science and Technology, if your shopper is considering a lot of information when making a purchase decision, they become willing to buy the higher-priced alternative when the alternatives are presented in order from most expensive to least expensive. The price of the first item becomes an anchor for what your shopper will expect to pay.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Guide Choice by Sequence of Presentation

Wednesday, June 29, 2011

Subscribe to Community Supported Retailing

A twist on subscription pricing is Community Supported Agriculture (CSA), where a set of consumers pay a fixed fee to have delivery of produce for a fixed time. For example, Whistling Train Farm in Washington State’s Green River Valley has had a CSA program in which 200 subscribers each pay $250 to receive one bag full of fruits and vegetables per week for the sixteen weeks of the growing season. LocalHarvest says there are over 4,000 similar CSA farms in the U.S.
     The CSA subscribers must accept receipt within certain geographical areas in order to ensure freshness of the deliverables. Many CSA programs have now moved beyond produce to include eggs, meats, cheeses, and flowers.
     Actually, the focus on the local could extend further to nonperishable merchandise. Think of it as Community Supported Retailing (CSR). The marketing message throughout is, “Buy local to ensure higher quality in products and higher quality of life for your neighbors.” This distinguishes CSA and CSR from non-local sweet-of-the-month or book-of-the-week subscriptions.
     Advantages to the retailer involve lower risk:
  • Risk of delinquent payments. You receive your money earlier in the exchange process and are more assured of full payment. This might allow you to offer reduced prices.
  • Risk of losing good will if difficulties happen to arise with your production. Your CSR customers feel they are in the endeavor with you. In fact, with the early versions of CSA about two decades ago, subscribers were thought of as purchasing shares in the harvest.
  • Risk of profitable innovations being rejected. Because of the “surprise me” understanding by the purchaser, it’s easier for you to introduce novel items the consumers can try out. This can build acceptance of attractive innovations. LocalHarvest claims that CSA subscribers’ children are more interested in eating previously-untried vegetables because the food was grown on “their farm.”
     But for successful CSR, you also must take steps to avoid the risks of overspecialization. LocalHarvest says CSA programs work best when they are one of many profitability sources. Farmers markets and restaurant sales in addition to CSA subscriptions. Whatever your line of merchandise, diversify the sales channels.
     Cancellations are less likely when there’s community loyalty. Also, because of mental inertia and the comfort of not having to worry about piecemeal purchases, people are unlikely to cancel a flat-fee arrangement midterm. Still, plan for some cancellations. Appeal to a base broader than locals.

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Perpetuate the Health Momentum
Weigh Flat-Fee Pricing

Tuesday, June 28, 2011

Accessorize to Project Expertise

At a “Profitability Tactics for Small Retailers” seminar I conducted for the retailing community in Patterson, California, I described the importance of staff dressing in ways that project expertise.
     One of the seminar participants was Kyle Guido, assistant manager of Patterson Auto Care. In response to my point, he shared a story that I include here with his permission and my gratitude:
     The State of California, which has stringent auto emission standards, reimburses owners of older cars for repairs they can’t otherwise afford. One way this program was marketed was to hold a well-publicized special event at the local community college. Auto repair shops were invited to set up desks at which they could schedule people who needed the reimbursement. Air pollution would be reduced, more drivers would be able to legally register their cars, and auto repair shops would get a little boost in business.
     Kyle came to the event wearing his NASCAR T-shirt and clean coverall pants. As Kyle tells it, one of the other auto shop managers came wearing a suit and tie. While Kyle arranged appointments in his paper calendar, he noticed the other fellow had an iPad sitting on the desk.
     Kyle admits he never saw the other fellow lift up the iPad. That’s because Kyle never saw the other fellow set up an appointment. As the event came to a close, Kyle returned to his pickup truck in the parking lot and spotted the other fellow opening the door to a BMW.
     Your shoppers love being served by experts. They judge the salesperson’s expertise even before the two start talking. The salesperson’s dress and body language say a lot as the prospective customer asks, “How much does this salesperson look like somebody who can solve my problem?” Customers will give greater credibility to the merchandise in a medical supply store when the staff wear white jackets and greater interest in cooking utensils when demonstrated by somebody wearing a chef’s toque.
     Desmond Morris, whose career work is central to the field of evolutionary psychology, wrote, “It is impossible to wear clothes without transmitting social signals. Every costume tells a story, often a very subtle one, about its wearer. Even those people who insist that they despise attention to clothing, and dress as casually as possible, are making quite specific comments on their social roles and their attitudes towards the culture in which they live.”

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Design Dress Codes Deliberately
Have Staff Who Show and Share Expertise

Monday, June 27, 2011

Downsize for Elderly Shoppers

Keep aisle lengths, merchandise selection, and package sizes small. According to a recent MediaPost article, that’s the advice from retailers who are successfully accommodating the increasing market of elderly shoppers.
  • Shorter aisle lengths require less walking by senior citizen shoppers. But the more important psychological advantage is that shorter aisles look less intimidating. In areas of your store where you stock merchandise primarily of interest to elderly shoppers, divide up long aisles with cul-de-sacs. If you can fit in a bench on which a shopper can take a brief break, all the better.
  • Even if you carry a broad assortment of brands and models in a category, feature a few of them within easy reach for the elderly shopper. This makes decisions quicker, especially later in the day, when the older brain is more readily confused.
  • Keep package sizes small. That makes them easier for older hands and arms to lift from the shelf and accurately place into a basket. The elderly generally prefer smaller package sizes for additional reasons. Perishable products can spoil too quickly if the customer is no longer living with a full family. When retirement checks barely cover expenses, the smaller item size is more affordable. And the elderly often have limited storage areas at home.
     Keep even the selling messages small. To do this, leverage the impact of emotions. Older consumers respond faster to emotion-laden sales messages (“The aroma of our coffee brings waves of contentment”) than to purely rational sales messages (“Award-winning taste at a lower price”). This is what’s suggested by research at University of Pennsylvania, University of California-Los Angeles, and University of California-Irvine.
     All emotions—positive and negative—arouse interest among older consumers. Emotional appeals also help senior shoppers remember details about sources of sales messages more accurately, according to researchers at Trinity College, College of Charleston, and University of Toronto. This means these shoppers will think of your store and staff as the sources to come back to for more information and more purchases.
     Lastly, keep the name you call these shoppers smaller. Use “older” at five letters and two syllables instead of “elderly” at seven letters and three syllables. I used “elderly” in the title of this post so you would know I’m not talking about sixty-year-olds. However, researchers at Ghent University and Vlerick Leuven Gent Management School in Belgium found that the shorter word does come across better.

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Help Seniors to Shop Early
Check Instructions with Elderly Customers
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Market to Seniors, not to Elderly

Sunday, June 26, 2011

Update Keeping Up with the Joneses

Over the entire history of retailing, a powerful selling message has been, “Others have this product, so why not you?” A comic strip premiering in 1913 titled “Keeping Up with the Joneses” gave a name to this consumer drive.
     If you’re to put this tactic to use, you’ll need to know who the Joneses are for a particular shopper. Or to use more modern vernacular, who, by being the competition, will serve as your reference point for convincing the shopper to start jonesing for the item you’re wanting to sell them.
     The identity of the competition is changed by circumstances in ways you might not expect:
  • Researchers at University of Minnesota, Texas Christian University, and University of Texas-Austin find that during the time of month a young woman is ovulating, she becomes substantially more likely to choose sexier clothing, shoes, fashion accessories, and cosmetics to buy and wear. This drive is much higher when the woman is shown photos of attractive women identified as being from her city than when shown the same photos and told the women live 1,000 miles away. A woman is not seen as relevant competition when she lives far away. The message for retailers is to describe the Joneses as being nearby.
  • Researchers at University of Maryland-College Park and Georgetown University found that young consumers’ motivation to try out a new video game faded when the consumers were led to believe that they played video games less often than most others did. The message here: Start by asking the shopper how often they think they’ll be using a product like the one they’re considering. Then choose as the Joneses others who use the product at a somewhat, but not substantially, greater frequency.
     Retailers using “keeping up with Joneses” selling techniques should take care not to exploit their customers. The drive is powerful enough to cause people to make unwise purchases.
     The danger of exploitation is greatest with families of limited means. Many consumer behavior studies have found how poor shoppers actually spend a greater percentage of their family budget on status-appeal products and services than do richer shoppers. Research findings from Erasmus University in the Netherlands and INSEAD-Fontainebleau suggest a way to decrease the destructive drive: Point out ways in which these shoppers do not need to compete for status with others.
     Then open these poorer shoppers to purchases they can make from you carrying more substantial value for their family.

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Anchor Frequency Estimates to Individuals
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Strengthen Your Barbell Retailing

Saturday, June 25, 2011

Respect Customers with Fixed Pricing

The respect found in a palace or temple.
     Wired has published a piece about a retailing innovation introduced by Alexander Turney Stewart in 1846—price tags. A. T. Stewart’s Marble Dry Goods Palace in New York City was unusual because of its huge size, offering both luxuries and commodities in the same store, and what is thought to be the first use in America of street-level plate-glass display windows.
     And those respectful price tags on the products. Mr. Stewart believed that the hard negotiating over price—at the time, the prevailing practice in NYC stores—left enough bad feelings among shoppers to interfere with customer loyalty. Most consumers viewed themselves as less skilled at haggling than were the retailers, who did it repeatedly each day, and so the consumers frequently came away feeling they’d been exploited.
     The Wired article says the introduction of fixed pricing was largely responsible for the rapid growth of Mr. Stewart’s retail enterprises. In 1862, he opened the Cast Iron Palace, which occupied a full city block.
     Although A. T. Stewart was a retailing pioneer in NYC, the attractiveness of fixed pricing began taking hold in London about 70 years earlier. Some retail historians consider Flint and Palmer’s, a clothing and drapery shop located on London Bridge, to be among the first merchants in Europe to maintain a no-negotiating policy. James Lackington’s Temple of the Muses, also in London, brought fixed pricing to book selling. Again, these retailers found that shoppers preferred this style of pricing. Even eBay says that fewer than one-third of their sales are currently being made via an auction format.
     Fixed pricing helps move shoppers beyond fixating on price. And moving beyond different fixed pricing on each single item is parity pricing, where a group of similar alternatives are all offered at the same price. Northwestern University researchers find that consumers are more likely to purchase certain types of items when presented with parity pricing because it eases the decision process. It is most effective as a selling technique with items for which the prospective buyer considers the purchase to be risky. This might be because the buyer believes the price to be high, which involves financial risk.
     Some shoppers won’t like parity pricing because they use price to make their decisions. Some shoppers will be attracted to the excitement of negotiating. But the evidence is that, overall, fixed pricing rules.

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Move Shoppers Beyond Fixating on Price

Friday, June 24, 2011

Freeze Shoppers to Discern Their Wishes

The Economic Times of India is raving about a technology from StickyPiXEL that, when embedded in a point-of-sale location, analyzes each shopper’s facial structure, facial expressions, body size, posture, and movement paths. The promise of the technology is to determine at a useful level of accuracy the demographic breakout of those who show interest in a product and then to track the degree of interest and the sequence of shopping steps for different demographic segments.
     Earlier this year, the exhibit floor at the National Retail Federation show featured an Anonymous Video Analytics technology that would seem to be born of the same spirit. A shopper approaches the sort of kiosk that could be positioned in a grocery store aisle. The kiosk uses facial recognition technology to assess the shopper’s age and gender. Then the consumer is invited to punch in information about their planned meal times and swipe their frequent shopper card, which links to data about the consumer’s past food purchases. The kiosk then generates meal ideas. Want a sample of an item it suggests you buy? Ask with a poke of the finger on the screen.
     A skilled salesperson could duplicate the magic of this Anonymous Video Analytics device. The StickyPiXEL technology goes it one better because of the ability to analyze motion in order to draw conclusions about the shopper. A skilled salesperson might very well be able to do that, too, but analyzing the implications of movement can be trickier for the retailing brain.
     “Keep your eye on the ball” is advice often given to baseball batters to prevent them from getting ahead of themselves. Those same words might be good advice for people watching the game at home, and for the same reason. Researchers at Northwestern University and University of Minnesota point out how when people see a baseball hit with great force, they often have a momentary feeling of certainty the ball will go out of the park. Maybe an undeserved feeling of certainty.
     We’re better with projecting when it comes to human shoppers rather than baseballs in flight. However, if that human shopper is from a culture different from our own, the meaning of movement can be misread. One suggestion by the researchers to improve accuracy is to take still pictures in our brain of what we’re seeing and check the interpretation of those stills against the conclusions from the mental video.

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Lie in Wait for Lying Shoppers
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Thursday, June 23, 2011

Levy a Cover Charge for Store Entertainment

To achieve a competitive edge over the ecommerce competition, brick-and-mortar retailers can offer in-store live entertainment. And levy a cover charge. Nightclubs have done it for decades.
     A New York Times article reports the extension of that concept to independent book stores. The Boulder Book Store in Boulder, Colorado is charging $5 to attend book signings. Kepler’s Books in Menlo Park, California requires purchase of a $10 gift card for attendance by two. McNally Jackson Books in New York City is constructing space to be used for fee-based signings. At R. J. Julia in Madison, Connecticut, about 10% of the store revenue currently comes from charges for the approximately 200 annual events.
     Other types of retailers beyond bars and bookstores can do the same sort of thing. Clothiers could charge for fashion shows, grocery stores for cooking demonstrations, sporting goods stores for celebrity appearances. The name “cover charge” fits especially well when the income covers the out-of-pocket expenses the retailer incurs in setting up the event and perhaps paying for the guest to appear.
     From a shopper psychology perspective, there’s evidence that charging a fee in itself lends value to the entertainment. When the price is zero, the consumer lacks a comparison point.
     Here’s how researchers at Monash University in Australia explain: If you’ve been giving each customer one free candy with each purchase and you now up that to five, the customer says, “Wow! That’s five times as much!” But if you’ve not given out candies to customers in the past and you now give out ten, the customer has zero as a comparison point for the ten, and our human brains don’t do well with zero as a comparison point. The research says that the customer is quite likely to be less impressed than the recipient of the five candies.
     The researchers extend this to other situations. For example, consider a sales promotion in which the purchaser of a digital camera is offered photo paper sufficient to print out 200 pictures. The offer will be more attractive if marketed as “We’ve been giving you paper for 10 pictures, but now we’ve upped that to enough for 200!,” than if the offer is, “For the first time, free paper to print out your photos, and it’s enough for 200!”
     Applying this to your in-store events, charge for all entertainment, but more for entertainment which is in higher demand.

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Stage Special Events to Build Sales
Give Shoppers a Comparison Point

Wednesday, June 22, 2011

Stamp Out Bias in Your Decision Making

In this month’s Harvard Business Review, Princeton University psychology scholar and Nobel laureate Daniel Kahneman joins colleagues from University of Sydney and McKinsey & Company-Paris in describing techniques for reducing bias in management decision making.
     Becoming aware of your biases isn’t enough. When making crucial business decisions under conditions of uncertainty, assertively stamp out your biases by asking challenging questions. Do this even if answering the questions requires extraordinary effort and objectively considering the answers is embarrassing.
     Here’s my adaptation of those questions to the retailer’s world:
  • What information that you don’t have would you like to have in order to help you make a more accurate decision without losing what could be a valuable opportunity? Even if there isn’t enough time now to gather that information, get high-quality substitute data which are available within the time you do have.
  • To what degree are you basing the decision on the outcome of a similar decision you’ve made yourself or was made by others whose judgment you trust? Check that the degree to which you’re doing this is not more than the degree of similarity of the current situation facing you to the situation occurring with the basis decision.
  • Are there more reasons to take the action or more reasons not to take it? Put somewhat more time into evaluating the side with the smaller count of reasons than the side with the larger count.
  • What is the evidence that the numbers and stories you’re using to make your decision are overall averages that mask a wide range or are extremes that mask typical situations?
     Although that fourth one may seem out of sequence, I put it there to make a point. The Princeton/Sydney/McKinsey allowed themselves to fall into a trap: They advocate for you fighting biases with the statement, “…when organizations worked at reducing the effect of bias in their decision-making processes, they achieved returns up to seven percentage points higher.”
     “Up to seven percentage points” is an extreme that does not inform us of typical situations or the true range of effectiveness.
     And here’s one research-based bonus tip from my own business consulting experience:
  • Always know that “information” is not the same as raw data. Information has implications for action. It directs you toward what to do or not do. Be careful that you don’t take false comfort by bathing in lots of warm data that aren’t information.
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Tuesday, June 21, 2011

Loosen Up Tightwads’ Wallets

Cheapskates—also known as tightwads—are an underappreciated market. When you survey tightwads, they admit to making smaller purchases than they think they should. They generally believe they should be willing to spend more money. And tightwads have the money to spend. Annual income is similar for tightwads compared to spendthrifts, who believe they should be spending less. Tightwads don’t feel poor, and this is not the same motivation as with those who fret about the future because of the worldwide economic difficulties.
     Tightwads aren’t the same as frugal shoppers. Frugality is driven by a pleasure in saving. Tightwads are driven by a pain of paying.
     Women are no more likely to be tightwads than spendthrifts, but men are three times more likely to be tightwads than spendthrifts. Consumers under the age of 30 are only slightly more likely to be tightwads than spendthrifts, but respondents over 70 are five times more likely to be tightwads than spendthrifts.
     Research indicates that the key to having tightwads spend their money with you is to reinforce their sense of responsibility. Here are a few tactics and why they work with tightwads:
  • Congratulate tightwads on how they shop carefully. Tightwads take pride in limiting their spending, but feel more comfortable when loosening up within reason.
  • Remind tightwads that you’ll be responsible in what you sell to them. Then keep your promise by explaining how the products and services you sell give full value. Remember that tightwads suffer emotional pain when spending. Dealing with a responsible retailer eases the pain.
  • Accentuate the small. Based on a survey administered to more than 13,000 adults, researchers at University of Pennsylvania and Carnegie Mellon University identified a group of consumers who said that they hated spending money on items beyond necessities. These people met the definition of tightwad. In the next stage of the study, the tightwads were offered the opportunity to pay extra for overnight shipping of a DVD they wanted. The extra cost was presented to some tightwads as “a $5 fee” and to the rest of the tightwads as “a small $5 fee.” The tightwads hearing the word “small” were 20% more likely to pay the fee than those not hearing that word. In contrast, there was no difference with a “$5” and “small $5” description among people who were spendthrifts—people who indicated on the earlier survey the opposite of tightwad tendencies.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Sell Spendthrifts with Opportunity Costs
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Monday, June 20, 2011

Integrate with Manufacturers’ Sales Staff

The store-within-a-store format has become popular enough for variants to have developed:
  • Leasing out space within your store to another retailer. Examples include Starbucks, Seattle’s Best, and Peet’s operations set up inside general merchandise stores and supermarkets.
  • Leasing out the space to a manufacturer. Examples include Estée Lauder and Shiseido, maintaining sales counters within department stores, staffed by employees of the cosmetics companies.
  • Having employees of the manufacturing company selling directly to your store’s customers on the regular sales floor, often with the manufacturer’s employees dressed to communicate to the shopper the true employer’s identity. Jones Apparel had tried this in stores selling their products.
     Manufacturer-run SWAS formats work best for product categories where consumers identify strongly with brands and where competition among retailers in selling favored brands is high, according to research findings from Carnegie Mellon University and University of Pennsylvania.
     Researchers at Michigan State University and Daejin University in China looked at the issue from the perspective of human resource management instead of product line. How well are the manufacturer’s employees integrated into the hierarchical management structure of the store?
     These employees will be perceived by shoppers as a hybrid of the store’s and the manufacturer’s brand identity. They are the retail store equivalent of the mythical half-horse, half-human centaur. Except that the salesperson turns additional inventory when they’re more than mythical.
     The manufacturer’s employee on your sales floor may feel in conflict about who evaluates and rewards their performance. It is in your interest as the retailer to have the manufacturer yield primary control to you. Here are tips on making this more likely, based on the Michigan/Daejin research and organizational psychology findings:
  • Describe to the manufacturer the many uncertainties in selling their product line and provide ongoing feedback about the amount of sales, why people seem to be buying, and what seems to be getting in the way of more purchases.
  • Keep the manufacturer’s employees informed on your expectations for in-store behavior and dress codes, and enforce those expectations. Promptly resolve any inconsistencies between your expectations and the manufacturer’s expectations.
  • Insofar as possible, include the manufacturer’s employees in your store training and invite them to staff social events. Since these employees will probably need to be paid wages for their training time, negotiate for this with the manufacturer.
  • Provide to both the employee and the manufacturer specific, unambiguous information about the job performance of each employee.
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Open Up Profits Using Stores-Within-A-Store
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Sunday, June 19, 2011

Gain Weighty Profits with Larger Sizes

Car companies are positioning pedals farther apart for bigger and wider feet. Toilet seats are getting larger, and a few airlines, like United and JetBlue, allow upgrades for augmented elbow and leg room. This past week, a New York Post article reported how the “Full Figured Fashion Week” in NYC has “tripled in size” from only two years ago.
     American consumers themselves may not have tripled in size, but they unquestionably are getting bigger. This creates profitability opportunities for you. About 65% of American women would be classified as overweight by U.S. Centers for Disease Control and Prevention standards, yet women’s plus-size clothing has traditionally constituted less than 20% of the women’s apparel market.
     It’s not only American manufacturers and retailers that have taken note. Last year, Debenhams—the department store chain with 153 stores located across the UK and Ireland—began showcasing fashions using UK size 16 mannequins. Nearly all clothing shops in Britain were using size 8 or 10 mannequins, even though the majority of women in the UK now wear either size 14 or 16. Debenhams’ changes show what the store’s offerings look like on typical customers.
     Is this a good idea? Some retailing consultants say no. Their argument goes like this: People buy things to help them become what they aspire to be. Most plus-size women aspire to be thinner, so when your target market is plus-size women, show models that are thinner than the members of your target market.
     There are consumer psychology findings supporting the “No, you should not.” Researchers at Tilburg University and Arizona State University found that when female study participants looked at moderately heavy models, the study participants began having unpleasant thoughts about their own weight. On the other hand, when the researchers showed images of moderately thin women, the viewers’ self-esteem improved. Better self-esteem generated by an ad makes people more likely to absorb and act on the advertising message.
     But maybe that conclusion is misguided. The study participants represented a cross-section of body builds. Such conclusions might be different if we include just plus-size consumers. Glee about girth is growing. Men have their “Big Dogs” T-shirts. Regarding women, one of the fashion exhibitors at the recent “Full Figured Fashion Week” is quoted as saying about the rule not to wear horizontal stripes, “Just do it. If you’re 300 pounds, what’s the big deal about looking like you’re 305?”

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Welcome the Plus Sizes
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Saturday, June 18, 2011

Donut Omit the Indulgent

Krispy Kreme’s getting healthier. First off, I’m talking about their stock price, which has doubled over the past year. Yesterday alone, the value increased more than 6% to a 52-week high.
     Many retailing experts had assumed the company was dead. Those experts credit the leadership of current president and chief executive Jim Morgan for the resurrection. According to articles in Bloomberg Businessweek and the Winston-Salem Journal—the newspaper of record in the town where Krispy Kreme was founded—one among many profitable changes is the introduction of new offerings.
     This is the other way Krispy Kreme is getting healthier. The stores are adding yogurt, oatmeal, and fresh fruit juices, for instance.
     Krispy Kreme isn’t alone. In 2009, John Mackey, CEO of grocer Whole Foods, announced he was moving the merchandising away from gourmet chocolates and their kin, and moving the labeling toward nutrition-density. Nutrition-density labeling shows the amount of nutrients per item volume. Since its founding, Whole Foods has profited from having introduced food items—such as sea salts and truffle oil—which fit the label “organic” better than the label “healthful.”
     If you view the decisions of Messrs. Morgan and Mackey as a model for your own retailing, don’t go to extremes. A range of studies have shown that consumers continue to want indulgences, even in these economically tough times—and some say especially in these tough times. A research team from City University of New York, Loyola College, and Duke University found that when a healthy salad was added to a list of side dish choices, diners separately identified as high in self-control actually became more likely to order the French fries.
     Offer a small frivolity that isn’t too expensive. That description is important to keep in mind as you interpret the Whole Foods and Krispy Kreme changes. Shoppers have moved from frivolity toward frugality. Among the indulgences available at Whole Foods were not only quite expensive items, but also ostentatious items. Consider the fountains spewing out melted chocolate which allowed shoppers to fresh-dip their organic turnips or whatever else they chose. In the face of the Great Recession, sales of the indulgences plummeted.
     You’ll want to decide how to best balance healthy with indulgent in your own merchandising. And you’ll want to move the balance point between the two over time. While doing this, do remember that nothing goes better with yogurt than a warm donut.

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Balance Healthy and Indulgent in Merchandise
Have Fun Items Throughout the Store

Friday, June 17, 2011

Encourage Reviewers to Identify Themselves

When a consumer posts an online review of your store or of a product or service you provide, that review is more influential with a shopper if the shopper feels a similarity to the reviewer. So suggest that reviewers who express positive opinions of your products also post a profile of themselves. Then link the name in the review to the profile. Anonymous reviews don’t carry as much weight with consumers as do reviews with names attached. Actually, this happens even if the names sound genuine, but are fictitious.
     Following this logic, it might seem that anonymity would be helpful when a review about you or your products is negative in tone. Shoppers would figure the reviewer with the criticism is hiding out in order to avoid responsibility for their statements. This would make the review less credible, and so less influential.
     This is, in fact, how it often happens. But not as reliably as a retailer might expect. Researchers at The Ohio State University, University of Pittsburgh, and University of South Carolina looked at the effects of reviews of restaurant, vacation, and music retailers. The researchers assessed both positive and negative reviews. Some were posted by people who included their name and identifiers such as a photograph or city. In other cases, the review included nothing more than a username.
     When a shopper reading a negative review is unsure about the identity of a negative reviewer, they often assume the reviewer is like them, adding credibility to the review. When a negative reviewer is clearly identified and the shopper already has developed positive feelings about the store or product, the shopper often emphasizes the ways in which they are different from the reviewer so that the shopper can discount the negative review. They want to like the item.
     It’s not that shoppers avoid negative reviews. As a rule, consumers who are having a difficult time selecting between alternatives appreciate—and may even seek out—criticism of one of the products or stores. This helps the consumer make the decision.
     However, researchers at University of Michigan, McGill University, and Hong Kong University of Science and Technology concluded that we are more willing to take purchasing advice from someone who likes the same things we like than from someone who hates the same things we hate.
     Encourage online reviewers to identify themselves whether or not the review is positive or negative.

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Arouse Lovers by Flaunting Haters

Thursday, June 16, 2011

Cancel Out Implications of Female Inferiority

Retailers might market to women by arousing their social insecurities and then proposing a product or service to correct for the insecurity. It would make no sense for the retailer to intentionally make women feel inferior to men, though. This would irritate the female consumers, making them less likely to buy.
     However, the implication of inferiority can happen unintentionally. And, as I think you’ll agree, with the best of intentions:
     Researchers at Erasmus University in the Netherlands, INSEAD, and London Business School were interested in why campaigns to increase breast cancer screening rates were not more effective. The researchers noticed how the campaign communications often emphasized the woman’s gender:
  • Text messages: “If you are a woman, what you are about to read could save your life.”
  • Direct imagery: A photo of a woman covering with her hands the area where a cancerous breast had been removed
  • Symbolic imagery: A pink ribbon, which has become associated with femininity
     Surprisingly, the researchers found that these campaigns were actually less likely to result in woman getting screened for breast cancer than were campaigns that did not emphasize the woman’s gender. High gender identity salience:
  • Reduced women’s perception that they would develop breast cancer
  • Produced women’s self-reports that they were finding it difficult to understand moderately complex articles about breast cancer
  • Reduced the interest of the women in donating money to fight breast cancer
  • Reduced the motivation to donate money to fight another female disorder—ovarian cancer
     These research findings about the marketing of health behaviors are consistent with other findings about female consumers. Researchers at University of Minnesota, Korea’s Yonsei University, and Canada’s Concordia University found that women avoid situations like automobile shopping, financial planning, and tax preparation because the women feared male salespeople would try to cheat them. The women believed that the men would assume the women’s science, technology, engineering, and math skills are inferior to those of the men.
     Each of these research projects also found a solution to the problem. Campaigns to increase breast cancer screening rates worked fine when accompanying messages pointed out the competencies of women. In the Minnesota/Yonsei/Concordia study, a vanilla scent pumped into the environment made the women feel more competent in dealing with male salespeople for purchases requiring technical skills. Why vanilla? The researchers explained that vanilla scent is found in breast milk, and is therefore deeply tied to feelings of competence in women.

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

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Stem the Tide of Female Shopper Discomfort

Wednesday, June 15, 2011

Unveil Quick Response Codes Through Shoppers

QR is the abbreviation for Quick Response Code, those small, square, maze-like matrices designed for scanning by shoppers’ smartphones, tablet computers, and other portable electronic devices. The scan produces a link to an internet URL, so a retailer can use a QR to play an instructional video on the mobile device, show the retailer’s web page, place a voice call to a product expert, display the part of a social media site with product or store reviews, or any combination of those and more.
     Now, I’m thinking many RIMtailing readers will look at that last paragraph and say, “I knew all of that already.” However, a recent Los Angeles Times article suggests that many won’t. Until reading the paragraph, these retailing professionals weren’t sure what function was served by those strange-looking boxes they’ve spotted in the corners of advertisements and product displays.
     Loads of consumers are moving from the “What the devil is that?” to the “What fun that is!” category. The LA Times article reports how the number of monthly scans recorded by the industry’s leading code maker has mushroomed from 80,000 to 2009 to about one million in 2010, to about two million so far this year. However, the number of consumers using QRs is still small. About one out of 20 smartphone users has scanned a QR. It appears that once people use it, they love it, but it’s an innovation that is still taking hold among consumers.
     Social psychology research findings indicate that this dynamic gives you—the retailer—a wonderful opportunity to build good will toward your store: Coach your customers to teach their friends and family how to use QRs. On the bottom of instructional signs, such as Macy’s is installing in their stores, and on billing inserts explaining what the scan will produce, say something like, “Help a friend to use QRs.”
The reason? Having one customer teach a skill to others that involves using your store becomes a form of store recommendation. It is a “Welcome to the club.”
     Set up plans to use QR for profitability. Recognize that as the novelty wears off, you’ll need to keep the content engaging. But certainly don’t keep QRs on the QT.
     Oh, I guess I need another short paragraph to explain that one: QT was first used as an abbreviation for “quiet” in the late 1800s. “On the QT” came to mean “confidential.”

Click below for more:
Make Your Shoppers Feel Special
Offer Aspirational Shoppers Subtle Signals
Give a Vocabulary for Richer Shopping

Tuesday, June 14, 2011

Catch Outrage Before It’s Out of Range

The latest Consumer Reports magazine says that, on a CR survey, 64%, or about two out of every three shoppers, report having left a store because the service was poor.
     I don’t take that statistic at face value. Based on my retail consulting experience, I believe consumers, while they are in a store, are more tolerant of bad customer service than that. Yes, many shoppers will abandon a shopping cart and head out the exit when treated poorly. But most shoppers don’t want to abandon their shopping intentions, so will complete the transaction, maybe pledging never to return again.
     Below face value, the CR statistic is important. Based on my shopper psychology knowledge, I can believe that around two out of every three shoppers do take away from an experience of flawed customer service enough anger to claim on a survey that they had walked out the door, even when they had not.
     The implication for action: Check with customers as they leave how you can improve, and then decide if it is worthwhile for you to take their suggestions. Catch any outrage before it is out of range.
     Cashiers are often instructed to ask each customer, “Did you find everything you were looking for?” That’s a good question, but not good enough, especially when asked in a robotic tone and when the cashier fails to report the findings to management.
     A better question is “What would you like to see in our store that we don’t have now?”
     And since the outraged customer isn’t even going through the cash/wrap, we’ll need to have the question asked by any staff member who sees a browser, shopper, or customer exiting. Here’s why I prefer this phrasing:
  • It gives a broader area for the customer to make suggestions. They can answer, “I’d like to see you have more staff so I don’t have to wait a long time to get an answer to my questions,” for instance.
  • It keeps the focus on the future. “Did you find everything you were looking for?” can draw a “No” which implies the store is not the place to get all that the customer wants. “What would you like to see in our store that we don’t have now?” implies, “If we don’t have it now, we’ll be thinking about having it for you next time you come in, whether product or attention to shoppers.”
Click below for more:
Draw Out Advice & Opinions from Shoppers
Turn Every Unhappy Customer Into a Loyal One
Define Customer Service for Your People

Monday, June 13, 2011

Categorize in Stimulating Ways

A current feature on Charming Charlie speculates why the chain, composed of about 100 stores selling women’s fashion accessories, was named a “Hot Retailer of 2010” by the International Council of Shopping Centers:
  • Treat each purchase as special. Regardless of the price of the item, it is wrapped in tissue and placed in a bag with the Charming Charlie logo.
  • Host shopping parties. Get together a group of ten, and Charming Charlie will set you up for a two-hour in-store mingle. They’ll even spring for the refreshments and give everyone a 20% discount on purchases made at the time.
  • Categorize items in helpful ways. For Charming Charlie, the basis of grouping is color. Customers have said this makes putting together an outfit much easier.
     Whatever your product line, you can do these same sorts of things toward boosting sales. If hue, tint, and shading are important dimensions with that product line—furniture, wallpaper, cosmetics—you can go Charming Charlie one better by giving juicy names to the colors.
     The color of a product strongly influences its attractiveness to consumers. Researchers at University of British Columbia and University of Florida found that the color of orange juice was more of an influence on how taste was perceived than was information about the price of the juice or claims about its quality. And shoppers searching for the right shirt, interior paint, or nail polish pay lots of attention to hue.
     But what about the names given to colors? Is a retailer better off carrying products labeled “cherry red” rather than just “red” on the package? Is a car salesman or interior designer likely to make better sales saying “passion blue” instead of “medium blue,” even though the automobile or the carpet swatch is right there for the customer to see for themselves?
     Research at Boston College and University of Pennsylvania implies that Shakespeare’s Juliet may have had her accuracy clouded by love when she uttered “What's in a name? that which we call a rose By any other name would smell as sweet.”
     Unexpected color names—like “Florida orange” and “freckle brown” build interest. Color names which venture beyond surprise to blatant ambiguity—names like “antique red” and “millennium orange”—might be better still. Ambiguous names work best when the shopper doesn’t see the actual product color first, while unexpected descriptive names work best when the product color is seen.

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Juice Up Sales with Flavorful Names
Give Experts Novel Product Categories

Sunday, June 12, 2011


A revenue increase from last year to this year of between 15% and 20% for the first week of the month for a couple of months now.
     I can’t tell you the name of the restaurant that achieved this, but I do have permission to give you a broad hint. I’ll say the restaurant is in downtown Sacramento, California, almost directly across the street from a bank with a well-known name and not that far from the State Capitol and other buildings housing state workers.
     The significance of my revealing this location is that many state workers are paid near the end of each month. No surprise then that for a number of years, the restaurant had been enjoying greater average revenues the first week of the month than for the other weeks. The patrons and prospective patrons felt more flush. The regular patrons were ready to try out the more expensive entrées, and the prospective patrons were ready to waive brown-bagging it for a day or two.
     More recently, the restaurant owner learned about some consumer behavior findings: Researchers at University of Utah and University of Iowa found that in the days soon after receiving a paycheck, consumers with full-time jobs become what is called “promotion-focused.” As the days after the paycheck pass, the person becomes progressively more “protection focused.”
     Researchers at Columbia University and Singapore Management University found that promotion-focused and protection-focused restaurant patrons spend more money when the menu is structured to fit their frame of mind: Promotion-focused consumers go for package deals—one price for a salad/soup/appetizer, entrée, dessert. Prevention-focused consumers spend less on the meal when the menu is structured this way rather than as a traditional list of items under category headings.
     Empowered with this knowledge, the restaurateur printed up different menus for the first week of the month. Revenues, which were already elevated for that first week, have grown even greater.
     There certainly are other explanations: Maybe, consumer confidence is higher this year than last. The novelty of a different menu could lead to diners spending more because they are more stimulated. Restaurant staff interest in the combination dinners might be enriching their sales pitches to the customers.
     Finding out what’s making it work is important. For now, though, an elaborate tip of my hat to any restaurateur—and to every other retailer—who applies consumer research findings to experiment with ways to improve store profitability.

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

Click below for more:
Merchandise to Fit Purchasing Cycles
Cycle the Merchandise by Paycheck Interval
Sell Either Protection or Promotion

Saturday, June 11, 2011

Explore the Shopper’s Distinctiveness

The researchers at University of Chicago and Korea University knew that consumers are more likely to buy an umbrella when it’s raining than when it’s sunny. You see, those researchers were a good cut above the image of the absent-minded professor who wouldn’t know to even come in out of the rain if lacking an umbrella.
     What intrigued these researchers was how to get consumers to select among a broad variety of umbrellas when the consumer feels overwhelmed by all the choices. An abundance of alternatives can decrease purchases and shopper satisfaction:
  • Stanford University researchers had found that shoppers presented with 6 choices to sample from were ten times as likely to end up purchasing a jar of jam as were the shoppers presented with 24 choices.
  • At Columbia University, student participants were exposed to either 6 different varieties of Godiva chocolates or 30 different varieties. Those exposed to the lower number of choices were much more likely to subsequently select a box of Godiva chocolates rather than a cash payment for participation in the study.
  • After analyzing their data, Cornell University study concluded that as the number of alternatives got large, shopper satisfaction went down.
     The Chicago/Korea researchers’ suggested remedy is to present the choice to the consumer as an opportunity to express their distinctiveness to the salesperson. Ask, “What’s important to you when selecting among umbrellas?” and later, say, “I’m interested in what led you to select this one over the others.” Explore the personal preferences.
     This works best when the item gives pleasure or reduces distress and when the shopper is willing to spend some time in the exploration. Staying dry inside an umbrella shop for a while could qualify. Participants in the Chicago/Korea study were more likely to make choices regarding vacation packages, literary novels, and flower bouquets when the choice process was framed as an opportunity to express themselves.
     Reason-to-buy questions help the shopper consider, thereby increasing your opportunities to influence them. Most people rise to the challenge when asked a question, even if answering to themselves.
     Asking these questions personalizes the selling arguments. People make each purchase decision for all sorts of reasons, and each of us has a distinctive consumer personality. For instance, some shoppers primarily want to play it safe while others primarily want to acquire new advantages. The shopper can take your reason-to-select questions in whatever direction fits them best.

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

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Protect Shoppers From Too Many Choices
Ask Shoppers for Reasons to Buy
Ask the Customer for Their Opinions of Items
Draw Out Advice & Opinions from Shoppers

Friday, June 10, 2011

Overcome Gender Stereotypes

Retail Design and Technology invited me to participate in a debate for the July 2011 issue. The question on the floor: “If most shoppers are from Venus, why are most stores designed by Martians?” You probably realize the terminology is from John Gray’s Men Are from Mars, Women Are from Venus.”
     Here is my argument:
     American humorist Robert Benchley wrote, “There are two kinds of people in the world. Those who believe there are two kinds of people in the world and those who don’t.”
     Put me forever in the box with those who believe there are more than two. No, wait, the human condition is much too rich for there to be permanent boxes at all. Certainly, female consumers are different from male consumers. I’ve seen the research as I craft shopper psychology findings into specific tactics my retailer clients use to make more money. Men tend to like sharp contrast. Women tend to like harmonious flow. And that’s only the start.
     But since the wrong advice from researcher to retailer could mortally sabotage profitability, I advise placing special attention on the phrase “tend to.” The variations in preferences within the population of women and within the population of men are, in many realms, more significant than the average differences overall between men and women. Statistical significance—the holy grail for academic researchers—is not the same as practical significance out in the world of shoppers flowing into and through a store, in various settings and at various times not at all segregated by gender.
     Any notion that only Venusians are capable of competently designing shopping spaces for other Venusians would box us into unnecessarily limited possibilities. That’s beyond humorous. It’s silly.
     The biological imperatives that distinguish men from women take different forms depending on the situation. The lady trying out cosmetics wants some privacy. We design a little nook she can tuck herself into to hide from the competing females. The gentleman pulling the pricy cologne bottle off the shelf prefers to announce his acquisition to any woman in the vicinity. No nooks or crannies for him.
     Now let’s offer our pair a pedicure. We’ll want to arrange group seating for the woman. When she socializes, she’s happier, so she’ll come back to our shop soon. And she’ll bring along her friends, adding to the merchant’s revenues. The gentleman? Give him privacy.

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

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Recalibrate for Shopper Gender Trends
Explain Yourself to Female Customers

Thursday, June 9, 2011

Perpetuate Beautiful Days in Your Neighborhood

Although it was Mr. Fred Rogers who created the lyrics “It’s a beautiful day in this neighborhood,” it is Mr. Fred Hayman who deserves honors for his creation of the beautiful retailing neighborhood known as Rodeo Drive in Beverly Hills, California.
     In 1964, when Mr. Hayman opened his shop, Rodeo Drive was a regular city street, with a grocer, a gas station, and a hardware store, not a coherent retailing corridor. Over succeeding years, Mr. Hayman produced what is now a team of merchants and a destination which draws shoppers and their money from throughout the world.
     Your retailing corridor might not include Giorgio Armani, Chanel, Hermes, Dior, Gucci, Prada, and Cartier outlets. Even if it could, they might lack compatibility with the store personality you want to project. Still, there are lessons to learn from Fred Hayman in how to create your own powerhouse neighborhood.
     For Mr. Hayman, the key was hospitality. He sharpened his skills while working at New York’s Waldorf Astoria and then California’s Beverly Hilton. When he opened Giorgio Beverly Hills on Rodeo Drive, he included an oak bar and pool table where men could enjoy themselves while the women in their lives shopped. Soon after he opened his store, he began a practice of offering browsers a glass of Champagne.
     As the district developed, Mr. Hayman formed a committee of the merchants to pay for benches and trees, plus staff to ensure the area was clean and safe. These days on Rodeo Drive, consumers with cameras, who prefer to take photos of shoppers rather than shop themselves, are still welcome. Browsers turn into customers, and in the meantime add the sort of excitement which gives brick-and-mortar stores an edge over online shopping.
     Encourage a good mix of stores in your retailing neighborhood so groups can spend time shopping together. Add amenities so prospective customers feel welcome.
     From the beginning, Mr. Hayman encouraged the Rodeo Drive stores to carry appealing merchandise and provide valuable services that would be difficult to find elsewhere. What can you sell in your store and retailing neighborhood that will draw shoppers from outside your commodity target markets? Distinctiveness gives a retailing corridor an identity consumers will recognize.
     And support your broader community. Mr. Hayman led the Rodeo Drive shopkeepers in contributing generously to the city’s police and fire departments, high school band, and community theater.

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

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Hobnob with Your Neighborhood Retailers
Monitor Your Community Involvement Payoffs

Wednesday, June 8, 2011

Replace Exclusivity with Substitutability

A recent posting discusses product substitutability—products in your assortment mix which the shopper feels comfortable substituting for other products they might consider. The examples in the posting are types of milk, so I’ll build on those:
  • The dad who is coming down the aisle looking for nonfat milk to keep the family healthy might be comfortable purchasing 1% fat milk, or maybe even 2% fat milk, if you’re out of stock on the nonfat. This allows you to keep the inventory of nonfat milk itself slim when you carry the 1% or 2%. It also means that you might not need all three types.
  • However, the mom who is coming down the aisle next and looking for chocolate milk to convince the kids to drink up probably won’t be satisfied with purchasing whole milk, nonfat,1%, or 2% as a substitute. Unless you have chocolate syrup directly adjacent to the dairy case. By adding a product and managing product adjacencies, you’ve developed substitutability in the shopper’s mind.
     But what about convincing the consumer to accept the substitute? Our natural tendency when thinking about how to make a switch worthwhile is to tell the shopper the ample positive benefits. This is a good start. People need to see the potential gains in order to put out the energy to form and maintain new habits.
     However, we too often forget about the importance to the consumer of the costs of the switch. Researchers at National Kaohsiung University of Applied Sciences in Taiwan found that thoughts of these switching costs significantly interfere with the positive value a person sees in the change. For instance:
  • “How difficult will it be for me to master the skills necessary to use the substitute?” If we’re talking about substituting 1% fat milk for nonfat or one package size for another, skill mastery isn’t an issue. But in substituting one type of club for another, there will be golfer concern. Demonstrate the substitute, emphasizing the similarities to the original.
  • “What social costs would I need to pay? If the substitute doesn’t carry the prestige of my usual item, will I find myself going through the bother of hiding from my friends what I‘m doing?” In selling socially visible items, select substitutes with the right prestige quotient.
     The overall message from the research findings: Introduce the item by saying with enthusiasm, “Give this one a try!”

Click below for more:
Monitor the Sales Floor to Avoid Out-of-Stocks
Prime Customer Interest with Adjacencies
Minimize Switching Costs

Tuesday, June 7, 2011

Beware the Intoxication of Wins

Researchers from University of Pennsylvania have repeatedly documented that focusing on your retailing wins will tip the balance toward business success. That body of research is challenged in a book titled Smile or You Die: How Positive Thinking Fooled America and the World. Author Barbara Ehrenreich argues that overlooking the negative leads to catastrophic business and life decisions.
     The answer is to use educated optimism and avoid the intoxication of wins. Research findings from North Carolina State University and University of South Carolina give a rather literal interpretation to that advice.
     The researchers analyzed two sorts of outcomes for 271 collegiate and professional sporting events. Each event selected was a high-stakes basketball or football game, such as a playoff or a homecoming rivalry. The first sort of outcome they analyzed was how close the game turned out to be. The second sort of outcome was the number of automobile fatalities on the day of the game in the area where the game was played and in the hometown of the opposing team.
     The study’s finding? The closer the game, the higher the number of automobile fatalities, especially from accidents involving alcohol intoxication. But this finding was much more striking with winners’ hometowns. There was no evidence of a significant increase in traffic deaths in the hometowns of the losing teams.
     The researchers’ explanation? Winning a close game, even if it is a vicarious experience as a spectator, generates high levels of both testosterone and blood alcohol, interfering with sober judgment when driving.
     Bringing it back to the world of the retailer, winning in a negotiation can impair judgment. The most dangerous time to make purchases from a vendor is when you’re both very busy and very happy. Researchers at University of Hong Kong and National University of Singapore found that joyful customers don’t adequately evaluate all purchase alternatives. These customers tend to just select either the first alternative or the last alternative.
     When you’re in high spirits, stop to check that you’re not entering some zone of excessive optimism which includes mumbling, “A good retailer can sell anything to anybody.” Maybe the reason you’re really happy is that your store is bustling, which means you’re especially busy. Then an added danger in negotiating with the vendors is that you won’t take time to verify you are making good business decisions instead of only easy, time-saving ones.

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

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Survive Using Educated Optimism
Curb Your Enthusiasm About Economic Recovery
Check Your Optimism When Dealing with Vendors

Monday, June 6, 2011

Anchor Browsers onto Higher Prices

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 a tactic for this with both American and Hong Kong shoppers: 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, the researchers suggest that before you introduce the shopper to the category they’re looking for, you encourage the shopper to walk by high-priced items in a variety of categories as you talk about the price-quality link.
  • With product categories like linens where there are many brands and many choices from each brand, group items with similar features together rather than grouping items from the same brand together. Stanford University researchers found that shoppers exposed to feature-based groupings were less likely to want to purchase lower-priced items.
  • Introduce a higher-priced version of the product. Some of those same Stanford University researchers found that when a higher-priced alternative is added to the list of choices, the alternatives which cost less become more attractive to the shopper. Soon after retailer Williams-Sonoma added a $425 bread-making machine to their merchandise line, sales of the $275 unit doubled.
  • When presenting prices to the customer, start with the highest and end with the lowest. Researchers at Hong Kong University of Science & Technology had participants rank prices of hotel rooms. Some were asked to rank from highest to lowest. Others were asked to rank the prices from lowest to highest. After completing the task, participants were asked to say how much they’d pay for a hotel room. Those who had ranked prices from highest to lowest were willing to pay an average of $19 more than were those in the lowest-to-highest group. The first group also estimated the average price of a hotel room to be higher.
Click below for more:
Move the Customer to Accept Higher Prices
Allow Modest Expectations of Discounted Products

Sunday, June 5, 2011

Call for Scrutiny of Groundless Fears

Just a couple of months ago, every consumer who had ever thought about giving their business to an airline was provided the opportunity to freak out about the possibility of a portion of their plane’s roof suddenly disintegrating while cruising at 34,000 feet above terra firma.
     After the April 1 incident on one of their 737-300’s, Southwest Airlines promptly addressed what was a reason for genuine fear. In my April 11 RIMtailing posting, I suggested that, in such circumstances of legitimate concerns which have been addressed, the retailer encourage consumers’ thinking to move on. Researchers at Washington State University and University of Texas-Austin use the term “willful ignorance” to refer to their finding that there’s information consumers would prefer not to know.
     The danger in the news today has to do with cellphones, and the nature of the resulting fear calls for a different sort of response from retailers concerned about the effects on sales of smartphones and accessories. The International Agency for Research on Cancer, a World Health Organization panel, reports evidence that frequent users of cell phones increase their chances of developing a glioma by 40%.
     A glioma is a particularly aggressive type of malignant tumor which often begins in the brain, close to the radiation from a cell phone held to the ear. The facts that so many of us use cellphones and that a glioma was the cause of Ted Kennedy’s death fueled media interest in the WHO announcement.
     The finding is quite preliminary, not conclusive, and this makes a difference in how retailers should handle the issue with consumers: Encourage shoppers and the media to scrutinize what’s known and not known at this point. Most experts in the field are saying a cellphone’s radiation levels are far too low to damage body tissue.
     When you genuinely believe a shopper’s fears to be groundless, or at least premature, you might find it helpful to use a set of steps based on a technique called systematic desensitization:
  • Check that the customer considers their fear to be unjustified.
  • Have the customer relax, without high pressure to make a consumption decision.
  • Encourage a critical evaluation of the actual facts and logic that have led to the fear and of reasons not to be afraid.
  • Make the sale in steps rather than deciding it all has to happen at once.
  • Genuinely praise the customer for overcoming their irrational fear.
Click below for more:
Ground the Flight of Customer Fears
Tamp Down Fear Points If Selling to Suppliers
Sell Self-Esteem After Times of Fear
Apply Systematic Desensitization to Fears

Saturday, June 4, 2011

Stimulate Bragging Rights from Complexity

When shopping for products that feature technology, shoppers tend to be attracted to ones with multiple features. But if they purchase these products, they quite often end up frustrated with the complexity of what they chose. This “feature fatigue” can lead to your customers getting irritated at your store and staff for selling them more than they needed. It also can lead to a higher rate of product returns.
     On the other side, you’d like to sell more feature-rich products to your customers who will be able to benefit.
  • The profit margins are usually higher on feature-rich than on feature-poor products.
  • With feature-rich products, there are more opportunities for you to offer training as a profit center.
  • Customers who find themselves enjoying possession of the fullest set of features are prime candidates for trading up as even greater technologies appear.
     Researchers at Georgetown University and Harvard University find that one way to overcome feature fatigue is to highlight the advantages of the complex products in impressing others. When people learned that someone they knew had selected an especially feature-rich product, they saw the person as more savvy and open to interesting experiences. Shoppers turn this around to say that if they are the one selecting the product, their friends will say good things about them.
     The Georgetown/Harvard researchers found this is most likely to occur when the shopper is with others who can see them trying out the product or if the shopper sees someone else in the store trying out the product. The interest in bragging rights fades when the shopper thinks carefully about what it will take to learn how to master all the product’s capabilities before feeling comfortable showing it off to people they don’t know well.
     Here are some steps for you take to make use of the findings:
  • Encourage technology-oriented shoppers to bring their friends along. Offer group discounts and rewards for customer referrals.
  • When your store is introducing a new technology-oriented product, hold special events that include demos and how-to sessions.
  • In advertising and store displays, depict people confidently using the product’s various features.
     All this applies most directly to technology-oriented products that have many capabilities. This description does fit an increasingly broad range of products. For one thing, technology is creeping into almost every sort of merchandise. And for another, retailers who want to limit inventory are interested in multi-solution, multi-featured models.

Click below for more:
Compare Features to Ease Overload
Sell Ease of Use to Last-Minute Shoppers
Encourage Group Shopping
Stage Special Events to Build Sales

Friday, June 3, 2011

Strategize in Advertising Expenditures

“Half the money I spend on advertising is wasted. The trouble is I don't know which half.”
     So said Philadelphia department store tycoon John Wanamaker, at least according to retailing lore. Mr. Wanamaker died in 1922, in an era when social networking would have had a quite different meaning than it does now. But the questions still remain about the relative benefits of advertising versus, let’s say, word-of-mouth. Consumer behavior researchers at University of Texas-Austin and University of Southern California report that classic studies have found word-of-mouth to be about twice as effective as broadcast advertising and seven times more effective than print advertising.
     Recent research at Southern Methodist University and University of Southern California gives a more comprehensive look at the quantitative effectiveness of advertising and suggests where you’re likely to get the best relative return when you strategize your advertising expenditures. The researchers analyzed findings from 56 studies published between 1960 and 2008. Here’s some of what they and other researchers discovered:
  • Advertising effectiveness is somewhat lower now than in the past. This is probably due to the explosive growth of social media. At the same time, there is no evidence that advertising effectiveness has been impacted by economic recessions.
  • Retailers in Europe achieve a greater return on investment from advertising than do North American retailers.
  • Advertising is more effective for durable goods than for nondurables.
  • Advertising achieves a higher return for new brands—products and stores—than for established brands.
  • Television advertising influence is generally higher than print advertising influence in the short term, but print advertising is more effective than television advertising in the long run.
  • Long-term effectiveness of advertising is about twice as high as immediate effectiveness when it comes to increasing sales. Look at your advertising as planting a seed for the future. That’s true not only for print and broadcast, but also for internet campaigns. Based on their analysis of MediaMind data for results of banner ad campaigns worldwide, eMarketer reports that only about 20% of the conversions come after a click on the banner ad at the time it is first viewed. The remainder of the resulting sales—about 80%—come later, stimulated by viewing the ad, even though there was no click-through right then.
  • The message counts. John Wanamaker, for one, had something to say in his ads. He’s known for having introduced the slogan “One price and goods returnable.”
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View Advertising as Planting the Seed