Monday, July 28, 2014

Hang ’Em High for Power Deposits

When your shoppers feel more powerful they’re more likely to put away money for the future, according to researchers at Stanford University and Tilburg University.
     It makes sense. Confidence springs from power, and those with confidence worry less about short-term financial shortfalls, so are willing to deposit dollars. This works best when the monetary deposits are framed as themselves adding to the individual’s power rather than as only generating reserves for a rainy day.
     The Stanford/Tilburg researchers made some study participants feel relatively powerful and others relatively powerless. Compared to those with perceptions of powerlessness, those with perceptions of power expressed greater interest in saving money for the future when told the objective would be to keep the money indefinitely. In a follow-up, there was no difference between the powerful and powerless in willingness to save money when the participants were asked to think about specific ways they’d be spending their savings later.
     Other retailers are usually more interested in having customers spend money now rather than deposit it for later, and here, too, perceptions of power matter. If you make shoppers feel more powerful, they’re likely to increase the amounts spent on purchases for themselves. If you make them feel disenfranchised, they’re likely to increase the amounts on purchases intended for others.
     Participants in a study at Northwestern University placed bids on items like a T-shirt and a mug. Some of the participants had been exposed to a manipulation to build a sense of greater power, while the manipulation for the other participants was designed to lessen the sense of power.
     When purchasing the item for themselves, those feeling greater power bid about 86% more for an item, on average, than those feeling lower power. When purchasing the item for someone else, those feeling less powerful bid about 52% more for an item, on average, than those feeling higher power.
     How to influence your shopper’s sense of power? Show ads and signage which emphasize the power possessed by the shopper (“At our store, you’re the boss”) or deemphasize the power (“At our store, we take care of you”). Then treat the shopper with deference or with authority.
     The Stanford/Tilburg researchers had participants sat on either a tall chair or a low ottoman. This recalls research showing how consumers with a higher-level perspective plan for the future.
     Hanging out high, in power or in perspective, produces a difference.

Click below for more: 
Assess Shoppers’ Cloaks of Confidence 
Manipulate the Shopper’s Sense of Power 
Enrich Clients’ Savings Deposits

Monday, July 21, 2014

Sell What’s Left

Customers generally pay more for scarce items, as long as the customers accept the reason for the scarcity as genuine. Such as seeing the scarcity for themselves on your shelves.
     And it turns out that they’ll see best how little is left when you show this on their left. The orientation of information in the shopping environment makes a difference in the shopper’s mental orientation.
     Consumers in a set of studies at City University of New York, IULM University, and University of Sassari viewed pairs of shelves in which one side was sparsely stocked with products and the other side was not. The participants were quicker to notice there were slim pickings when it occurred on the left. This was true whether the shelves were arranged side-by-side immediately adjacent to each other or arranged facing each other with a blank wall between. (A methodological note: All the participants in the study had said beforehand that they were right-handed.)
     Once the shopper detects genuine scarcity, you will want to decide whether to limit the number of items each customer can purchase. From a strictly business perspective, it would seem that if you allow shoppers to buy as many units as they want, you’re more assured of making quicker profit on the entire inventory.
     From a shopper psychology perspective, there are additional considerations to whip you back and forth, left and right, in your thinking:
  • Customers who come to your store looking forward to getting a high-demand item will feel betrayed if they encounter an out-of-stock. 
  • On the other hand, customers who otherwise have an allegiance to your store and encounter an out-of-stock become more likely to come to your store promptly when sales on high-demand items are announced. 
  • On the other hand, if the purchasers of large quantities then turn around and resell the items online—as happened a while back with the Missoni line featured by Target—your regular customers might conclude that they don’t need to wait in line at your store. 
  • On the other hand, if the prices charged online are twice as much as your store’s purchase price—as happened with Target’s Missoni line—this adds value to purchasing from you. 
     Left-right position also influences the response to perceiving a good deal. The eyes go to the right. Therefore, immediately to the right of a deeply discounted item, have products priced for a healthy profit margin.

Click below for more: 
Turn Comparisons Right Side Up 
Decide Whether to Limit Purchase Quantities 
Offer Scam-Free Scarcity 
Hook Experts on Scarcity

Monday, July 14, 2014

Increase Store Loyalty Using House Brands

House brands—private label brands—offer your shoppers a price advantage. Traditionally, retailers price them at an average of one-third less than the national label brand. House brands also usually offer you higher profit margins than do the corresponding national label brands.
     Now research at University of Texas-Austin and University of Erlangen-Nuremberg finds that, under certain circumstances, house brands have the bonus advantage of building loyalty to your store. This effect is strongest when:
  • Shoppers for the product category consider the alternatives carefully 
  • Most shoppers for that product category are bargain hunters 
  • Your store has the reputation of offering low prices on all merchandise 
     The upshot is for you to feature house brands in these circumstances.
     While you’re at it, check that the house brand incorporates your store name, or at least the package carries your store logo. When items carry the same brand name across product categories—such as a bath soap and a shampoo—you’d like to strengthen the brand image by having the same package design. Having almost identical package designs is common with house brands, where a consumer could be looking at tables and tacos during one shopping trip.
     Overall, using a similar package design to build brand image is a good idea from a shopper psychology perspective. Mere familiarity brings credibility.
     There’s a potential downside, though. Research findings from Wake Forest University and University of North Carolina–Greensboro suggest that when packaging is similar across items, the shopper senses a loss of control. The consequence might be that shoppers seek variety beyond the similarly branded items. The shopper becomes a bit less likely to buy the house brand across product categories unless you take steps to restore the sense of control.
  • Use variations of the same name. At Trader Joe’s, you might see Trader Ming, Trader Jacques, and Trader Giotto. 
  • Introduce distinctions by placing products with the same package design in different relative shelf positions for different product categories. With the mouthwash, the house brand is to the top left of the other brands, while with the toothpaste, the house brand is to the bottom right of the other brands. 
  • Curb the routine with distinctive designs and color schemes on signage for different product categories. Researchers at Columbia University and University of British Columbia find that such techniques give the shopper a sense of control, and this sense of control curbs further variety seeking. 
Click below for more: 
Finesse Profit Margins on House Brands 
Build House Brand Equity with Distinction 
Arouse the Love for Your Store

Monday, July 7, 2014

Time Out for Number-Free Descriptions

Time and money are psychologically different for consumers. Research findings from Hong Kong Baptist University and Chinese University of Hong Kong suggest that a salesperson is wise, under certain circumstances, to bring out to a shopper the time savings the shopper could experience in selecting, using, and maintaining a product or service more than emphasizing cost savings in purchasing or using the item:
  • When you want to keep the shopper from getting bogged down in analyzing numbers associated with item characteristics, instead listening to your number-free descriptions. 
  • When you prefer the shopper to compare alternatives on the basis of benefits rather than on the basis of specific characteristics the items possess. This might be because the alternatives for satisfying the shopper’s needs each do the job in different ways, so don’t share many attributes in common. An example would be asking the shopper to decide between purchasing a motor scooter or a one-year bus pass, both of which provide the benefit of transportation, but in quite different ways. 
     Regarding “time is money,” an aphorism attributed to Benjamin Franklin, consumers consider time more valuable than money when thinking about how time is perishable. If you don’t use time now, it’s gone forever, but money not used now can be used later. In fact, if invested properly, the money gains in value.
     If you, as a retailer, establish this mindset in shoppers, they’re more impressed with appeals to saving time than saving money. This appeal also works well when consumers are thinking of time as more subject to having a fixed supply than does money. There’s only so much time available, but a person can use credit to expand the money available now.
     However, unless the consumer has either or both of those mindsets, the consumer will undervalue a savings of time. There’s a tendency to think indefinite amounts of slack time will become available in the future. If your appeal to the shopper is a savings of time, the research findings suggest you start by prompting the shopper to place a greater value on time.
     This doesn’t mean shorter durations always indicate greater value to consumers. In studies at University of Toronto and University of Singapore, people rated services like those of a locksmith as inferior when the service was delivered more quickly than the person expected.

Click below for more: 
Slacken Consumers’ Undervaluing of Time 
Explain How Quick Service Is Worth More 
Sense When Wait Irritation Heats Up