Monday, August 25, 2014

Name Your Price!

Among the most compelling evidence of the value to a retailer in understanding shopper psychology consists of those instances in which a shopper finds a higher price on an item to be more attractive than a lower price on an equivalent item.
     This might be because the higher price indicates greater exclusivity. Researchers at University of Texas-Dallas explored instances in which a supplier of a high-prestige item drops the price. One result of such a drop is that demand increases for a substitutable item with a higher price. The logic goes like this for the consumer, perhaps at a subconscious level: “If the price is now lower, more people will be able to buy the item. This means the people in my social group won’t be as impressed when I show them I purchased this item. However, if I buy this other item, which carries a higher price, my purchase will impress others more because it’s distinctive.”
     Or the preference for a higher price could be due to pronunciation. For instance, an “s” sound conveys smallness and smoothness to the English-speaking brain. A price stated verbally as seven dollars, sixty-six cents tends to sound small, and the purchase decision seems smooth. But an “oo” sound, as in seven dollars, twenty two cents, tends to sound larger. Researchers at Clark University and University of Connecticut found that a price of $7.66 was rated as a better deal by one group of consumers than was a price of $7.22 by another, equivalent, group of shoppers for the same item regularly priced at $10.00.
     Now Clark University researchers, this time in collaboration with Babson College researchers, find another example of sound effects in pricing: When an item’s price resembles the sound of the shopper’s name or birthdate, the shopper will like the price better. In some circumstances, this means the shopper will prefer that price to a lower price which sounds nothing like the shopper’s identifying information. A price of fifty-five dollars has extra appeal for consumers named Fred or Ms. Fine. A price of $49.15 has extra appeal for a consumer born on 9/15 or even 4/15.
     You may not set different prices for different shoppers based on an individual’s name or birthdate. However, in those circumstances where the sound of a price matches the sound of the shopper’s name, say the price and the shopper’s name in the same sentence.

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Raise Luxury Prices If Equivalents Drop Prices 
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Monday, August 18, 2014

Discuss Disgust Conservatively & Liberally

Political scientists at University of Nebraska-Lincoln and Rice University say that liberals tend to be physiologically different from conservatives, and that the differences influence what the people will purchase at retail.
     A primary distinction between the two orientations is in the frequency, nature, and intensity of physiological signs of disgust. Prior research had found that the higher a consumer’s identification with politically conservative values, the higher the probability of that consumer buying lots of cleaning supplies, laundry baskets, and desk organizers for use in the household. In another set of experiments, political conservatives spent more time than political liberals fixating on depictions of vomit. This suggests the conservatives would be more receptive to items which head off the disgust.
     Conservatives have a sharper sensitivity to all sorts of negative stimuli. Depictions of house fires and dangerous animals also drew prolonged attention. Facial expressions interpreted as surprise by political liberals were more often interpreted as threat by political conservatives.
     Some research finds that the brain structures of the two orientations differ: Liberals have relatively more gray matter in the anterior cingulate cortex, a part of the brain associated with impulse control, while conservatives have relatively more gray matter in the amygdala, which is associated with intense emotional experiences.
     These are all overall tendencies, not true of every individual consumer. Further, the Nebraska/Rice researchers acknowledge that physiological predispositions, built into a consumer’s DNA, aren’t the whole tale. The situation matters, too. Voters are somewhat more likely to express disgust with politically conservative candidates and issues when the polling place is a school than when it’s a church. In the retail store realm, shoppers sitting on a hard-surface chair are quicker to be repelled by novel brands and products than when sitting on a soft chair.
     Still, discussing with your shoppers their liberal-conservative orientations could help guide your selection of merchandise to stock and your selling points. Or you could use market research data. University of Michigan, New York University, and Turkey’s Özyeğin University researchers analyzed purchases over a six-year period in 1,860 supermarkets across 416 U.S. counties. Survey data on voting patterns and religiosity for each county were used to calculate what the researchers identified as “conservatism.”
     The resulting advice from the researchers: If many of your shoppers identify themselves as religious and say they vote Republican, emphasize national brands over store brands in your merchandising and hesitate stocking recently-released products.

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Conserve Tradition If Serving Conservatives 
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Monday, August 11, 2014

Limit Availability to Overcome Satiation

Even your most satisfied customers may seek out retailers who compete with you for those customers’ business. That’s because people like variety. Take comfort in knowing this doesn’t necessarily mean they’ll desert you, never to return.
     The return is more likely, though, when the customers haven’t satiated on your store’s products. It’s best to leave them always wanting more. Researchers at University of Georgia and University of Minnesota found that one way to avoid satiation is to interrupt the nonstop availability of products and services which are distinctive to your store. Perceived limitations increase post-purchase enjoyment of the items, and enjoying the items results in desires to shop with you again.
     Time limits occur naturally as you phase out certain items to create room for new offerings. Announce to your target audience an item you’re selling is a limited edition, and sales can blossom. It’s true with artwork and, as it happens, with encyclopedias.
     In spring 2012, Encyclopaedia Britannica, Inc. announced the end of the print edition. The average 60 orders per week promptly grew to 1,050. What had become a marginal part of the business because of the move to digital versions of the product became a prominent profit center, although briefly.
     As a general rule, however, it best serves your profitability to combine “limited availability” with “ongoing availability” to assure your customers of a future source of supply.
  • To create perceptions of limitations, remind people that nothing lasts forever. UCLA and University of California-San Diego researchers saw that a large percentage of people who’d moved away from the Chicago had visited local tourist attractions, such as Millennium Park only toward the very end of residency, perhaps in the midst of packing up. The researchers suggested tourism retailers sell to locals the idea of a “staycation,” such as a gift certificate for specific dates to visit the nearby attractions. 
  • Invite shoppers to revisit the already done after an interval to recover from satiation. Researchers at American University, University of Arizona, and Northwestern University mused on why people will read the same book a number of times, watch the same movie repeatedly, or go back to the same place and do the same things again. In-depth interviews revealed answers: They seek out details they missed before. They want to give the item another chance for a positive impression. They’ll enjoy being there while friends encounter the experience for the first time. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Show Them What They’ll Never See Again 
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Monday, August 4, 2014

Interrupt the Urge to Interrupt the Shopper

Strategic interruptions of the browsing shopper can move that shopper toward purchase. For example,  interrupting someone by pointing out a clearly inferior alternative often unfreezes indecision. Say, “May I show you one more model that I think would help you decide? I hate for you to need to go shopping somewhere else.”
     But plenty of other consumer behavior research finds that poorly timed or poorly framed interruptions disrupt the selling process. At issue is what psychologists call “Need for Cognitive Closure” (NFCC). Some shoppers want to make a decision quickly and then stay with that decision. Interruptions by a salesperson risk confusing those shoppers. Other shoppers evidence a strong need to gather as much information as possible before deciding. They welcome salesperson interruptions to relax the process. Then after deciding, the shopper doesn’t mind the sorts of interruptions which reassure them they’ve made a good decision.
     And almost all shoppers are somewhere between those two extremes.
     NFCC is a personality trait, which means each of us tends to stay within an idiosyncratic range on the dimension throughout adult life. Then situational factors can move us within that range and occasionally well outside it.
     Most consumers are more open to interruptions early in the purchase process and less open later. However, researchers at New Mexico State University and Sacred Heart University suggest that the retailer look out for the potential customer who seems pressed for time and is evaluating choices almost from the start. Minimize interruptions of these people early on and never interrupt early on with content not directly related to the purchase selection, such as with an extended greeting or casual conversation. With the shopper who is in this frame of mind, later interruptions are okay, and can actually create good will, as long as the interruptions are pleasant, such as reassurance or gratitude, and they’re not frequent.
     Another set of researchers, at Stanford University, note how in-store shopping can be subject to a plethora of interruptions from sources other than the retailer—phone calls, texts, impatient children. To the degree that the retailer can control additional ones, the sale of the considered item is more likely. Beyond this, the Stanford studies found that a disruptive interruption during the climax of the current transaction increases the NFCC for immediately subsequent purchases.
     Before interrupting the shopper, pause briefly to determine your objective.

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Dissolve Decision Paralysis 
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