Sponsor in Good Company

Sponsorship marketing is usually associated with a business helping out a charity or nonprofit. It can also take other forms. Your store might financially support a business seminar for retailers in your community, staff the press room at a week-long local trade show using a few of your paid employees, or provide supplies from your store stock for a children’s soccer team over an entire season.
     A chief objective of sponsorship marketing is to build goodwill toward your business from prospective customers and from community decision makers. Knowing all this, researchers at Leibniz Universität Hannover urge you to inquire about and then seriously consider the reputations of any cosponsors. Using sophisticated statistical analyses, the researchers verified that if a sponsor is viewed unfavorably by participants in the activity or event, those negative impressions will bleed over toward perceptions of the other sponsors. This situation could occur, for example, when your cosponsor has signed on to a marketing initiative mostly because they want to calm a recent controversy about them.
     The bleed-over to your reputation is more likely when:

• The cosponsor is in the same type of business as you 
• The cosponsor is well-known 
• The cosponsor’s name is featured in the same posters, agendas, and speakers’ expressions of gratitude as is your business name 

     Other research indicates that although there will also be a bleed-over when the reputation of a sponsor is highly positive, the influence on audiences is not as significant as with a negative bleed-over.
     It’s probably pretty much out of the question to ask event planners to withhold the identity of a cosponsor you’re concerned about. Yet there is a circumstance where you could make a case to the cosponsor to stifle the notice:
     Invite one of your suppliers to be your cosponsor, but to not announce themselves as a cosponsor. Your argument could start with recognizing that building sales is in the interest of both the supplier and you. Go on to point out that if the target is a charity, you’ll get better results in convincing others to join you in donating if you publicize the sponsor as being your store, not the supplier. Research at Michigan State University, Illinois Wesleyan University, and University of Texas-Austin suggests that when a store instead of a brand is publicized as the sponsor, consumers are more likely to see the sponsorship as a charitable act rather than only a selling technique.

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

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Activate Sponsorship Marketing
Donate In Ways that Encourage Others to Donate

Bring Value Closer

Today’s consumer thinks about today’s value. That’s why, everything else being equal, they’ll prefer products and services which give them immediate benefits over those in which the benefits are over the horizon.
     Researchers at Wayne State University and University of Arkansas saw this phenomenon when comparing messages for energy savings on light bulbs. Those like, “You can start saving a little money now on your electricity bills by using this product,” generated more purchase potential than did messages like, “Over the next three years, you’ll save a noticeable amount of money by using this product.”
     Psychological distance enters into the shopper’s preference equation in other ways, too:

• Selecting an item to be used in the future rather than starting now 
• Selecting an item for use by someone else rather than one’s own use 
• Considering an item after reading an ad rather than in the store 

     Also, a need to travel a longer way to obtain the item. But this one sometimes adds to the valuation of the item instead of subtracting. Researchers at University of Chicago found that shoppers who characterized themselves as “smart” rather than “not smart” expressed a higher preference for products they’d have to travel across town to get over equivalent products they could purchase nearby. These shoppers also evaluated products more positively when the products had been pushed back on the shelves rather than being in easy reach.
     Related to the degree of valuation are these further effects of psychological distance:

• Emotional reactions become less intense. According to studies at University of Colorado-Boulder, University of Oviedo in Spain, and Lieberman Research Worldwide, this is true for highly positive emotions—such as the thrill in having the item—and for highly negative emotions—such as anger at flawed product performance—and for all the emotions in-between. 
• There is a stronger link in the shopper’s mind between price and quality. Researchers at Hong Kong University of Science and Technology told study participants how much had been paid for a set of items—ranging from yogurt to computers—and then asked each participant to guess the quality of each item. In some cases, the study participant was to assume she herself had made the purchase. In the other cases, the participant was to assume a friend had made the purchase. With purchases made by friends, there was a more direct relationship between the price paid and the assumed quality of the item. 

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

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Drive the Psychological Distance
Challenge Smart Shoppers
Commit Shoppers from a Distance for Expenses

Downgrade Free Upgrades

“Buy an 8-inch cake and we’ll give you a 10-inch at no extra charge!,” says the bakery salesperson to the birthday cake shopper. To the next birthday cake shopper, though, the salesperson says, “Buy an 8-inch cake and, for only a penny more, we’ll give you a 10-inch!”
     How strange that the person asked to pay the tiny extra amount is more likely to select the 10-inch model than the person who would get it absolutely free. To ascertain why, researchers at China’s Southwestern University of Finance and Economics-Liulin offered either a free or token price upgrade to real shoppers for one or another of a range of items. After analyzing the shoppers’ reasoning, the researchers concluded that the token fee made it easier to appreciate the value of the deal compared to the price of the regular version. Zero makes a poor comparison point.
     Monash University researchers saw a similar oddity that led them to say retail customers would be happier with a drop from a 5% interest rate to a 1% rate than if the drop is from 5% to 0%. Again, this is because zero doesn’t serve well as a consumer’s anchor for appreciating the magnitude.
     When the cost is more than a penny, the general principle still holds for an initial upgrade: Make the relative cost calculation easy for the shopper. They’re more likely to choose the upgraded alternative if the cost is a round number. So if the prices on the bin tags are $19.99 and $29.99, the salesperson says, “For only $10 more, here are the additional features you’d get.” The easy comparison facilitates acceptance of the upgrade.
     However, get set to pile on another oddity for subsequent upgrades during the same shopping trip. Here, shopper agreement to the upgrade is more likely when the price comparison is more difficult. Researchers at Babson College and Baruch College found that, when considering subsequent upgrades, people perceive the differences in prices between the regular and upgraded versions to be smaller if the comparison is harder to compute. For these subsequent upgrade considerations, quote the actual price points rather than rounding them, and discuss the prices in detail.
     How to explain why this works? When the shopper has expended considerable mental energy deciding whether to put out even more money on another item upgrade, their resistance to accepting an upgrade which benefits them is worn down.

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

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Detail Subsequent Upgrade Price Comparisons
Give Shoppers a Comparison Point

Repeat Warnings at Time of Acquisition

You would think that if you warn some shoppers “The product may cause significant hair loss, headaches, and damage to the immune system,” those shoppers would be less likely to choose to use the product than if no warning had been given. But researchers at New York University, Tel Aviv University, and INSEAD-Singapore found that, under certain circumstances, the warning ends up actually making product use more likely.
     Those circumstances occur when there’s a delay between the warning being given and the step of acquiring the item. It’s a version of what consumer psychologists call “the sleeper effect,” in which part of a message is remembered and acted upon, but the rest is forgotten or ignored. When people are warned of the dangers in using a product, they build trust in the retail source of that message as being honest. Over time, the impact of the warning fades, but the feeling of trust in the product benefits statements remains.
     For one study, researchers included within a pitch to women for a certain artificial sweetener a warning that the product could cause immune system damage. The remainder of the women in the study were not given that warning. Then for half of the women in each group, an invitation was extended to order the sweetener right then. The others were asked to return two weeks later, at which point they were invited to order the sweetener.
     Women in the immediate-choice circumstance who had been given the warning ordered about 5% the number of sweetener packages ordered by those who didn’t get the warning. The caution frightened them away. But in the two-week-later group, those who had been given the warning ordered 265% more than did those not given the warning. The warning built trust which outlasted the caution.
     Similar results for other items indicate this paradoxical influence of warnings holds for purchases of a range of products, medical procedures, and financial investments. Other research indicates that the scarier the original warning about an item the shopper desires, the more likely the warning will be forgotten. Added to the sleeper effect is willful ignorance.
     My general advice to retailers is not to give warnings to shoppers unless asked. Inform without intruding. However, I make an exception when it comes to safety. Via product labels, risk statements in ads, and face-to-face dialogue, arouse caution in shoppers at the time of product acquisition.

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

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Acknowledge Customers’ Willful Ignorance
Caution Shoppers for OTC Safety
Wait, Wait, Don’t Tell Me
Check Instructions with Elderly Customers

Get Price Hike Irritation Over With

More often than not, retailers will impose price hikes less frequently, but in greater amounts, than price drops. Still, there are plenty of exceptions. This practice, which economists have named “Rockets & Feathers,” occurs about 70% of the time.
     Why not all the time? Probably because experienced retailers have come to realize that the Rockets & Feathers method is most successful in certain situations. Studies based at University of Seville identified two of the factors, saying it works best:

• With the more expensive items within a product category at that particular store
• When the consumer will be highly involved in use of the item rather than using the item without much conscious thought

     For items fitting these circumstances, get the pain associated with price hikes over quickly. Raise prices as infrequently as you can, and when you raise them, be sure it is by an adequate amount.
     Those are the rockets. Also remember the feathers. Do not drop prices too severely. It’s better to offer frequent smaller decreases.
      Lowering prices gently and with precision is a good way to ensure customers who visit your store often will continue to trust your pricing. Use of the word “feathers” to describe this pricing strategy fits nicely in another sense, too. One meaning of “feather” is to hit softly and precisely.

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

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Feather Pricing Changes with Precision
Drop Prices Slowly
Strengthen the Price-Quality Link
Sharpen Your Price Image

Choose How to Use Unit Pricing

Stating prices in terms of units, such as per ounce, is required by law in many localities. Then, too, retailers might choose to use unit pricing even if not required to do so. They see it as a service to price-conscious consumers.
     According to researchers at Monash University, unit pricing not only serves price-consciousness, but also stimulates it. In their studies, a highlighting of price-per-unit on store shelves motivated purchase of less expensive options. This effect occurred even when the choices for the shopper contained the same quantity.
     Let’s say you offer five packages of flour, each with an identical number of ounces and each carrying a different price. Shoppers don’t have to depend on labels with unit pricing to figure out the comparison. So what happens if we contrast purchase patterns among one group of consumers given unit pricing and another not? The answer is that consumers in the first group spend less, on average, for their flour package purchase.
     This enhanced price sensitivity leaves the price-quality link intact when the packages are of different sizes, not all the same size: Why would consumers consider a cleaning product in a smaller package to be of better quality than another brand of cleaning product which comes in a larger package? According to research findings from University of Texas-San Antonio, Hong Kong University of Science and Technology, and Chinese University of Hong Kong, it’s because the smaller package generally carries a higher cost-per-unit than does the larger package. Consumers associate higher costs with better quality.
     When the researchers distracted the consumers sufficiently to keep them from estimating cost-per-unit prices, the effect disappeared: The product in the small package was no longer rated as being of higher quality than the one in the larger package.
     Judging a product to be of higher quality can make it more attractive. Perfume manufacturers depend on this when using small containers for their offerings at retail. Catch the curiosity of the shopper by highlighting that the product carries a high price. Then say why it’s worth it.
     If you can choose which units to use in unit pricing, you’ve ways to frame value statements. Based on their field study results in retail stores and shops, researchers at London Business School and European School of Management and Technology recommend you quote the price in terms of units of use. A tire retailer could state prices by how much it costs per 1,000 miles.

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

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Utilize Unit Pricing
Depend on Interdependency for Price-Quality
Use Familiar Measurement Units
Put Large Quantity Before Odd Price

Know When No Warranty Is Best

As we watch the cheetah stalking a herd of gazelles on the African savanna, we notice how a few of the predator’s intended prey start hopping high into the air instead of running away. What’s going on?
     A theory of behavior called the Handicap Principle says that the hopping behavior signals to the cheetah that the gazelle is guaranteed to be highly fit and therefore not worth pursuing. And, indeed, the typical cheetah does favor pursuit of the running over the hopping gazelle.
     Researchers at NEOMA Business School in France and at The Korea Development Bank applied the Handicap Principle to exploring the question, “Is it ever better for a business to offer no warranty to customers than to compete by offering a longer warranty than another business?” The answer was yes, with the explanation that a store or brand offering no warranty is signaling that the superb quality of their outcomes makes an explicit warranty unnecessary.
     This can work because of the functions a warranty serves for the shopper. Shoppers usually prefer a product or store when it provides a warranty. However, people don’t buy a product principally because of the warranty. Researchers at University of Chicago and University of Singapore analyzed consumers’ reasoning about warranties for cars—an end-consumer product—and for computer servers—a business-to-business item. They found that warranties are more likely to influence purchases when presented in one or both of two ways:

• “The warranty is like an insurance policy, letting you know that if anything goes wrong, your costs to make things right will be zero. You don’t need to reserve money to pay for repairs that are covered by the warranty.” 
• “The warranty saves you from worry that you’ve made a bad purchase decision. There’s less uncertainty and more predictability when your purchase comes with a warranty.” 

     Shoppers think of the warranty more in terms of insurance against loss than in terms of assurance of product quality. They look elsewhere for cues of quality. If you exude quality as a retailer, think carefully whether you want to bring up the matter of warranties. To bring it up can distract from that focus on quality.
     You’d better be able to deliver, though. The physically fit hopping gazelle without a head start can still run away at more than 60 miles per hour if called on to honor the guarantee made to the cheetah.

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

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Present Warranties as Insurance, not Assurance
Guarantee with Care

Prosper from Shopper Pessimism

A pessimistic shopper isn’t the same as a sad shopper. Sad shoppers often pay more than happy shoppers for an item. That’s because sad shoppers are anxious to change their current circumstances. At the same time, sad shoppers are less likely than happy shoppers to try out products or services which are new to them. But according to research at University of Chicago, shoppers who are pessimistic about upcoming events in their lives are quite open to changing habitual purchase patterns.
     And an unhappy customer isn’t exactly the same as a dissatisfied customer. Customers with a succession of justified complaints about products or services you’ve sold them aren’t prime candidates for further sales. On the other hand, dissatisfaction can be used by you as a selling opportunity. That’s because customers get dissatisfied when they want something different from what they have now. Dissatisfaction is inevitable. Every one of us sooner or later will want more from our possessions and experiences. No matter how satisfied the customer is at the time of purchase, they’ll become dissatisfied later.
     Pessimism about the future and dissatisfaction with the present often reflect the consumer’s uncertainty. Your purchase advice can help ease that uncertainty and thereby make a sale. If you'd like to encourage brand switching, do it when people are moving from one role in life to another. This happens with events like college graduation, getting married or getting divorced, having a first child, changing careers, or locating in a new country or culture. Research at Ohio University showed how recent immigrants seek out brands to give themselves acceptable status in their new culture.
     We might assume that when people are already feeling highly uncertain about what's happening in their lives, they'd actually be less likely to switch brands. Since moving from one role in life to another is a time of high uncertainty, it would seem that you trying to change brand commitments then would only end up being a big waste. But when it comes to role switching, the truth is the opposite of what we might commonly assume.
     Perhaps the ultimate pessimism is seen in a fear of dying. An entire theoretical framework in consumer psychology is based on the findings that a fear of dying leads people to purchase luxury items they would not otherwise have considered.
     Negative emotions vary and so require varying responses. Learn what distinguishes pessimism.

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

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Use Dissatisfaction as a Selling Opportunity
Use Customer Life Changes to Switch Brands
Use Terror Management Theory for Status Items
Tickle with Uncertainty

Display Interpersonal Warmth Above Digital Ads

Researchers at Babson College and Stockholm School of Economics say in-store digital display advertising hurts sales revenues when used by small retailers. Better to stick with traditional signage than install computer monitors showing animated images, this seems to mean. Moreover, traditional signage costs less and robs less merchandise space than computer monitors do.
     Yet the real takeaway from this research might not be to give up on in-store digital display advertising. Instead, use the technology strategically. After all, the research also found that digital displays in Big Box hypermarket stores were responsible for increasing sales markedly, and the increases continued for at least five months after the signs were first turned on.
     Consider how your smaller retail business can achieve similar benefits:

• Display your website content in-store. This helps the viewer integrate the multiple shopping and promotional channels you offer. 
• Advocate co-op advertising to your suppliers. A significant cost with digital display advertising is for production of compelling content. Ask the manufacturers of the products you sell what they have available and could produce for your use. 
• Make it part of a state-of-the-art appeal. If you sell products which foster creative thinking, accommodate people who want to play around with the items. Interactive digital displays, such as with touch screen menus, help. 
• Entertain the shopper. People love a story, so brief story-based ads can be highly effective as marketing tools for retailers. But don’t entertain the shopper to the point where the shopper is distracted from your primary selling message. Researchers from University of Iowa and Northwestern University found that if the ad, even if relevant to the shopper, interrupts the shopper’s flow of thinking, the consumer will dislike the ad. 

     Still, why were the Babson/Stockholm results so different for large than for small retailers? I suspect it’s because the distinctive appeal of the successful smaller retailer is in the warmth shown to the shopper by familiar faces and interpersonal conversations. Those are less important at the Big Box, where price is a primary consideration. My suspicious were strengthened when I saw that, in the research, digital displays lifted sales only when item prices were being promoted.
     Small to midsize retailers can learn from large retailers. Discern where the large retailer seems clumsy, then grab market share by being more nimble. Assess how what is working superbly for the Big Box might be successfully scaled down or adapted.

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

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Integrate Multiple Shopping Channels
Play Full with the Sales Potential of “Playful”
Entertain with Story-Based Advertisements
Learn From the History of Giant Retailers