Monday, February 27, 2023

Talk Up Talk Over Gifts for Good Apologies

Miss Manners was asked about a floral peace offering. Following a spat with his wife, the husband gave her a flower bouquet. She said the gesture was inadequate until he arranged the flowers into a vase.
     Miss Manners replied that the wife has some strange ideas about thoughtfulness. Reader comments accompanying the column included the perspective that a bouquet of flowers—or any gift—usually falls short as an apology.
     Studies at Wageningen University and Erasmus University support this perspective. The researchers caution retailers against misrepresenting presents as vehicles for atonement. People in the studies were less likely to accept a gift when it was described as an apology for a transgression.
     Perception that a gift’s primarily intended as apology leads to a more negative appraisal of the gift giver. This is because the recipient almost always wants to talk with the other party about the hurt feelings and therefore views the gift giving as evidence the gift giver misunderstands them. Related to this feeling, the gift giving seems like an easy way out. For an apology to be credible, there must be sufficient efforts. Not just extending the grasped bouquet toward you, but also moving on to retrieve just the perfect vase and to use it. Talk up talk as crucial for credible apologizing.
     Receiving an apology gift also leads to a more negative appraisal of the item. This is because the gift reminds the recipient of the argument or hurt each time the gift is used or experienced. HEC MontrĂ©al researchers identified a related effect in the realm of self-gifting: There are circumstances in which people will buy souvenirs of an experience and store the souvenirs out of sight in order to help forget about the experience.
     The circumstances are ones in which the experience is unpleasant, yet the consumers believe they are obliged to endure the experience. The researchers used as an example visits to the World Trade Center 9/11 memorials. Tracking a cadre of site visitors over a period of eight years, the researchers saw many instances in which souvenirs of the visit were sought, purchased, and then kept in the home without ever being looked at or shown to others. The purchasers spoke about wanting to honor the victims of the terrorist attacks, then using the act of storing away the souvenir as a way to compartmentalize the anger and grief aroused by the visit.

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Discover What the Gift-Giver Expects in Giving 

Monday, February 20, 2023

Scale Purchase Restrictions During Shortages

Widespread shortages differ from normal stockouts both in the cause and in the optimal retailer responses. Normal stockouts result from the store’s inventory management strategy, such as to minimize carrying costs for unsold merchandise. Optimal responses include easing shopper irritation at the out-of-stock and improving inventory practices. On the other hand, widespread shortages result from unanticipated events which disrupt entire supply chains and/or explosively escalate demand. An optimal response might include limiting the quantity of an item each customer is allowed to buy.
     Researchers at UNSW Sydney and University of Florida developed a statistical model to generate recommendations for a retailer using purchase quantity restrictions during a widespread shortage. The model takes account of store size, shortage severity, sales channel competition, and seasonality. It also attends to how shoppers’ search stimulated by scarcity of a product can increase store traffic, which builds sales of items there not in short supply.
     The recommendations: 
  • For moderate shortages, large multiproduct stores, where shopping basket sizes are large, should maintain low prices and impose purchase quantity limits. 
  • For moderate shortages, small stores carrying a limited line of products should increase prices and not impose limits. 
  • For severe shortages, large stores should keep low prices and not impose limits. 
  • For severe shortages, small stores should increase prices and impose limits.
     The criterion here is what’s most financially profitable for the retailer. That’s valuable because the same disruption which causes widespread shortages can threaten the profit margins of a retailer. If the retailer goes under, the community is deprived of a source of supply.
     Limiting purchase quantities following natural disasters or in anticipation of severe supply chain disruptions also can serve the community by reducing hoarding of scarce items. Retailers shrink from raising prices substantially at times of disaster because they fear public outrage would follow. Can you curb hoarding in ways stakeholders would accept?
     Might it work to state the case to shoppers and urge shoppers to buy no more than what they’ll need for the near future? My experience and expertise indicate that, for many consumers, the effects of such an appeal constitute a case of reverse psychology: A retailer telling shoppers not to buy is unusual enough to lead to pushback. “It’s a free country! Nobody’s telling me I can’t buy as much as I want!”
     Raising prices while announcing you’ll give the extra to disaster relief, for instance, can work, though.

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Turn Out-of-Stocks to Your Advantage 

Monday, February 13, 2023

Shush AI Usage News in Luxury Design

Gucci utilized artificial intelligence in designing a sneaker. BMW uses AI for developing innovative automobile models. Creation of an Acne Studios Fall/Winter fashion collection depended on AI technologies.
     After reporting these examples, University of North Texas and University of Illinois at Urbana-Champaign researchers explored how news of AI’s role in luxury design influences prospective purchasers. The answer, they found, depended on the degree to which the item’s luxuriousness was marketed to provide functional versus emotional benefits. When the functional predominates, such as with the transportation from a BMW, discovering AI has been used increases the value judgments and purchase intentions. When the emotional predominates, such as with fashion, shopper assessments of value and purchase intentions drop after discovery that AI has been employed in the design process.
     The explanation is that the emotional appeal of luxury design arises from association with the essence of the celebrated creativity of a human designer. When that human starts depending on a statistical algorithm to make design decisions, the brand essence is cheapened. However, if the marketer shows how AI usage improved functionality, the luxury item’s appeal is maintained or improved among consumers who value performance competence.
     The researchers suggest that marketers stay aware of risks in advertising that AI has been used in design of an offering. One aspect of this concerns a group of people who buy luxury items only occasionally but, according to marketing studies, are an important source of luxury sales growth. These excursionist luxury consumers are generally younger than currently habitual luxury consumers. Since we might expect them to be more conversant with AI usage, we might also expect them to be more receptive to, or even appreciative of, AI in item design. The researchers found no evidence of this. For all consumers and all luxury items, the researchers recommend increasing the appeal of AI use by highlighting its contribution to design functionality.
     Danger of interference with luxury brand essence is also seen in a study which revealed a glaring exception to a consumer psychology truth. The accepted wisdom is that shoppers are drawn to personalizing purchases. Personalization allows a closer fit to the usage characteristics and better opportunities to express one’s identity. But researchers at University of Wisconsin, Bocconi University, and WU Vienna University of Economics and Business found that with luxury items, people pay for the designated designer’s expertise and associated status. They can be repelled by offers to customize.

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Satisfy Desires for Luxury 

Monday, February 6, 2023

Tour the Force of Tours on Consumers

Stanley A. Feder wanted to set things straight during his New York Times interview. As president of Simply Sausage, he vented his irritation about the quote popular among legislators and often attributed to 19th century Prussian politician Otto von Bismarck: “Laws are like sausages. It is best not to see them being made.”
     Quality sausages are made from a specified recipe for each type, with the unsavory parts of each ingredient cut out before production, asserted Mr. Feder. Lawmaking, in contrast, is victim to the corruption of politics.
     For marketers in Mr. Feder’s situation, it might be best to reverse the Chancellor von Bismarck advice. Show consumers how the product or service is made. Tell them about the process. That is, promote tours of the premises conducted by informative guides.
     This advice follows from studies of tour results at a beer brewery and a university campus by researchers at Nanjing University of Aeronautics and Astronautics, University of Graz, and Imperial College London. People participating in an informative tour became more willing to recommend the organization to others and, in the case of the brewery, more interested in purchasing the products.
     The richness of the tour experience was important. A university tour producing better results included the historical background of the university, the current usage of the university buildings, the various departments, current challenges facing the university, the university’s impact on society, and a description of student life. The inferior tour omitted coverage of the historical background, current challenges, and the university’s impact on society.
     As we might expect, consumers coming to the tour having less familiarity with the brewery showed a larger effect from the tour experience. However, a prior positive attitude toward the brand made less of a difference than the knowledge and the experiential enjoyment gained from the tour.
     Backstories told during the tour add knowledge and enjoyment. Items sell better when accompanied by a tale to give it distinction. Backstories also give conversation starters for generating word-of-mouth. Have handouts available for the tour participants to take away with them. Be alert to stories from the participants during the tour and use snippets from selected tales to build the backstories further.
     Backstories delivered face-to-face to the participants add the appeal of exclusivity. The impression, deserved or not, is that the consumer is privileged to be told the tales. Use this fact to inject a touch of drama.

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Reveal to Combat Customer Alienation