Pack It In if You Act Like Packard

A Fast Company posting recounted the deadly consequences of a single flawed branding decision by the long-gone Packard Motor Company. As philosopher George Santayana said “Those who cannot remember the past are condemned to repeat it.” So listen up, retailers.
     Prior to the 1929 stock market crash, the Packard motorcar was viewed in the U.S. as a highly luxurious automobile. For the first few years after the crash, Packard stayed true to the brand image, using a strong cash position and the cost benefits of a single production line. By the mid-1930’s, though, Packard chose to introduce low-priced “Junior” lines. The brand image suffered greatly. By the late 1950’s, Packard had packed it in.
     In my hometown of Vacaville, a renowned retail restaurant suffered a parallel branding failure. The Nut Tree restaurant was famed for its high-quality, luxury-priced California cuisine. Queen Elizabeth II and Ronald Reagan were among the many celebrity diners. People would fly into the Nut Tree airport and take the little train as a shuttle to the dining room. As I traversed the world providing shopper psychology training and consulting, I could pretty much count on somebody saying at some point, “Oh, you’re from Vacaville. I had a wonderful meal at the Nut Tree years ago, the kids rode on the railroad, and we bought toys I’d never seen being sold anywhere else before.”
     Then after the death of the family patriarch, highly publicized squabbles among the adult children resulted in wild vacillations between luxury cuisine and bargain meals being served at the Nut Tree. The brand identity was muddled, and with more restaurant chains having moved into Vacaville, the end came in 1996. Now the site carrying on the Nut Tree name is a fine retail development and the Nut Tree restaurant cookbook is sold at the Vacaville Museum.
     You may need to assume multiple personalities in your selling. To project proper brand images, maintain clearly delineated parts of the store. The new merchandise here and the resale merchandise there. The relaxed fashions for senior citizens in an area with a different color scheme, aisle width, and perhaps a different fragrance than where the teen fashions are sold.
     Instill in the minds of consumers characteristics of your business that are associated with the name, logo, tag lines, and even celebrity endorsers of your store. Do your branding competently and the images will be indelible.

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

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Flow Consumers Into Good Financial Habits

You’d like your target consumers to be in good financial as well as physical health. Let them live long and prosper. And spend their years and money shopping with you. Let them go with the flow.
     Or more precisely, the flow state. Psychologists talk of a “flow state” in which a person who makes a consumer decision then becomes more likely to make another similar decision and then another.
     Researchers at Northwestern University analyzed flow states in people facing an uncomfortably common problem in our economic downturn: Getting out of debt. They found that a good predictor of the consumer’s success was the number of credit accounts closed toward the start of the debt elimination program. The dollar balance of the credit accounts closed at the start was not a good predictor of success. It was the momentum of closing accounts which made a difference.
     The same principle works when the consumers are out of debt and fit to spend. This is what happened in a study conducted by researchers at Yale University, Duke University, and Carnegie Mellon University:
     Some study participants were invited to buy a CD that had been previously judged as appealing to people like the participants. The rest of the participants were invited, instead, to buy a light bulb. Yes, the butt of all those “how many does it take” jokes. A lowly light bulb. As you might expect, a higher percentage of the CD group than the light bulb group decided to make the purchase.
     Next, all participants—regardless of what they’d been offered before and whether they made a purchase—were invited to buy a keychain. Shopping momentum evidenced itself. A higher percentage from the CD group than from the light bulb group decided to buy the keychain, and those in the light bulb group who did make the purchase were more likely to buy the key chain that those who turned down the light bulb offer.
     In your selling, start out with such an appealing request that the shopper is very likely to say yes, and then use this yes as a base for presenting a series of larger requests. Consumer psychologists have repeatedly found that getting a yes to a simple request makes the person much more likely to agree to a bigger request if benefits follow that yes to the simple one.
     Don’t exploit purchase momentum, but do use it.

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

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Turn Out-of-Stocks to Your Advantage

What are the effects on your shoppers when you run out of an item shoppers expected to purchase from your store? How might you turn those effects to your advantage?
     Here are a few tips, using research findings from Indiana University-Bloomington, University of British Columbia, and Northwestern University:

• Consumers who have repeatedly purchased a small set of items from you will desire some of those items even more strongly when they discover other items in the set are out-of-stock (OOS). The more general finding is that loyal customers who encounter an OOS become more likely to come to your store promptly when sales on high-demand items are announced. Coach your store staff to sincerely empathize with the shopper and give helpful guidance, such as telling the shopper when the next shipments are due. 
• For consumers who purchase a particular item at regular intervals, encountering an OOS repeatedly will lead the consumer to change item preferences. When an item is OOS in your store, use signage to suggest an alternative which you do currently have in stock. 
• Shoppers’ price sensitivity increases when they encounter out-of-stock items. They dislike the feeling they are being required to buy a substitute for meeting their needs. To lessen the negative feelings, offer alternatives at a range of price points. 

     Researchers at American University in Washington, D.C. and University of Arizona suggest you be ready for a shopper to veer off to a wholly different choice after learning an item the shopper has carefully chosen is OOS.
     Say a shopper comes into your store and looks at expensive ink pens. The shopper narrows the choices to two, both of which have an extra-fine felt tip. The only difference between the two is the ink color, which the shopper decides is not that important.
     Then when the shopper asks for the pen with the blue ink, he’s told it is temporarily OOS. He’s asked if he’d like to place an order, and he’ll be notified when the pen arrives. He declines. The salesperson—knowing the value of selling substitutability—offers the shopper the extra-fine felt tip pen with the black ink.
     But, like a majority of the participants in the American University/Arizona study, the shopper goes off in a different direction, such as purchasing a fancy ballpoint pen with blue ink. Because of the OOS, the blue ink color becomes more important than the felt tip.

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

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Face Your Fate About Service Delays

Consumers who associate with Asian cultures react to service delays differently than do those associating with a typical American culture, according to a set of studies at Chinese University of Hong Kong and Lingnan University.
     The researchers use as an example the delay of an airline flight. Asian consumers are substantially more likely than their Western-culture counterparts to accept the delay without upset. On the other hand, the Asian consumers are much more sensitive to airline personnel showing evidence of disrespect when explaining the reason for the delay. They consider losing face as within the control of the service provider, but accept fate as a reasonable explanation for taking longer.
     In the Hong Kong studies, Western consumers were relatively tolerant of staff rudeness in settings that included a movie theatre, a computer repair service, and even a restaurant. Asian consumers became irritated at minor signs of rudeness, but accepted nonsocial retailer failures relatively graciously. This effect was strongest when the retailer offered brands with names like Lucky Star which imply fate-based initiatives.
     Research findings from Dartmouth College and Columbia University explored this as a matter of karma. Karma—which is strongly associated with India—is a belief system centered around long-term consequences. As we look forward in our lives, the decisions we make now affect what happens to us in the future. Good actions will produce good results at some point. Turning to look behind, we’ll see that what is going on with us now is the result of our past. The thoughts we’ve had, the words we’ve said, the actions we’ve taken, the deeds we’ve instructed others to take on our account or while under our control.
     This is true for everyone, since even the youngest child possesses a past, having lived a succession of existences. Universally, pleasant experiences will happen for us now because of good we’ve done in this or a former life. My unpleasant experiences are the consequences of my bad thoughts, words, and deeds in the past.
     Consumers who believe in karma are more patient in resolving complaints about retailers than are consumers who don’t believe in karma. People who believe in karma also are more persistent than those who don’t. If they attribute bad customer service to their own past bad actions, they don’t lower their expectations for respectful customer service. Recognize the importance of patience and persistence in building their repeat business.

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

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Fit Contributions to Contrarian Consumers

You want the various aspects of your store operations to be consistent. This strengthens your brand image, resulting in consumers remembering you better. However, research findings at North Carolina State University and University of South Carolina indicate that this general rule doesn’t hold true when it comes to cause-related marketing.
     In cause-related marketing, a retailer addresses social responsibilities by making charitable contributions. For instance, you announce to your target markets that you’ll donate a certain amount of money for purchases from your store. The effect on sales can be impressive. As long as you don’t do it too often, your promise of a charitable contribution of $1 for each item purchased at the regular price will produce a higher average percentage gain in sales than offering a discount of $1 off the regular item price.
     But what charity to choose? The answer is that you’ll do best to include charities which don’t fit the personality of the store operations. The reason is that this gives the consumers more of a sense of personal participation in helping the cause. They feel noble, and a sense of nobility increases purchase intentions.
     Prior findings from University of Minnesota, University of South Carolina, and University of Georgia support this idea. Those researchers used one of the most basic personality dimensions in consumer psychology: promotion-focused versus prevention-focused.
     Prevention-focused shoppers put top priority on products and services which help them avoid losing what they have now. Promotion-focused shoppers put top priority on products and services which help them gain more than they have now.
     Shoppers in luxury stores are more likely to be promotion- than prevention-focused, while it’s the other way around for shoppers for necessities. This influences the merchandise they’ll buy in expected ways. But when it comes to the charitable activities, it’s different: Shoppers interested in self-enhancement in their purchases are more comfortable when their purchases sponsor charities supporting traditional causes, such as basics and conservation.
     If luxury stores do include a symphony orchestra or art exhibit among their partners, they might do well to also highlight continuing association with a charity providing food, shelter, and education to disadvantaged populations.
     On the other hand, stores selling commodities should include among their charity partners causes which promote self-enhancement. The effect here is not as strong, though. More important is that the money be for causes in the local communities so results are easily seen.

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

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Mail Large for Ad Response Rates

When using direct mail, the larger the mailing piece, the better the response rate.
     About 1.12% of consumer receiving a postcard respond, while the rates are 1.28% for a letter-sized ad and 1.44% for an oversized mail piece. When the mailing list includes only past customers, the rates are about 2.47% for postcards, 3.40% for letter-sized ads, and 3.95% for oversized mail pieces.
     The consumer psychology explanation for the differences is that a larger size implies higher importance. This is particularly true for consumers who view themselves as less powerful.
     Larger mailing pieces do cost more than smaller ones, both for production and for postage. Balance that fact against the improved response rate. And any marketing campaign using direct mail will cost more for production and postage than a campaign using e-mail. However, because the response rates to e-mail ads are so low—about .03% for a general list and .12% for a past-customers list—the cost per order or sales lead is slightly more for e-mail than for direct mail campaigns.
     Other considerations when deciding on your mix of direct mail and e-mail marketing:

• Multichannel and multi-impression marketing work better than campaigns using a single-channel one-shot. The highest response rate—about 13%—is with telephone marketing to past customers. Furthermore, only 6% of actions following an online display ad occur right after a click. Consumers generally require time and repetition before popping up as prospects. 
• Over the years, there has been an increase in e-mail response rates and a decrease in direct mail response rates. So the marketing mix returning the best return on investment (ROI) this year might not be the best one a few years from now. 
• Although larger size advertising mailing pieces for unfamiliar products get higher response rates, smaller size sample packages of unfamiliar products get more consumer trial. Researchers at Technical University of Lisbon and at Tilburg University in the Netherlands found that people who were hesitant about eating a food product were more likely to overcome their hesitations when presented with small packages than when presented the equivalent amount in a large package. 

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

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