When You Just GOTTA Have It

You know when you hear about a new product and you get the sudden urge to go out and get it? All of a sudden your life feels somewhat inadequate because it is missing this crucial item. Why does this happen? In reality, most of the time our lives function perfectly well without these “must have” items, but we just can’t seem to separate need from want.  This article by Peter Noel Murray in Inside the Consumer Mind explains why we get a craving for the products that we just can’t live without.

http://www.psychologytoday.com/blog/inside-the-consumer-mind/201206/why-i-covet-the-ipad

ImageThe article explains that when it comes to the majority of our purchasing decisions–mostly anything that is not an everyday purchase–are driven mostly by our emotions.  But this doesn’t fully explain the “must have” mentality. For an item to be a “must have,” it has to be backed by a shared emotional response among consumers market-wide. These items must hold a subjective meaning that is generally accepted and supported by society. For example, the iPad is a popular “must have” item that holds subjective meaning related to Apple’s innovative technologies. Which begs the question, is it the product consumers really want? Or does the brand have a lot more to do with it?

Another point this author makes is that the decision to purchase these items is not at all logical or rational. When you really think about it, many of these products have similar ingredients, features, etc. as the competing products in the market. So why choose the must have over the comparable alternative that is most likely less expensive? The answer is the status that these products hold is what really makes them the must haves that they are. Consumers believe, whether it be consciously or subconsciously, that these products will enhance their image. The status is what truly makes an otherwise ordinary product into this season’s “must have.”

NBC’s “Fashion Star”

So, have you seen this new show on NBC, Fashion Star? If you’re not familiar, it is a reality series that features 14 fashion designers who compete to get bought by three major retailers, Macy’s, Saks 5th Avenue, and Express. If a designer gets bought, at the end of the show viewers can go online and actually buy their designs! Not very online-shopping savvy? The retailers put the pieces in stores the day after the episode airs. Here’s a link to the trailer if you haven’t seen it:

I think that this is an excellent concept in terms of consumer behavior. By making the designs people see on TV so accessible, consumers who don’t have the ability to splurge on designer products have an opportunity to own “designer” pieces (Macy’s and Express are quite affordable). I know I have been guilty of purchasing some of these items that, if I’m being honest, I might not have looked twice at them if I hadn’t seen them on TV first. Hey, I could be the only one who thinks this is awesome, either way, it’s definitely worth watching.

Observations from the Vera Bradley Outlet Sale

I had an opportunity yesterday to attend the Vera Bradley outlet sale in Fort Wayne, IN. If you’re not familiar, Vera Bradley is a design company best known for its quilted handbags. The Vera Bradley outlet sale is held every year in April, at a huge arena in Fort Wayne and goes on for several days. The first day of the sale is private and requires those who are invited to register and buy a ticket to get into the sale. The next few days are open to the public, and I am told the place turns into a madhouse, where customers wait in line for hours just to checkout.  Customers are given large pink trash bags when they enter the sale too stuff with all of the products they can fit (I saw several people with multiple bags full, seriously I have never seen so much consumption of merchandise in one place).

My main point of this post is to pose the question, how does this event elicit so much consumption? In reality, the prices offered at the sale aren’t really that much different than what you can get from in-store or online promotions.  My theory is related to my previous post about time pressured sales. By hosting this “big event,” people feel that it is their one opportunity to get great sales. They are given only three hours to shop, so feel pressure to pull the trigger on products they might not normally purchase given more time to evaluate. The huge crowd that this event draws in is also a factor in the extraordinary consumption of the masses. The crowd adds more pressure to grab the really good items before they’re gone.

All in all, I think that this is an extremely successful strategy that other retailers should take advantage of. All of the people working the sale are volunteers, so the whole event is done at a low cost to the company. It also offers customers a great opportunity to buy gifts. With an opportunity for “great savings” (whether they are actually great or not) customers can buy all the gifts they need for the whole year (and many do!), which means VB just got all the sales from the other retailers that these consumers would have gone to not given this opportunity. 

The Effect of Time Pressured Sales on Unsuspecting Consumers

http://www.psychologytoday.com/blog/ulterior-motives/201011/the-psychology-time-pressured-sales

I have recently discovered that psychologytoday.com is a fantastic resource for anything consumer behavior.  The article I came across for today’s post is about time-pressured sales, and what really goes on in the minds of consumers that makes them act the way they do in these situations.  The author, Art Markman, explains that the reason for such frenzied activity during time pressured sales such as “black Friday” or “cyber Monday” is a concept called “need for closure.” Need for closure is described as the degree to which on feels the need to finish a decision process and take action. Put simply, someone who is high in need for closure is more likely to make impulse purchases where someone who is low in need for closure is more likely to take more time to make a purchase decision.  

Markman explains that time pressured sales create a situation that creates a high need for closure, even in those who would not normally be described as high in need for closure. The retailer offers discounts on products and suggests that these discounts will not be around for long. The crowd in the store gives the impression that you have to act quickly. By having a “limited time only” sale, retailers are also able to make the consumer feel like they are getting a good deal, which increases the need for closure even further.

Given all this information, we as consumers can make wiser purchasing decisions when dealing with time pressured sales.  In order to release some time pressure, Markman suggests doing comparison shopping at home before heading out to a sale. This way, you’ll better understand what is actually a good price compared to what the retailers want you to believe is a one-time only deal. 

Customers Ask for a More Seamless Experience

A new study by Accenture found that consumers are looking for a more seamless shopping experience. The cause of this sudden interest? The growth of online shopping as a consumer preference. Because of the increased use of mobile devices as shopping platforms, consumers are  looking for a better integration of  in-store, online and mobile shopping channels. In fact,  88% of consumers reported that they have participated in “webrooming,” which means they browse for products first online, and follow up by buying in-store. This is a huge opportunity for retailers to gain competitive advantage by integrating the consumer experience in this way.

The study suggests that consumers are still happy with the in-store experience. It offers a certain social aspect that mobile and online channels just can’t compete with. However, retailers could really benefit from improving their online and mobile channels. Only 74% of consumers reported that they thought online shopping was easy, and only 26% found shopping on a mobile device easy or user-friendly. Obviously there is still a lot of room for improvement.

A transition into a more seamless experience, however, may not be such an easy feat. According to the article from retailcustomerexperience.com, “Seamlessness is a tall order for most traditional retailers.Traditional retailers must take stock of their operational capabilities. They require a presence at every stage of the customer journey to deliver a consistently personalized, on-brand experience from discovery through research, purchase, fulfillment and beyond to product maintenance or returns.”

Read more on this topic at http://www.retailcustomerexperience.com/article/211457/Study-Consumers-want-a-seamless-shopping-experience?rc_id=408

The Psychology of Visual Merchandising

Maybe it’s the retail management major in me, but I have always been fascinated by visual merchandising. I find it so interesting that every decision a retailer makes, from the lighting in the fitting rooms, to the location of the sale section, to the aroma it exudes, has a strategic purpose.  Visual merchandising is all about focusing on the psychology and motivations of the target customer. I was interested in doing a little research on the topic, and I found this awesome article written byCecilia Biemann which speaks about mastering the art of visual merchandising.

The article starts off by explaining the importance of visual merchandising, apparently some view it as a frivolous expense, but the truth is it can make or break your business. Because there is so much more competition than ever before, retailers must continually work at capturing the consumer’s attention.  The author also mentions that simply rotating merchandise, updating displays, and changing signage can go a long way for those retailers on a budget.

Obviously there are some very basic aspects of VM such as creating visual balance, merchandising similar products together, and cross-mix merchandising, however, I am more interested in the aspects which consider more consumer psychology. One of these aspects is the ability to encourage impulse purchases. Merchandisers know where to place certain products that will catch the eye of the consumer and compliment what they already have in their shopping cart.

Another aspect of VM that I find particular interesting has to do with what the author of this article refers to as “seducing the senses.” Biemann mentions that “Create a sensual experience in your store by paying attention not only to sight, but also to smell and sound.” Think about the last time you went shopping, was there music playing? Did you notice the smell? Chances are there was and you probably didn’t really notice it, but you probably ended up shopping longer because of it.  This is what I love about visual merchandising, retailers really know how to get inside the heads of consumers and entice us to buy, kind of scary, but very interesting!

If you’d like to read more on the topic, visit http://www.showmummythemoney.com.au/mastering-visual-merchandising.htm

Classical Conditioning Used in Advertising

In class we discussed how advertisers often used classical conditioning in marketing campaigns as a way of enticing consumers to buy. Well this is probably one of the best examples of this concept out there.

A short and sweet explanation: Men love sexy women…Burger King associates itself with sexy women…men love Burger King!

Customizing the In-Store Shopping Experience

This video describes a very interesting study done by Cognizant, which surveyed consumer preferences and behaviors. It is so important for a retailer to define and understand it’s target market because every customer segment has different priorities (price, customer service, selection, etc…). This means that there is no one strategy that will work for all retailers. Retailers must create a value proposition that is consistent with their target market’s needs and expectations if they want to continue to survive in a growing market. These days there is so much competition, retailers can’t afford to make too many mistakes.

The study described in the video found that generally, customers still prefer shopping in the traditional brick-and-mortar stores. They enjoy the experience of shopping in store and feel that it is important to see and touch the products in person. This is good news for these types of retailers, however, this does not mean they can sit back and coast. Many consumers, especially males, people with high income, and those ages 18-45, expect retailers to adapt to the multi/omni channel environment, and expect a consistent experience across all channels.

The survey also found that the three biggest complaints from consumers had to do with out of stock merchandise, lack of signage, and difficulty finding items. The fact is, only about half of a store’s customers will ask for help, and the other half will leave without you ever realizing there was a problem. So what is the best way to overcome these issues? Invest in your employees. If associates are better able to respond to customer needs, they should be successful in delivering a more seamless experience.

Retail Therapy

We’ve all been there, we go shopping on a particularly bad day and end up spending way more than we intended. In my case, this happens way too often, and i brush it off by calling it “retail therapy.” Well guess what, experts are now claiming that retail therapy is completely ineffective. This article by Matthew Hutson explains why:

http://www.psychologytoday.com/blog/psyched/200802/retail-therapy-explained

The article suggests that we often engage in this type of therapy as a way to enhance ourselves and increase self focus. Another theory is that the reason we are willing to spend more money when we’re sad is because “we value everything else more highly in comparison to ourselves when we’re down.” Either way, the fact is retail therapy is only a very short term solution, so next time you’re feeling down, avoid the mall at all costs!

The Future of Retail

Reality is, the world of retail is drastically changing. With the baby boomers getting older and the millenials becoming the new young professionals, retailer must adapt to a new target market if they want to survive the next 10 or 20 years. This video features Mike Walsh and gives us a little bit of insight into where the future of retail is headed. With the millenials growing up in the age of technology, this consumer segment knows nothing but change and innovation, they see brands and shopping much differently than any of the older generations. In order to continue to be successful, retailers must keep up with this ideal and continue to innovate, especially in terms of technology.

This means that the way we shop will change radically in the next decade or so. In the video, Walsh mentions that retailers will have to find a way to incorporate entertainment into the customer experience. One retailer who has done this well is Diesel. The clothing retailer has incorporated social media mirrors into some of its stores. These mirrors let customers virtually try on clothing and post the images on social media sites, where they can immediately get feedback from their peers. Another Japanese designer made it possible for guests of their fashion show to take pictures of the products on the runway and buy the merchandise with one click of their mobile devices.

To emphasize the importance of social media for the future of retail, Walsh also mentions that some retailers today wouldn’t exist without these sites. His example was of food trucks in Los Angeles, which was also mentioned in class. These food trucks post on twitter where they will be in the city at what times so customers are able to find them wherever they are. Talk about innovation! All this change sounds a little daunting to me, but I am very excited to see where this takes us in the future.