Sunday, January 11, 2009

Every store can't be Walmart

Every business cannot offer the lowest prices... so what else can be done to increase the chances that customers will buy?

Two January 2009 shopping trips, two very different scenes.

Trip #1 to a local mall on a Saturday afternoon. Few shoppers. Even fewer buyers -- it was startling how few people were carrying shopping bags with purchases.

Trip #2 to a local Walmart on a Saturday afternoon. Hard to find an empty parking spot (picture just below). The store was packed with shoppers. 35 of 38 cash registers were open and all had lines.

Fact: In the current economic climate, shoppers are attracted to low prices.

Fact: Not all stores can compete price-wise with the Walmarts of the world.

Beyond low prices, what are businesses doing to increase customer purchases?

Note: While not new tactics, the following are examples of methods some firms are employing in attempt to keep customers buying.

  1. Bundle current products together for a "deal". Recently, Jack In The Box announced the new "Jumbo Deal" (picture below) that combined a sandwich, tacos and fries for $2.99. Even if the price covers only costs, the fast food restaurant can profit from the likely sale of a highly profitable soft drink.

  2. Reduce purchase risk by offering attractive warranties and guarantees. Already tightening their purse strings and wallets, even willing consumers are looking for methods to minimize risks of unwise spending on products. Businesses can increase consumer confidence in purchases by offering strong (as perceived by the buyers) product warranties and guarantees (money back if not satisfied, you will not find at a lower price, etc.).

  3. Allow consumers to try the product before purchasing. More businesses are finding ways to allow customers to "test drive" their products. Starbucks is offering free trials of two new Tazo tea drinks (with a coupon from a USA Today advertising insert -- picture below). This allows customers to be more sure that they like the product before purchase thereby increasing their buying confidence to overcome risks of spending money that is in short supply.


Barb Jacobucci said...

This is on the minds of every small business owner in America today. In this economy more and more buyers are sacrificing the shopping experience to get the lowest shopping price. Tough to overcome.

Danika Heatherly said...

In my recent travel to New York City and Washington D.C. your point about how companies are looking to give "trials" as a way to comfort the potential consumer's pre-purchase decision was especially evident. The crowds of both cities were offered everything from free Q'doba tortilla soup to body lotion, cell phone service, and Sharpies. I carefully observed the mind of the consumer in the situation I was presented with--in this case, 4 fellow travelers. I'll let it suffice to say we ended up at Q'doba for lunch that one actually ordered the tortilla soup. While smaller and more "experience-oriented" companies are struggling in the current state of economy, your mention of counteractive possibilities remains useful--at least for the time being...