Getting consumers to think and shop

Allstate promotional campaign attempts to get customers to stop and shop

Customer loyalty is a goal for businesses.  Instead of spreading their money around, loyal customers spend more over time with their beloved businesses and products.

Loyal customers tend to stay loyal until given a reason not to be loyal.  Unfortunately, businesses too often deliver those reasons themselves through multiple methods such as disappointing products, bad service and high pricing.

However, what if those loyal customers aren't yours?

Allstate has a current promotional campaign encouraging consumers to take a moment to think about their insurance and shop around.  Obviously, Allstate hopes that such shopping will lead customers to them.

I realize the ad's tag line is "Shop less, save more" -- Allstate wants you to shop until you find them and then you can stop shopping.  

Consumer roles & buying behavior

Appealing to the roles consumers have is a powerful influence.

We all have our own lists of roles we play in our lives --  

Friend. Wife. Husband. Mom. Dad. Teacher. Doctor.

You get the idea...

The roles each of us have impact how we act and decisions we make.  Marketers know this too.

Notice how this TV commercial for Sylvania Silverstar headlights juxtaposes two common roles -- (1) fun-loving male and (2) dad.

Obviously, the dad role wins out in this advertisement. In my own role as a dad, the ad makes me wonder how bright the headlights are in the car my kids drive. Which is just what Sylvania hoped for.

Opening a new range of apps

Square mobile payment app blends software and hardware

The Square Mobile Payment System is early on the curve of a new wave of applications for phones (iPhone and Android) and other mobile technologies like tablet PCs (iPad, etc.).  These emerging apps go beyond current ones as they integrate hardware into the systems.

Plugging Square's hardware into a device's audio jack allows the user to use the app to pay by credit or debit cards, gift cards and prepaid cards.  These payments can go to businesses or individuals who also have Square.

Crystal ball

A couple things will be interesting to watch for:

• When will consumers adopt these types of apps?
• How quickly will businesses adapt to the such new apps?
• When will other types of apps that integrate hardware be offered?

iPad's growing ecosystem

More businesses are integrating iPad into their offerings -- and hoping to attach their products to iPad's high brand positioning.

By any measure, Apple's iPad is a successful product on its own.  However, it is increasingly being used by businesses as part of their product offerings.  As much as the iPad might actually improve these products, the biggest benefit might be linking the iPad to the products... if consumers think so highly of the iPad, maybe some of the "love" will rub off.

NOTE: This goes beyond merely adapting current offerings for the iPad -- although iPad apps for existing products are extremely popular.

Some recent examples:

• The owner's manual for Hyundai's Equus model is an interactive digital owner's manual on the iPad that comes with the luxury car. See the magazine advertisement below.

          

• Delta Air Lines has installed 200 iPads in their gate area at New York's JFK International Airport. Delta customers can use the iPads for entertainment and to order food at airport eateries.
• News Corporation is developing a new digital newspaper centered around the iPad. The Daily is scheduled for an early 2011 launch. 

Apple continues to reap the rewards for their great products.

The shopping experience

Dressing rooms, merchandising, the senses, and more...

This morning, the Today Show showed an interesting segment on retail shopping. The segment shows several retailing strategies and tactics that facilitate a pleasurable experience.

The portion of the segment below features a visit to a mall by the reporter, Janice Lieberman, and Marshal Cohen -- the author of "Why Customers Do What They Do".

Retailers need to analyze if, and if so how, their stores provide customers with experiences that makes shopping pleasurable and interesting.

The last shopping days before Christmas (2009)

'Twas the last days before Christmas, when all through the stores

Not enough customers were coming thru the sliding front doors.

The shopping carts were arranged in a tidy neat row,

Awaiting frenzied shoppers to spend lots of dough.

The registers were staffed by an anticipating crew,
With hopes that paying shoppers were surely soon due.
And the manager with keys and the new hire named Don,
Had just checked the front sign to make sure it was on.

When out in the parking lot there arose such a stew,
Employees rushed to the windows to see the new view.
Away from the panes they returned to their places,
With not a grin but frowns on their faces.

For it was not future buyers making the fuss,
But just a trash truck and a big passing bus.
Now time was short to start making sales,
Discounts and coupons should cure all that ails.

But customers still did not buy in quantities sought,
Retailers scared of low revenues from products not bought.
Wishing but knowing that holiday earnings wouldn't be stout,
But in the back of their minds, Congress might bail them out.

Maybe this is a time to just try to scrape by,
And come back December 26th to give it another try.
For then unwrapped gift cards will be burning a hole,
In wallets of shoppers ready to give it another go.

To get what they want, to make post-Christmas hay,
Let's hope they spend until this New Year's Day.
Retailing is tough, this holiday season two thousand-eight,
Let's just survive and see next year's fate.

So from the advertisements giving it one more last try,
"Happy Christmas to all, and please from us buy."

.....

Not much has changed since last year --

re-posted from this blog (12-18-08)

Can celebrity endorsements work?

Some still wonder if celebrities can really influence behavior.

Take a couple of minutes and watch the following two videos... then you decide.

NOTE: If you want to see something interesting, play both at the same time... starting the second video once Taylor Swift starts singing in the first.

Since celebrity endorsers represent a brand, selection and affiliation should be undertaken with great care. However, celebrities can/do influence consumer behavior.

It's (already) beginning to look a lot like Christmas

Retailers not waiting to start the holiday season... will it be discounts as usual?

Sitting in my home waiting for trick-or-treaters to start arriving in a few hours, it is interesting to consider the upcoming holiday retail season. Retailers of all types -- from big box discounters to small specialty stores, brick-and-mortars to clicks-only -- are struggling to figure out how to handle another slow holiday season. ............................................. ................................................
Typical move

Many have already started offering and promoting products for purchase for the holidays -- either as gifts or decorations -- in the hope to capture the expected limited consumer spending this season.

While this might have a bit of success for some, this strategy has to overcome a major hurdle taught to consumers by retailers themselves.

Retailers have taught consumers that if they wait, retailers will flinch first when holiday sales are slow and then the discounts will come. Consumers are not dumb. They've learned that they will be rewarded with lower prices if they postpone the start of their holiday shopping. ...................................................................... .........................

What retailers are trying

It seems that more retailers are trying to move away from extreme holiday discounting by limiting inventory -- hoping consumers will buy at closer-to-full price if they are concerned that the products they want are in short supply.

Price-conscious shoppers or retailers... who will win?

My money is on consumers. Several major retailers have already started holiday discounting including Sears, Borders, and Kohl's. About a week ago, Walmart announced a holiday season discount pricing format where sales would rotate for different products throughout the holiday shopping season.

(Baltimore Sun photo by Gene Sweeny Jr 10-30-09)

Instilling consumer confidence

Always remember -- consumers pick up cues about businesses from a variety of inputs.

Does this sign instill confidence that you want this repair shop to work on your car?

Impress customers, not yourself

If you have thoughts similar to these, think twice:

• "I've been in this business for 20 years... I know what to do."
  
• "Customers don't know what they want but I do."
• "Customers are dumb."
  

Thinking you know more than customers is a trap more common than one might think.

A case study:

The current Burger King advertising campaign featuring a very hip king (see above) gets attention and some acclaim for creativity. One never knows where the king will show up. From waking up people to promote breakfast at BK (right) to dancing with Sponge Bob Square Pants to promote Kid's Meals (see video below)... the BK King certainly gets around.

Burger King's current problem?

While fast food consumers seek products at lower prices, BK is sticking to the image of the hip king with little in response to customer pricing desires.

While McDonald's has responded to consumer economic concerns with an expanded "Dollar Menu", Burger King has been airing the booty bumping Sponge Bob commercial (and just recently adding a $1 Whopper Jr. TV commercial).

The results? Burger King revenue is down since March 2009 while McDonald's rose 7% in April 2009 alone .

Even in the current economy, Burger King thought their customers should value image over prices. Apparently, BK was wrong.

P.S. Promoting Kid's Meals with a crotch grabbing king and shaking square booties? That's a topic for a future posting.

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.

Question:
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.
   
   

The last shopping days before Christmas

'Twas the last days before Christmas, when all through the stores
Not enough customers were coming thru the sliding front doors.
The shopping carts were arranged in a tidy neat row,
Awaiting frenzied shoppers to spend lots of dough.

The registers were staffed by an anticipating crew,

With hopes that paying shoppers were surely soon due.

And the manager with keys and the new hire named Don,

Had just checked the front sign to make sure it was on.

When out in the parking lot there arose such a stew,

Employees rushed to the windows to see the new view.

Away from the panes they returned to their places,

With not a grin but frowns on their faces.

For it was not future buyers making the fuss,

But just a trash truck and a big passing bus.

Now time was short to start making sales,

Discounts and coupons should cure all that ails.

But customers still did not buy in quanities sought,

Retailers scared of low revenues from products not bought.

Wishing but knowing that holiday earnings wouldn't be stout,

But in the back of their minds, Congress might bail them out.

Maybe this is a time to just try to scrape by,

And come back December 26th to give it another try.

For then unwrapped gift cards will be burning a hole,

In wallets of shoppers ready to give it another go.

To get what they want, to make post-Christmas hay,

Let's hope they spend until this New Year's Day.

Retailing is tough, this holiday season two thousand-eight,

Let's just survive and see next year's fate.

So from the advertisements giving it one more last try,

"Happy Christmas to all, and please from us buy."

Lower prices plus

This holiday season, consumers are being flooded with so many "price deals" that it is difficult for a business to stand out from competitors.

Economic news is making consumers skittish. It seems that little is certain in the financial arena except that the values of their homes and 401k plans are both down. Bail outs of American business institutions seem to come on a daily basis.

Some good news... Gas prices have dropped by more than half from the summer highs of over $4 per gallon last summer.

The bad news? While nice to have more money left in pocketbooks and wallets after a fill-up, it has not been nearly enough to bolster shaken consumer confidence.

A textbook business response
In an attempt to attract such jittery customers, many businesses have lowered the effective prices on various products by offering sales and coupons. However, since so many retailers are doing the same, buyers have numerous options offering lowered prices. In addition, an environment of intense price competition -- where competitors keep lowering prices to match or beat other stores -- can "teach" consumers to wait to make a purchase. In this type of situation, consumers learn that postponing a purchase results in better (from their perspective) prices by giving retailers more time to keep lowering their prices.

Offering more than just lower prices
Some retailers have started to offer consumers "lower prices plus". The "plus" can be wide ranging -- including higher quality products, more service, better product selection, a better return policy, and so forth. In our lower price retail environment, the purpose of the "plus" is to give prospective buyers a reason to buy from that retailer and even possibly give consumers a reason to buy sooner rather than later.

Currently, Best Buy is doing this.

Best Buy is in a highly competitive market space... they compete with a wide variety of businesses such as Walmart, Costco, national department stores, and local electronics stores. Lower competitive prices are widely used. This retail space is so competitive that former Best Buy competitors Circuit City and CompUSA are either downsizing or are no longer in business.

Best Buy's current television advertising campaign "You, Happier." exemplifies the "plus" strategy. The thirty second spots each feature a "Blue Shirt" (Best Buy employee) sharing a brief story that shows how their product knowledge and empathy for people helps their customers. With Best Buy's assistance, you can be happier. Now that's a "plus".

Example A: Connecting grandpas and grandkids

Example B: Needing the perfect gift

Example C: Great gift ideas

Does the early store get the customer's holiday cash?

Christmas was in the air at the Walmart store in Hadley, Massachusetts...

• An instrumental version of "The First Noel" played on store speakers.


• The check out area was adorned with wrapped gift boxes above the cash registers.


• Christmas decorations, clothes and gifts were stocked on shelves and aisles.


• The entry area inside the front door was decorated with a Christmas Tree and wreath decoration (above).

It was looking a lot like Christmas.

It was November 9, 2008.

A "quiet" change
Moving the holiday shopping season earlier and earlier is a relatively newer phenomenon. Not too many years ago, Christmas shopping really started after Thanksgiving. Over the last decade, retailers have started stocking holiday decorations and gifts before Thanksgiving. It was not uncommon to see such sights prior to Halloween.

However, this was done more on the sly... with little promotion and fanfare. It just happened. Things seemingly just appears on store shelves. If shoppers bought holiday items, it would be great. If not, there was still a lot of time until the holidays for them to do so.

It is different this year
This year, there is a reason for retailers to have an earlier holiday shopping season. Economic concerns are impacting consumers' spending. The prevailing thought is that consumers will have smaller gift giving and holiday decorating budgets... and be more likely to stick to them this year. So, when the allotment is gone, consumers are done spending on the holidays. Therefore, retailers fear that, if they do not get the early Christmas spending, coal will be in their holiday sales stockings.

Questions

• What issues are affecting your customer base?


• How are you addressing these issues?


• What will be the impact on your business if such variables are not dealt with effectively?

Tough marketing for tough times

This is not the time for timid marketing

There is a lot of news on how consumers have quickly closed their wallets in response to the barrage of recent negative economic announcements. The 10-20-08 BusinessWeek cover story (right) on how U.S. consumers are tightening their spending is representative of most stories.

What we've been taught
It is accepted business practice to "get lean and mean" when revenues fall. It has not been uncommon for businesses to cut, or at least slow down, expenditures on variables such as new hiring, customer service, advertising, product improvements, sales promotions, sponsorships, and hours of operation.

A recent study of the 400 member Association of National Advertisers found that more than 1/2 anticipated decreased spending by their businesses for marketing and advertising over the next 6 months.

But what we've been taught is not always right
However, business history shows that economic downturns might be an inopportune time to cut marketing efforts. Businesses have found significant success by increasing their marketing campaigns (or at least keeping their marketing stable) while competitors shrink theirs.

In the midst of financial uncertainty, consumers tend to be more open to trying different brands, stores, restaurants, products and price points. While some competitors cut the very resources that allow them to communicate and retain their current customer base, other businesses increase marketing expenditures to reach out to these abandoned consumers. Such firms take advantage of the decreased advertising and promotional clutter that makes communication with customers more difficult and expensive.

Examples of successful marketing campaigns started during economic downturns since the 1950s include Crest toothpaste, BMW, Calvin Klein jeans, and IBM personal computers.

No one says it will be easy
Building a brand during an economic downturn is not for the faint of heart. Devoting dwindling financial resources to marketing efforts is not an easy decision to arrive at. But the payoff can be significant. Not only might the hard times be lessened by increased sales in the short-term, the firm can enjoy greater brand awareness, customer loyalty, as well as, increased sales long after the economy strengthens and consumers loosen their spending.

One final note: such marketing efforts must be wise and judicious. The changes in consumer behavior that result from financial hard times must be understood and reflected in how firms relate to customers. Marketing "the way you've always done it" will not be enough. Consumers have new concerns and desires that businesses must recognize and appeal to.

Let your customers be involved

Businesses should do more than talk about incorporating customers into marketing efforts

Although businesses might not be able to go to the same level, the newly released movie Fireproof offers a lesson in customer involvement. The movie, which came in 4th place and earned $6.5 million for its debut weekend, asked for and got a level of participation from its constituencies during product development (shooting the movie) unimaginable to most businesspeople. For example, volunteers built the sets and it is reported that most of the people that made the movie also volunteered.

Why do it?
Allowing customer involvement is one way to increase customer loyalty. Such participation improves customer "buy in". They have a voice. They have a stake in the effort. They want you to succeed.

Easy to dismiss
Businesspeople should not dismiss this lesson too quickly due to an "our customers will not participate with us!" attitude. Granted, Fireproof is an example of extreme customer participation. However, too many businesses do not try hard enough to allow their customers to become involved with them.

Customer participation comes in many forms. A few examples of customer involvement across various industries include:

• Airlines providing programs to let participants in their frequent flier programs donate airline miles to charities such as the American Red Cross.


• T-shirt makers allowing customers to vote on which images (which were designed by volunteers) on shirts to sell.


• Businesses aggressively soliciting and acting upon customer feedback regarding their products and services.


• Providing online communities that allow customers to interact with each other and the firm.


• A soda maker featuring pictures taken by customers on the labels on pop bottles.

The questions to ask include...
.....1. How could we be helped by customer involvement?
.....2. How can customer involvement be facilitated?
.....3. How soon can we get it going?

Quick response -- effective marketing

Moving in a timely manner can be the difference between success and failure.

Economic news was very bad this past week.

• The stock market dropped several hundred points one day mid-week.
• Top management of the U.S. "Big Three" automakers were on Capital Hill to stump for Federal funds to assist their firms (GM, Ford and Chrysler).
• Experts and newscasters tell how losses from sub-prime home loans and foreclosures in the residential house markets threaten the U.S. and world economies.
• The Federal Government is working on a taxpayer funded $700 billion (at a minimum) bailout of various financial entities in an attempt to shore up the U.S. economy.
  

Obviously, this news is causing much uncertainty and angst among consumers.

Such times call for timely marketing responses
The newspaper advertisement (above right) is an example of a thoughtful marketing response that addresses issues on customers' minds. However, a significant portion of this advertisement's effectiveness is due to when it was in the newspaper -- in the weekend editions of the week described at the beginning of this entry.

Business is about today and tomorrow

Sole focus on the "here and now" can hurt in the future.

Premise #1
Businesses need products and services that are attractive to consumers in the "now". If a firm cannot sell enough in the "near-term", the "long-term" may not arrive for that organization.

Premise #2
Businesses cannot be so focused on their current product offerings that changing trends and consumer preferences are not recognized and acted upon.

Premise #3
Successfully balancing both premise #1 and #2 is difficult.

The example of the parking lot
While sitting outside a Starbucks in Burbank, CA (see 8-29-08 entry), the issue of balancing the near-term with long-term business perspective was parked right in front of me. Literally parked.

There were 24 vehicles in the parking lot on this Saturday morning at 7AM.
- the largest 11 vehicles were all from US automakers
..(12 SUVs/vans/pickups and 1 very large car)
- the remaining 13 smaller vehicles (all cars of various sizes)
..were from non-USA automakers

With gasoline around $4 per gallon, Toyota and Honda reported vehicle sales at very high levels during the summer of 2008. During the same period, American automakers' sales were poor. What caused US automakers to be in the position of not offering more fuel efficient vehicles when US consumers were craving them?

The lure of the high profit margins from larger vehicles (per unit profitability of pickups and SUVs have been - until recently - very high) was too tempting and became the prize of American automakers. Such a limited focus blinded executives from American automakers from possible opportunities and threats -- including the prospect of high fuel prices and the increasing green attitude of American auto buyers.

The impact of higher prices of fuel is not unprecedented. One only has to recall the high priced gas (with accompanying long lines at service stations) of the 1970s. Since such uncontrollable variables impacted the auto industry before, why were they missed by American automakers just 30 years later? The answer: too much focus on the "here and now" to the detriment of watching for (and reacting to) events and issues that would shape future consumer behavior, wants and needs.

Deal with issues impacting consumers proactively

It's not a new idea...
businesses just need to do it.

Gas prices have skyrocketed and have impacted consumer spending far beyond merely buying fuel for their personal vehicles. This is due to increased prices across many product types as a result from higher fuel prices for production and transportation being passed along to consumers.
....
Consumers are feeling the pinch.

If consumers are changing some buying habits this summer -- from what vacations taken to trading in trucks and SUVs for smaller cars, etc. -- what are businesses to do?

Sitting on the sideline should not be an option.
Businesses need to be proactive in addressing such consumer concerns. While offering free or cheaper gas with a purchase is not a new promotion (see example advertisement), it is very relevant to American consumers during Summer 2008. Hotels, restaurants, museums, etc. are promoting how their organizations can be part of "staycations" for those limiting or dropping vacation plans and staying closer to home (see example advertisement).

McDonald's: Please do coffee right this time!

In an early 2007 Consumer Reports coffee taste test, coffee drinkers preferred McDonald's Premium Roast over blends of Starbucks, Dunkin Donuts and Burger King.

Currently, the local McDonald's are in the midst of reconfiguring their front counters to accommodate the fast food firm's move into expanded coffee shop offerings.

No options
Even though they have had a nice tasting product for over a year, McDonald's chose to maintain their fast food heritage regarding their coffee. Even though promoting their coffee as a premium beverage in a redesigned cup, McDonald's failed to offer customers any choices of creamers. Instead of a selection of milks -- cream, whole, 2%, non-fat, soy, etc. -- and flavorings, McDonald's has limited coffee drinkers to a single type of coffee cream in "mini moos" (the miniature creamer "buckets" topped with foil -- see the picture above).

To be fair, McDonald's coffee drinkers could have a wider selection of creamers (2% or non-fat)... if they bought a small carton of milk with their cup of Premium Roast!

Jump, don't just stick your toes in
McDonald's seems to have the coffee that satisfies the palate. Here's hoping they realize it is more than just the coffee. Since McDonald's is entering the coffee market with more gusto, it would be beneficial to remember that up-market coffee is not viewed as a commodity and that even variables seemingly as small as coffee condiments impact consumer perception.