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What if it all STARTS with the purchase?

Wednesday, August 11th, 2010

By Joel Rubinson

Traditional marketing theory tells us that the purchase is the successful outcome of consumer-directed messages that create awareness which begets interest, desire, and action.

What happens when that is wrong?  What does marketing do when it STARTS with the purchase?

This is an extreme version of what Procter calls “store back”.  However, based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it.  In those cases, it all STARTS with the purchase and ENDS with awareness.  The purchase funnel is totally flipped.

When it all starts with the purchase, the role of marketing communications changes.  Now marketing must get the product noticed at shelf and impart meaning to it instantaneously for the shopper.  Packaging, shelf placement, thematic displays, signage, mobile messages that are location-aware, shopper offers based on that shopper’s history, and master brand familiarity become the main vectors for creating meaning.  In this communications model, when someone encounters a product they were unfamiliar with they should be able make sense of it instantly; to tell YOU (the marketer) what the product is about, rather than you having to tell them in a concept statement.  After the product is bought and being used, there is more sense-making that occurs.  If the consumer is really into the product as they are using it, now you have an opportunity to build engagement:  they might join a community, become a fan in Facebook, share comments, start seeking out advertising and recalling it, seek out the brand’s “creation story”, etc.  In this scenario, the impact of brand narrative, brand values, social media engagement, etc. come AFTER the purchase, so they solidify rather than precondition the brand-customer relationship.

Could it really be that it all starts with the purchase?  Well, for certain types of products and retailing situations, I believe it does.  Consider this:

  • - Conduct a study to measure the percent of products bought for the first time that are discovered in-store (I got 50%+)
  • – Do you think the products bought for the first time on impulse in a Kroger’s, Trader Joes, Costco, Target, etc. are all the same and were previously known? If not, then you believe that brand adoption can START via the shopping experience.
  • - Consider shopping styles that people have, reflecting their relationship with a product category.  Can you imagine categories (e.g. artisan cheeses) where shoppers like to explore and find new interesting products to buy?

This last point is perhaps the most important.  People have different shopping styles for different product categories which means that the heuristics they use to make decisions are systematic.  You might not ever buy carbonated soft drinks the way you buy interesting dips that you just tried at a tasting station.  This is where behavioral economics intersects marketing; the study of how people decide is often more interesting than theoretical purchase intentions.  Hence, some products will predominantly be bought via a process that starts in-store.  Others will be bought based more on the traditional marketing model requiring awareness built via mass media. You need to study HOW people decide in order to understand when to start from the traditional end of the funnel and when you start from the other end of the funnel.

When it all STARTS with the purchase, everything that you thought was upstream becomes downstream and the thing that was the most downstream of all, the purchase, becomes the most upstream event.

This is “store back” on steroids.

Now, the researcher in me has to ask the rhetorical question, “Does the marketing community have the research tools to act on this new way of thinking?”  Rhetorical because, I don’t think we do.

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Joel Rubinson is a distinguished expert in consumer and market research and the President of Rubinson Consulting. He can be reached at joelrubinson@gmail.com

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Posted in Behavioral Marketing, Branding, Marketing, Store Experience, Trends

Generosity

Tuesday, July 13th, 2010

By Doug Stephens

Generosity: noun~ Willingness to give or share; unselfishness

All successful relationships are underpinned by generosity.

The willingness to give or share without expectation of repayment is central to healthy, human interaction.  It doesn’t matter what you give.  It can be your time, your praise or simply your attention but without generosity, relationships tend to vanish in a cloud of selfishness and resentment.

This is equally, if not more true with business relationships.  Long-term success in retail comes down to fundamental beliefs with respect to the whole concept of generosity.  Specifically, you either believe that generosity is almost always rewarded or almost always abused.

You can easily spot businesses that believe the latter.  They’re the ones that have you deposit a quarter to use their shopping cart.  The ones that refuse refunds without a receipt. Those who link any charity work they do to a sales goal or promotion.  They cut the holiday employee turkey to save a few dollars. And you probably can’t use their restrooms either.  All because their belief system suggests that generosity is something that is abused and taken advantage of.  As the English poet Alexander Pope wrote “…all looks yellow to the jaundiced eye.”

Rare businesses, however, take the contrary view.  These businesses believe that the simple act of giving – whether to customers, employees or the communities they operate in is simply the right thing to do –it’s just good karma.  They provide their employees with great places to work, their patrons with great places to shop and their communities with businesses that give back.  They regard customers as people – not mere transactions.  Employees are part of the team – not simply headcount.   They give based on the belief that people are basically good and that their generosity will indeed be repaid – if not today then tomorrow and if not tomorrow then someday.

The unfortunate thing is that generosity is no guarantee of success.  Indeed, some of the most successful businesses in the world are also the greediest.    The consolation, however,  is that only those businesses who give generously will leave a positive impression on the world.  And perhaps that’s the truest definition of success.

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Posted in Branding, Marketing

The World Doesn’t Need What You’re Selling

Saturday, January 30th, 2010

By Doug Stephens

In the end, the world doesn’t need what you’re selling.  It doesn’t matter if you sell shoes, cameras, cars, goldfish or even iPads.  The world can probably get by without it.  And if by some chance they do need your product, they’ll get it somehow, with or without you.  It’s a hard pill to swallow but it’s absolutely true.  The world doesn’t need what you sell.   Sales

This realization and the fact that what you sell guides only a fraction of your potential business success shouldn’t be cause for despair but rather a major step to enlightenment.  Once you accept the idea, you can begin to redirect the energy being focussed on the inconsequential nuances of product, toward the things that will truly differentiate your business and allow you to stand out.

To that end, here are four simple questions you can ask yourself to test the strength of your value proposition, well beyond the products that you sell.

  1. Is the world somehow better off because your business exists? 
  2. Do you provide customers with memorable and remarkable experiences?
  3. Do you develop bright, talented people who cherish the experience of working for you?
  4. Does associating with your business benefit the reputation of your suppliers?

The truth is, if you answered yes to all four questions you’re selling something much more meaningful, powerful and important than any product could ever be.  And rest assured, the world needs lots of it.

Posted in Branding

Never Bring a Knife to a Gunfight

Thursday, January 21st, 2010

It’s been called the first rule of modern warfare – “never bring a knife to a gun fight”.  Although I’m not certain who coined the phrase, I can almost assure you it wasn’t the guy who brought the knife.

And as obvious as this idiom is, every day I see independent retailers walking into fights they can’t win.  It happens every time they focus marketing efforts on business attributes which they can’t possibly dominate in. Shootout

I use the word dominate and not compete because frankly, competing is a nebulous term and doesn’t really carry any assurance of success.  Domination signifies that you maintain an own-able position in the mind of the public, distinct from competitors and truly remarkable.    For example, all professional athletes compete but the ones that really stand out actually dominate in their sports.

That said,  independent retailers sometimes have difficulty identifying how they can dominate in their chosen market.  They struggle with isolating the aspects of their business where they can consistently reign supreme.  As a result, they attempt to be good at everything, which usually renders them exceptional at nothing.  In other words, by trying to be good at everything, they actually weaken their competitive position.

Stop trying to be the good at everything

The 2001 book by Fred Crawford and Ryan Matthews titled The Myth of Excellence, is an account of an extensive study examining the competitive attributes of a wide range of highly successful businesses.  Although almost a decade old now, I think the findings are even more relevant today than they were then.

The key discovery from the research was that none of the best businesses were the best at everything.  However, all of them clearly dominated in something.  Almost without exception, there was a single competitive attribute on which the best businesses stood head and shoulders above the competition. 

With this information in hand, any business can begin to map out a coherent competitive strategy.

Start with your dominant attribute

There are 5 basic competitive attributes across which a business can compete.  First pick the one that your business can realistically dominate in relative to other players in your market.  And although it might seem obvious, make sure that the dimension you choose is both relevant and tangible to consumers.

To Dominate In You need to be remarkable for things like…
Product 
  • The widest selection
  • In-stock position
  • The highest quality goods
  • The most unique items
  • The most desired brand(s)
  • Most hard-to-find items
  • One of a kind and customized items
Price 
  • The lowest every day price on the most items
Service 
  • The highest level of expertise
  • The best after-sale support
  • The friendliest and most helpful staff
  • The most liberal return/exchange/refund policies
  • The best in-home services
  • Best warranties/guarantees
Convenience 
  • The most stores
  • The best locations
  • Call ahead services
  • The longest store hours
  • The most efficient systems
  • The best delivery program
  • The best online shop
  • The best payment options
Store Experience 
  • The most fun/enjoyable
  • The best learning experience
  • The most interactive
  • The most relaxing
  • The most welcoming environment

Now you need to select another attribute where you can be good, relative to competition.  You don’t have to dominate but you should noticably excel in this attribute.

Lastly, you need to be at least average with respect to the remaining attributes.  Not necessarily excellent but acceptable.

Here are some examples

Starbucks is highly regarded as being dominant in store experience while having a good product.

Dollar General dominates on price and offers good convenience through numerous locations.

Apple dominates on product, while offering a good store experience.

So, it doesn’t matter how you dominate – only that you do.

Now tell them

Once you’ve established your ideal mix of attributes, build all marketing messages around it.    Don’t waste energy talking to customers about what you’re average at.    Focus the message almost exclusively on what you dominate in and why that’s worth caring about.

Using this approach will create clarity on all fronts.  Customers will be clear on why they should shop you.  Staff will be clear on what they should be delivering to customers.  And you, the owner will be clear on what you’re taking into your next gun fight.

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The Road to Remarkble is an interactive workshop aimed at assisting retailers in deveoloping own-able competitive positioning.  If you would like to schedule a session of the Road to Remarkable for your group, contact us.

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Posted in Branding, Marketing

Luxury Retailers Hit the Panic Button

Friday, December 11th, 2009

By Doug Stephens

As the recession drags on, it’s become clear that few in the retail sector are being spared its wrath. In separate stories this week, New York icon Saks Fifth Avenue and super-luxe retailer Neiman Marcus conceded to just how bad the situation has become. 

With both chains bleeding double-digit sales and profit declines, strategic shifts are taking place that go to the very heart of their respective value propositions. These changes, unless carefully managed, could have lasting negative implications for both brands.

For example, the once venerable Saks is now using gift cards and lower priced merchandise to coax aspirational customers back to their stores. They also reported a 52 percent increase in their use of coupons, a sales tool that until recently was a foreign concept at Saks.

Neiman Marcus has likewise called for fundamental changes to its assortments in order to provide lower priced, entry point products for hesitant shoppers. The chains’ luxury vendors have been tasked with supplying lower cost versions of designer collections. As further incentive to buy, customers are being given extra points on their loyalty cards and gift cards for future purchases. To make matters worse, neither chain sees a quick recovery in sight and are in fact bracing for a long road back to pre-crisis sales levels.

The decision to move down-market will likely come as good news to that percentage of consumers who might not otherwise visit a Saks or Neiman Marcus. What’s less certain is the reaction of core customers – the elite shopper– without which, neither chain could have become what it is today.

While even discount pricing at Neiman Marcus or Saks is still well outside the means of the average American, it can’t help but to impact the air of exclusivity that surrounds their names. And if scarcity and exclusivity do in fact breed luxury, then one has to wonder if these chains are taking a dangerous step toward obscurity. As always, time will tell

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Posted in Branding, Marketing, Trends

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