The Homa Files

Excerpted from BusinessWeek, “How to Win Frugal Consumers and Influence Them to Buy”, by Susan Berfield, January 29, 2009

* * * * *

For a while, Paco Underhill of the consulting firm, Envirosell, has been telling merchants that there are no new customers, which is his way of saying that stores must get better at persuading existing customers to purchase more. He has also noticed that people more often make decisions about what to buy when they’re out shopping, not before. This gives stores an opportunity: If they can compellingly present information about merchandise they might exert greater influence on consumers.

* * * * *

In better times, when people selected an item from the shelf, they usually purchased it. Now the average amount of time shoppers spend in the aisles is increasing, by around 20% as they read labels more carefully. That sounds like it might be a good thing for retailers. But Underhill says people are more frequently discarding items in other parts of the store, particularly near the cash register. “They are trading out or experiencing buyer’s remorse,” he says.

Then there is the matter of choice: Underhill says some shoppers can’t deal with it, and if the item isn’t a necessity, they’ll just walk away. “Merchants have to take some control over the consumer’s eye,” he says. “Put up a sign that says ‘Our Best Seller’ or ‘Our Best Student Computer.'”

* * * * *

Underhill and I go shopping at Whole Foods, a retailer known for trying to entice shoppers with “good stories” about its products. A large sign over the red kale and rainbow chard is titled “Why Buy Organic.” The explanation is probably too long for most people to read, he says, but that’s O.K. It’s meant to make shoppers feel they’re buying something valuable, maybe doing something virtuous.

A small sign stuck into a pile of Russian Banana fingerling potatoes reads “How cute are these?” Underhill loves it. “These are more expensive than Idaho potatoes, so they’re trying to find creative ways of getting you to trade up or try something new.”

* * * * *

When Underhill talks to his clients about signs, he is concerned with what he calls the dropout rate, or the percentage of people who don’t read through an important piece of information.

Underhill’s work for a spice maker is an excellent case in point. The company had designed a pricey display for supermarkets, and the prototype categorized the bottles as spices, extracts, essences, or flavorings, and had no noticeable effect on sales. The distinctions the company was making were meaningless to shoppers. “Who cares what it is? What it does to food, how it tastes and smells, are all that counts.”

Edit by DAF

* * * * *

Full article:
http://www.businessweek.com/magazine/content/09_06/b4118045670299.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

* * * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

* * * * *

This entry was posted on February 26, 2009 at 7:00 am and is filed under Mktg - Merchandising In-store, Mktg - Promotion, Retailing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.