// December 5th, 2012 // No Comments
Gift-giving is not for the faint-hearted. We all know how we feel when our loved ones tear the wrapping off a present we’ve carefully selected, only to see them disappointed with what lies beneath. Or perhaps the postie delivers a package from a distant uncle, which when opened reveals a golf-themed ashtray (though we’ve never smoked and we don’t play golf).
TNS research in December 2011 found that 38 per cent of Kiwi women and 21 per cent of Kiwi men have passed on unwanted gifts. And Trade Me reports a surge in listings each year in the 24 hours after Christmas lunch, with more than 10,000 new listings added to the site (many of them bearing the stigma “unwanted gift”).
And that may simply be the tip of the iceberg. A recent US survey (Bookoo’s 2012 Holiday Regifting Survey, November 2012) found that more than 62 percent of survey participants plan to regift an item to a friend, neighbour or colleague for the holidays.
The gift-giving challenge, of course, represents opportunity for savvy marketers. Here are some of the ways to address the issue:
- By providing a wishlist facility. Amazon.com provides perhaps the most visible of such offerings. US research [reported here: http://bps-research-digest.blogspot.co.nz/2011/08/psychology-of-gift-giving-just-give.html by a pair of researchers (Francesca Gino and Francis Flynn) at Harvard and Stanford suggests that most people would prefer that you simply buy them something that they’ve told you they want:
“Gift-recipients prefer to receive items they’ve asked for, and they think givers who fulfil this ideal are more thoughtful. Yet when we’re the one who is doing the giving, we suffer a temporary blind-spot and fail to realise that people tend to prefer receiving what they told us they want.”
- By offering crowd-sourced social proof. Again, the most well-established example is Amazon.com with its many “people who liked this also liked” variants. However Facebook is also actively developing in this area through its Social Graph extensions, in particular the newer offerings which indicate what people “Want” or are currently listening to, reading or otherwise consuming.
- By providing gift suggestions categorised by recipient (as well as traditional product-specific ideas). Marks & Spencer shares gift ideas based around both gender/age and personality types:
|Gifts by Recipient
||Gifts by Relationship
||Gifts by Personality
- By offering extended Return & Exchange facilities. Gift recipients typically won’t want to admit to the giver that they don’t want that exquisite knitted collectable, so will appreciate a return card that is included with the item.
- By offering gift cards and vouchers. See our next story for more on this topic.
What sorts of items are destined to be regifted or resold?
Virtually anything. In past years, Trade Me has reported resale listings for goods as diverse as iPods, clothing, jewellery, fishing equipment, mobile-phone accessories, cosmetics, CDs, DVDs, gift vouchers, cosmetics, kitchen appliances, ties, boxer shorts and chocolates. Meanwhile eBay reveals that in a typical post-Christmas season “more than a million gifts have been offered for sale and as an opportunity to be re-gifted.”
If you want to be truly depressed about the gift-giving season, read Scroogenomics by Joel Waldfogel (2009). Professor Waldfogel argues that Christmas gift giving is a “deadweight material loss” from an economic perspective, with recipients valuing the gifts they receive at just 25% of the purchase price. The good professor describes the result as “wasteful giving” and suggests that “the economic apocalypse is just around the corner.” Bah humbug, indeed.
Thankfully, not everyone shares Professor Waldfogel’s gloomy perspective. Wharton marketing professor Barbara Mellers, in a paper co-authored with Philip Tetlock and Ilana Ritov entitled “Surprise and the Value of Gifts: Why Christmas Is Not a Deadweight Loss”, takes a different perspective, citing as an example the classic O. Henry short story “The Gift of the Maji”.
As described in her paper, the story tells the tale of “a poor couple who give up their most treasured possessions to buy each other Christmas gifts. Della sells her long beautiful hair to buy Jim a chain for his watch, and Jim sells his gold watch to buy tortoise combs for Della’s hair.” The gifts are consequently useless – or, as Scroogenomics would have it, complete deadweight economic losses with no material value to the recipients. But the sentimental gains are priceless.
Psychology, rather than economics, explains why the Christmas gift-giving tradition has lasted so long.
// December 5th, 2012 // No Comments
Christmas – the most wonderful time of the year, according to the perennial tune – is a season during which retailers in particular hope to be jolly. But consumer shopping behaviour has seen some significant changes in recent years, and many of those may impact the retail bottom line this holiday season.
What changes? Here are a few, many of which were documented by Booz & Company in their 2012 Holiday Retail Outlook http://www.booz.com/media/uploads/BoozCo_Holiday-Retail-Outlook-2012.pdf
- Consumers now start looking for Christmas gifts earlier than ever, but don’t buy until they’re completely convinced they’ve gotten the best possible deal. This is typical consumer behaviour in tough economic times: they spend much more time than usual looking for information but are slower to spend because they can’t afford to make a mistake.
- For the same reason, they’ll comparison-shop more than ever, to be certain they’re getting the best deal. As a result, showrooming has become a major challenge for bricks-and-mortar retailers. 40 percent of US consumers now describe showrooming as their primary shopping strategy – they will visit a retail store to inspect (and, in the case of items such as shoes or clothing, even try on) a product but then buy it elsewhere – more and more frequently, online.
- Consumers need more proof and more reassurance that they’re making the right purchase, so they are seeking out objective testimonials, reviews and social endorsements from their friends.
- We’ve successfully trained shoppers to hold out for the deals: according to one US study, 66% of customers will wait until their chosen products will be on sale before purchasing them.
- There are signs that consumers are tiring of talk of Global Financial Crises, Layoffs and Spending Cuts – fifty-three percent intend to buy at least one luxury item this Christmas.
Although most consumers have at least started their Christmas shopping by the time December rolls around, there are still plenty who haven’t – and many more who have a whole lot of shopping still to complete. A survey by Kantar Media found that, as of November 18:
- 32% of US consumers still hadn’t bought any presents
- 18% had purchased between 1-10% of planned present purchases
- 9% were in the 11-25% range
- 18% had purchased 26-50% of their requirements
- 7% were between 51% and 75% completion
- 15% could pat themselves on the back, having already achieved 75% or more of their Christmas gift needs
Still plenty of time to panic before Christmas.
// December 5th, 2012 // No Comments
More than half of New Zealanders are now accessing the Internet via a mobile phone, according to Statistics New Zealand (October 2012). And that development has direct implications for Christmas shopping.
For example, an internet connection in consumer pockets just made showrooming easier. According to the Google/Ipsos OTA MediaCT study “Our Mobile Planet: New Zealand”, 21% of Kiwis intentionally take their smartphones with them to compare prices and inform themselves about products; and 18% have changed their mind about purchasing a product instore as a result of information sourced via smartphone.
And they won’t stop there. The recent Google/Ipsos OTX US Holiday Shopping Intentions Study 2012 found that 80% of mobile/tablet owners plan to use their devices to aid in Christmas shopping:
- 45% plan to use their smartphones to compare prices
- 44% will use theirs to find nearby stores based on location
- 39% plan to look for coupons
- 34% will read reviews on their smartphones
According to the Official Google Australia Blog http://google-au.blogspot.com/2011/11/2011-christmas-retail-search-trends.html, Australia hit the 50% smartphone threshhold at the end of 2011, and saw these results:
The number of shopping queries coming from mobile devices increased 220% year on year. In fact, one quarter of all Christmas shopping-related Google searches this year now come from mobile devices.
Mobile shopping is breaking out all around the globe. During the 2011 Christmas shopping season, 15% of people in Britain logging on to a retailer’s website did so from a mobile device, be it a smartphone or a tablet computer, according to data gathered from the websites of 150 leading retailers by IT group IBM. Of all UK online sales, 11% were made from a mobile internet connection in October 2011, according to IBM – up from 3.1% in the same month in 2010.
Is your website ready for mobile?
Google offers a free service, at www.howtogomo.com, that enables you to see your site as smartphones see it. The key issues that GoMo tests for are:
- Do you have a mobile version of your site that’s designed for today’s modern cellphones? Early mobile versioning software was very text-based, but today’s searchers (the post-iPhone generation) expect visual pizzazz, even on the ultrasmall screen.
- How does your site actually look on a mobile phone? Does it support or denigrate your brand?
- How quickly does the site load? Mobile web users don’t wait around for slow-loading pages.
- Are there any broken or hidden images? iPhones and iPads don’t display Flash files, so if your website relies on Flash you have a problem.
- Is the site easy to read on a small device? Users hate having to zoom just to read the basic content.
- Are links easy to click on with thumbs? We live in a touchscreen world, but human thumbs haven’t shrunk.
Ross McDonald, Head of Retail, Google Australia & New Zealand, offers some words of advice on coping with the new mobile environment:
The good news is that it’s fine to keep it simple–there’s no need to rush to build complicated mobile e-commerce websites or expensive mobile apps. 49% of those we surveyed had used their smartphone to research and then call local businesses, while 45% visit a local business they’ve found using their smartphone. That means that most businesses can start by making sure their location, contact information, and opening hours are accessible on mobiles.
It’s not too late. Google sees shopping searches increase right up until Christmas Eve Day, and mobile queries actually peak the week before Christmas.
// October 23rd, 2012 // No Comments
- Caller ID that comes with Feedback ratings (in the finest Trade Me or TripAdvisor tradition), so that we can see how others rate our caller before we pick up the phone
- A whiteboard that actually stays white despite the cumulative efforts of far too many marker pens
- Official disclaimers accompanying any news report, so that we can identify the political leanings of the reporter compiling that report
- New Kiwi tech start-ups that aren’t focussed solely on the online auctions market
- Bread packaging that turns black when the bread is too close to its ‘use by’ date
- Reality TV programmes that show real people achieving something more meaningful than instant humiliation
- Mood-sensitive notepaper that changes colour depending on how we feel when we write a note (from pretty pink happy thoughts to deepest purple for serious ranting).
- A new Facebook icon to supplement the ‘like’ thumbs-up, perhaps a raised eyebrow, to indicate ‘maybe’.
// October 23rd, 2012 // No Comments
You’ve no doubt heard one of the countless variations of the old tale about the three bricklayers: the first, asked what he was doing, replied “laying bricks”; the second admitted to “building a wall”. The third, however, similarly questioned, answered with a gleam in his eyes, “I’m helping to build our newest and finest cathedral”.
Carmine Gallo, writing in Forbes [http://www.forbes.com/sites/carminegallo/2011/01/18/steve-jobs-and-the-power-of-vision], tells a similar tale (except not about bricklayers):
In 1977, Rob Campbell was a young programmer who was excited about the emerging class of personal computers. He began searching for a position at one of the companies at the forefront of the revolution.
Campbell first visited Tandy Computers. “What is your vision for the personal computer?” he asked. “We think it could be the next big thing on everyone’s wish list for the holiday season!” Tandy executives exclaimed. Uninspired, Campbell visited Commodore, a company that introduced a personal computer in 1977. Commodore’s stock was trading at less than one dollar a share. “What is your vision for the personal computer?” Campbell asked. “We think it could help our stock rise above two dollars a share.” Commodore executives said excitedly. Uninspired, Campbell decided to take Steve Jobs up on an invitation to meet for lunch.
“What is your vision for the personal computer?” Campbell asked Jobs. Campbell said what happened next still gives him goose bumps. “Steve Jobs was a magical storyteller,” Campbell told me. “For the next hour, he talked about how personal computers were going to change the world. He painted a picture of how it would change everything about the way we worked, educated our children and entertained ourselves. You couldn’t help but buy in.”
So how do you actually develop a compelling vision that will seize the imagination – and still resonate thirty years later? Here are some ideas from the ever-inspirational Tom Peters, who (in “Thriving on Chaos”, Knopf, 1987) recommended these foundational components of any organisational vision:
1. Look to your prior experiences. What have you learned [from the past]? Here’s your chance — fix what’s been wrong in every place you’ve been before.
2. Fiddle around, but make haste. Make lists. Doodle. Talk with others, from all walks of life, and seek their advice. Reflect on all such numerous inputs — but move fast.
3. Try some participation. Meet with disparate groups — front-line staff and supervisors, suppliers, customers, wholesalers, community leaders [and, we're sure Tom would add today, from social networks]. Seek their list of top-ten irritants, their ten best experiences with the company or with others in the category.
4. Clarify over time. Perhaps a two-day session with those who report directly to you. Swap stories, dreams, precise internal and market assessments.
5. Remember, listening is basic. Paradoxically, visions are seldom original. Bennis and Nanus observe: “The leader may have been the one who chose the image from those available at the moment, articulated it, gave it form and legitimacy, and focussed attention on it, but the leader only rarely was the one who conceived of the vision in the first place. Therefore the leader must be a superb listener.”
Live the Vision First
If you begin with a formal declaration, you are probably doomed. You don’t know what it really means, let alone anyone else. You are likely to be continually trapped by a thousand tiny inconsistencies in your wobble towards clarity. If the process is to work, it needs to be a done deal, bought into, already being lived [before the cards are printed and the slogans announced].
If you notice a common thread running through Tom’s recommendations, you’re right: effective visions are drawn from all around you, not self-obsessed. It really is not about you.
As you revisit that vision, consider also that it needs to be:
- Inspiring (of course)
- Clear and challenging
- Demanding Excellence
- Relevant in the marketplace
- Flexible in a turbulent world
- Stable but constantly challenged — and changing at the margin
- Acting as a beacon to attract to your cause
- Empowering both to your own people and to your customers
- Facing the future but honouring the past
Without a vision, the people perish. With a vision – the future beckons.
// October 23rd, 2012 // No Comments
Inspirational leaders and compelling visions are all very well when you’re dealing with high-concept products such as computers and mobile phones, but what happens when your product lines are, well, less than sexy? How do you “sell the dream” when you’re promoting industrial fasteners or food staples such as salt or flour?
Nielsen USA conducted a study in 2007, labelled “Omega Rules and Delta Moments”, that examined consumer behaviour in the supermarket, with particular attention on low-involvement products.
Why do consumers buy the same brand of coffee and mayonnaise over and over again, but will often purchase different brands of cold cereal and chocolates? It’s hardly happenstance, according to The Nielsen Company. Nielsen’s study of shopper behaviour shows that consumers exhibit distinct shopping modes at the supermarket that dictate what ends up in their grocery bags.
“Shoppers don’t waste energy on everyday decisions,” said Manjima Khandelwal, senior vice president, Nielsen Customized Research. “To simplify their lives, shoppers are often in grab-and-go mode, reaching for the brands they usually buy without reading the label or checking the price.”
The key to reaching shoppers lies in understanding that auto-pilot mode can get disrupted by external stimuli such as advertising, buzz, new offers, price and promotions. When this happens, shoppers re-evaluate their decisions; they look at alternatives and consider new offers. Nielsen calls these disruptions Delta Moments and it is at these times that marketers have a brief window of opportunity.
Auto-pilot and Delta Moment dynamics vary significantly across Categories. A seemingly great strategy in one Category can fail to connect in other Categories. Marketers could be way off the mark by failing to read the ‘body language and mindset’ of shoppers.
Nielsen’s study, which reviewed consumer shopping behaviour across 30 food categories, found that consumers adopt one of four different “shopping modes” as they cruise the supermarket aisles. Key characteristics of the shopping modes – auto-pilot, variety-seeking, buzz or bargain hunting – are:
In auto-pilot, or grab-and-go mode, shoppers are making everyday, habitual decisions driven by brand choices and they are usually not in the market to try anything new. Items such as coffee, cereal, cheese, margarine and mayonnaise are purchased in auto-pilot mode. For example, Nielsen’s research found that shoppers were quite particular about their coffee, choosing the same caffeine fix, flavour and coffee experience.
“The implication for marketers in auto-pilot categories is that if you are a leader, avoid radical changes to your brand message or packaging,” said Deepak Varma, senior vice president, Nielsen Customized Research. “Otherwise you may risk disrupting habitual behaviour driving brand choice in your favour.”
In the variety-seeking mode, shoppers are browsing shelves actively and on the lookout for new tastes as well as interesting product innovations or products offering “surprise” in their role as household chef.
“Consumers seem to get bored with the same choices in certain categories,” said Varma. “We found shoppers on the lookout for a change of pace when shopping in the frozen food and cold cereal aisles, as well as for biscuits, salad dressings and chewing gum. In this context, customers’ decisions to purchase products were greatly influenced by informative and exciting packaging.”
Energy and sports drinks, chocolate, ready-to-drink teas and yogurt drinks fall in the buzz-activated category. “Shoppers are most likely to be influenced by catchy advertising, new product introductions and the original packaging that leaps off the shelves and grabs interest and attention,” said Khandelwal.
Bargain-hunted categories are driven purely by price comparison and promotions. “Consumers in this shopping mode are on a mission and the mission is savings,” said Varma. Canned Tuna, Canned Tomatoes, Canned Fruit and Pasta Sauce all languish in this category, according to the study.
Nielsen’s research revealed that even though some product categories are not bargain-driven, manufacturers continually offer in-store deals and promotions, resulting in some categories to be over-promoted.
“Consumers choosing sports drinks aren’t looking for a bargain,” said Khandelwal. “In-store deals for these products go largely unnoticed. Marketers would be better off redirecting their wasted promo dollars to investing in advertising and new product introductions.”
Omega Rules OK
“I always buy brand X …unless guests are coming!”
“I buy the cheapest brand on special, as long as it’s not X!”
“Brand 2 works for my family, but if Y is on special, I buy that!”
Underlying repetitive purchase patterns are a set of cognitive decision rules – the ‘programme’ behind ‘auto-pilot’ purchasing. Nielsen call these Omega Rules – the mental check-lists that keep consumers on-track and help them decide between alternatives.
Often these rules are quite mundane (e.g., pack shape) or social (e.g., acceptable to friends) and don’t represent deep emotional commitment to the brand. Brand leaders need to understand Omega Rules as they provide guidance on key marketing tactics that will reinforce the habits that give them leadership.
Recent advances in cognitive psychology have revealed that although consumers have 10,000 brands in their heads, they waste little time thinking about them. Instead, they evolve simple rules to navigate through the world of brands. These rules tend to be simple, few in number and rather hierarchical. They can be rational or emotion based, and once they have been developed the consumer is on ‘auto-pilot’ when placed in a buying situation. Auto-pilot mode remains in force until interrupted by an external stimulus, a Delta Moment.
Delta Moments are different for different segments and at different stages; they’re ‘moments of change’ when habits are most likely to be reviewed, and they vary in their impact depending on the disruptive nature of the causative event.
At Delta Moments, consumers re-evaluate their habitual decisions and either:
- Re-validate their rules
- Change their rules
The challenge for marketers trying to get noticed:
- Understand how habits are formed in their particular category
- Identify the key criteria underlying ‘auto-pilot’ habits
Develop a range of Delta Moment triggers and motivators that will lead to change
// October 23rd, 2012 // No Comments
Admiral Jim Stockdale, whose story is featured in the business bestseller “Good to Great” by Jim Collins (2001), was the highest-ranking military officer in the “Hanoi Hilton” prisoner-of-war camp during the height of the Vietnam War. Tortured over twenty times during his eight-year imprisonment, Stockdale lived out the war without any prisoner’s rights, no set release date and no certainty as to whether he would even survive to see his family again. Nevertheless, more than twenty years later, when Jim Collins asked the Admiral how he coped with his situation during his captivity, the answer was straightforward:
“I never lost faith. I never doubted that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”
The Admiral’s faith, however, was not blind.
“This is a very important lesson. You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
Author Collins uses that analogy, which he and his team dub “The Stockdale Paradox”, to make some key points as he shares the tale of two companies and their very different reactions to the entry of a rather large elephant into the room within which both were operating:
When Procter & Gamble invaded the paper-based consumer business in the late 1960s, Scott Paper (then the category leader) simply resigned itself to second place without a fight and began looking for ways to diversify.
Kimberly-Clark, on the other hand, viewed competing against Procter & Gamble not as a liability but as an asset. CEO Darwin Smith and his team felt exhilarated by the idea of going up against the best, seeing it as an opportunity to make Kimberly-Clark better and stronger. They also viewed it as a way to stimulate the competitive juices of Kimberly people at all levels. At one internal gathering, Darwin Smith stood up and started his talk by saying “Okay, I want everyone to rise in a moment of silence.” Everyone looked around, wondering what Darwin was up to. Did someone die? And so, after a moment of confusion, they all stood up and stared at their shoes in reverent silence. After an appropriate pause, Smith looked out at the group and said in a sombre tone, “That was a moment of silence for P&G.” The place went bananas.
Notwithstanding the faith shown by the Kimberly-Clark team, however, they did not lose sight of the realities of the P&G challenge:
“Could we have a better adversary than P&G? Not a chance. I say that because we respect them so much. They are bigger than we are. They are very talented. They are great at marketing. They beat the hell out of every one of their competitors, except [us]” –Wayne Sanders, Kimberly-Clark CEO (successor to Darwin Smith after the latter’s untimely demise)
As Jim Collins goes on to note (about the companies studied in “Good to Great”):
… they all embraced The Stockdale Paradox. It didn’t matter how bleak the situation or how stultifying their mediocrity, they all maintained unwavering faith that they would not just survive, but prevail as a great company. And yet at the same time, they became relentlessly disciplined at confronting the most brutal facts of their current reality.
Committed to a glorious future, yet extremely conscious of, and pragmatically dealing with, the deadly challenges around them – most heroic sagas (real or imagined) embody The Stockdale Paradox.
// October 23rd, 2012 // No Comments
The principles behind consumer behaviour in low-involvement categories have been explored at some length in academia. In her 1994 book Consumer Involvement: Concepts and Research, Pirjo Laaksonen observes:
The weak capability of attitudes to affect behaviour when involvement is low has been stressed by Ralph L. Day when he stated that:
… When involvement is low and confidence is lacking, the attitude itself will be a poor predictor of subsequent behaviour. Not only will the attitude measure likely be unreliable (which means it is prone to spurious change and yea-saying response biases …) but the environment will have more influence in changing both attitude and behaviour. [Day 1978]
Day thus emphasised the ability of environment factors to affect behaviour under low involvement. Indeed, it can be assumed that when a consumer perceives a product as having minor importance for his life and values, he prefers to throw himself on the mercy of the supply structure instead of devoting energy to developing preference orders for different brands. It may be hypothesised that under high involvement the locus of behavioural control lies more within an individual, whereas in low involvement the locus of behavioural control may be found in the environmental and situational characteristics.
To the degree the assumption that a consumer hands over the locus of behavioural control to outside forces holds true in low involvement conditions, we can expect environmental and situational factors to have quite a powerful influence on consumer behaviour.
In other words, when consumers have little emotional investment in a product category, they’re likely to be responsive to either environmental (“what products are on the shelves?”) or situational (“I need something special for dinner because the family is coming over”) triggers to drive their brand choice. The Delta Moments study suggests a number of ways in which marketers can influence such triggers.
However, those are not the only options. If we revisit academia, we discover additional research highlighting important alternative strategies. As Plavini Punyatoya notes in the paper “How Brand Personality affects Products with different Involvement Levels” (European Journal of Business and Management):
By having a strong brand personality consumers will definitely prefer a low involvement brand. For examples researchers used bottled water (Freling & Forbes, 2005), chocolate chip cookies and soft drinks (Beldona & Wysong, 2007) etc. which are low involvement products to see the positive effect of brand personality on the product preference to purchase.
An example? Domestic air travel, once glamorous, is now effectively a low-involvement category, with airline choice driven largely by price and flight timings.
And yet, as Fast Company reports [http://www.fastcompany.com/1793413/injecting-some-serious-swagger-your-brand-personality], in an industry where even the peanuts are identical from carrier to carrier, Kulula Airlines, a South African discount flight provider, stands out.
Here are some actual comments heard over the PA system on Kulula flights:
“Thank you for flying Kulula. We hope you enjoyed giving us the business as much as we enjoyed taking you for a ride.”
And from the pilot during his welcome message: “Kulula Airlines is pleased to announce that we have some of the best flight attendants in the industry. Unfortunately, none of them are on this flight!”
After an extremely hard landing, the Flight Attendant said, “Ladies and Gentlemen, welcome to The Mother City. Please remain in your seats with your seat belts fastened while the captain taxis what’s left of our airplane to the gate!”
Part of a flight attendant’s arrival announcement: “We’d like to thank you folks for flying with us today. And, the next time you get the insane urge to go blasting through the skies in a pressurized metal tube, we hope you’ll think of Kulula Airways.”
“Ladies and gentlemen, if you wish to smoke, the smoking section on this airplane is on the wing. If you can light ‘em, you can smoke ‘em.”
Brand personality? In spades. Impact on consumer choice? Definitely.
In other words, as Shakespeare said (or should have), “the brand’s the thing”.