Monthly Archives: December 2017

Hi, I’m your Emotional Customer. Can you please help me?

There’s an emotional customer in all of us. In fact, emotional experience connotes the whole range of our feelings, including anxiety, fear, apathy, euphoria, depression, sadness, anger, and grief 1. I’m sure we’ve all experienced some of these feelings as a result of our emotional state.

Our emotional state is important because it affects our decisions before and while we’re shopping 2. And all retailers need to know it…

Now, picture yourself as an emotional customer. So, one morning you wake up, and, getting out from the wrong side of the bed, and you feel miserable. But wait, maybe it’s the perfect day to go shopping, I’m sure I’ll feel better…

You’ve made an emotional decision because – hey you’re only human…

The shopping behavior of an emotional customer

Of all the behaviors we possess, the decision to go shopping is one of our most purposeful 3. Apart from buying the products that we need, we also shop to experience entertainment, recreation, social interaction, or intellectual stimulation.

Although purposeful shopping suggests that we should do thinking and planning before purchasing, that’s not always the case. Most of us still relies on our “gut feeling” when we decide to go shopping.

So, in spite of us being so clever and having all the info, technology and tools, we mostly cope with our lives by making emotional decisions. “Decisions cannot be made solely based on logic as they may have pros and cons on both sides and simply may be too complex”, suggests Kane Simms in Guided Selling.

Now retailers need to depend on their customer’s “gut feeling” to make their shopping experience a memorable one…

Selling to an emotional customer

Every customer that walks into your store is in a specific state of mind. Indeed, Robert Taibbi in Psychology Today lists the six most common states of mind as follows:

  1. Rational. This is the gold standard, the middle of the road, the prefrontal lobes fully engaged; where you use emotions as information.
  2.  Anxious. We all know this one. It’s about the future, the what-ifs, disasters and butterflies in the stomach.
  3. Depressed. If anxiety is about the future, depression is often about the past – mistakes, regrets, roads not taken.
  4. Angry. We plot revenge, we say over and over how unfair this is, in place of anxiety’s butterflies this is a raging volcano.
  5.  Fear. Anxiety is worry; everyday fear (not battle-zone fear, surgery fear) is often tied to easily-activated little-kid fears. It’s here where you feel intimidated by someone even though in your rational mind you realize there’s no sane reason to.
  6. Rebellious. Like fear, there’s usually a little-kid element to this as well. There’s resentment and a bit of passive-aggressiveness or simple digging in of heels.

How do retailers cater for the states of mind of an emotional customer?

To create a store atmosphere conducive to buying, a retailer should establish in the consumer a frame of mind that promotes a buying spirit.

A fix retail setting may be perceived differently by every individual customer entering the store. It has mostly to do with the store’s psychological environment. In essence, a store’s psychological environment is the mental image of the store produced in the customer’s mind 4.  Also, our emotional reactions can be guided by sensory information.

Here’s how a retailer can use sensory appeals to affect a favorable store image and a pleasant shopping environment for an emotional customer 4

  • Sight Appeal. The sense of sight provides people with more information than any other sensory mode. For example: Lighting is used to highlight merchandise, sculpt space and capture a mood or feeling that enhances the store’s image.
  • Sound Appeal. Sound can either enhance or hinder a store’s buying atmosphere. For example: music in supermarkets affects the average time spent in the store.
  • Touch Appeal. For most products, personal inspection (handling, squeezing, and cuddling) is a prerequisite to buying. Before buying a product, the average consumer must at least hold it, even if it cannot be removed from its package. The chances of a sale increase substantially when the consumer handles the product.
  • Taste Appeal. For some food retailers, offering the consumer taste appeal might be a necessary condition for buying. This is often the case with specialty foods such as meats, cheeses, and bakery and dairy products.
  • Smell appeal. Smell has the greatest impact on our emotions and retailers add fragrances to enthuse a certain mood in shoppers. For example, some retailers are using a chocolate scent at the entrance of their stores in an attempt to entice customers to enter the stores.

However, for retailers to use sensory appeals to influence the mindsets of their customers there need to be customers in their stores. Physical retail stores are losing most of their customers to the online channel.

How does the online retail channel appeals to an emotional customer?

Just as with the retailer owning a physical shop, the online retailer wants to create a pleasant emotional online experience for her customers. Indeed, everything about your website – from the colors to the copy – should work to arouse the emotions of customers, according to Virginie Kevers in Emolytics.

The online channel doesn’t (not yet) offer a way for retailers to use sensory experiences like touching, smelling and tasting to influence the buying behaviors of their customers. However, the use of visual and audio sensory experiences can, with the help of a variety of online marketing tools, help convince customers to buy products online.

That’s not all. The internet is an ideal platform for customers that are highly involved in the purchasing process. These customers are interested in gaining more information about the product and processing product information in greater detail, presumably because they are more concerned about making the right decision 3. Therefore, an emotional customer’s need for intellectual stimulation can be taken care of by online retailers.

The online social media platforms are great for the emotional customer to announce her state of mind: : She’s rational; anxious; depressed; angry; afraid or  fed-up. Wow, here the savvy retailer may get to know his products and customers better with little effort…

Concluding

There’s no doubt that your customer’s state of mind has a huge affect on where and what she buys. Because we are all customers, I think we can easily relate to that. It’s a pity that the contribution that physical stores made in catering for the emotional needs of their customers is diminishing. That’s because of the massive closures of physical retail shops.

However, the online retail channel offers additional and more focused opportunities to satisfy the emotional needs of retail customers. And, together with that, can retailers now communicate personally with their emotional customer, online of course.

What is next? Only time will tell if retail customers will bond emotionally with robots and other AI devices. Then again…

Read also: The Joy of Shopping

Video: 8 Emotional Triggers That Get Customers To Buy


Notes

1 Goetz, C.G. ed. 2007. Textbook of clinical neurology (Vol. 355), Elsevier Health Sciences.

2 Sherman, E., Mathur, A. and Smith, R.B. 1997. Store environment and consumer purchase behavior: mediating role of consumer emotions, Psychology and Marketing, 14(4):361-378.

3 Puccinelli, N.M., Goodstein, R.C., Grewal, D., Price, R., Raghubir, P. and Stewart, D. 2009. Customer experience management in retailing: understanding the buying process, Journal of Retailing, 85(1):15-30.

4 University of South Africa 2009. Course in Retail Marketing and Merchandising, Practical Merchandising, Only study guide for CRMM02-X, Centre of Business Management, Pretoria.

Image

Wikimedia.org

An Icon Department Store Closes its Doors in South Africa

Another department store has lost its battle to stay open. “The end of Stuttafords: After 159 years, ‘Harrods of South Africa’ shuts shop” screams a headline in The Sunday Times.  Wow, so after almost 160 years of guts and glory, Stuttafords has decided to throw in the towel.

What a shame, some of us would think. However, think again. Most people probably didn’t even notice that they are gone… and that’s maybe the reason why they are gone…

Department stores around the world are closing down in heaps. Let’s consider why? The marketing mix (or 4Ps), which is a foundation model in marketing, may help us to explain what went wrong with department stores.

The Marketing Mix (4Ps) as a tactical marketing tool for a department store

In marketing practice, the 4Ps have endured because they provide the four fundamentals of marketing planning and management 1. The 4Ps represent the following 2:

  1. Product – this is the bundle of benefits that the seller offers and the customer receives. The particular set of benefits on offer will appeal to a specific group of customers;
  2. Price – this is the total cost to the customer of adopting the product;
  3. Place – is the location where the exchange takes place;
  4. Promotion – is the marketing communication package used to make the offer known to potential customers, and persuade them to investigate it further.

When I did my reading on this subject, it was quickly evident that department stores start using the 4Ps as strategic marketing tool long before McCarthy 2 introduced his 4P model to the world in 1960. In fact, since the opening of the first department stores in the nineteenth century, retailers had to decide what products to sell to their customers and where to make them available. A department store owner needed to sell her products at the right price and then motivate customers to visit their stores again or to buy more products.

So, after all these years of cumulated business experiences, what went wrong with department stores?

The Products of a department store

Products are at the heart of a department store. As a result, department stores usually are arranged into specific departments carrying lingerie, perfumes, men’s clothing, and so on. Thus, the stores have long aisles with shelves full of products that are arranged by categories. The shelve racks carry only a handful of products with recognizable brands e.g. Levi jeans, and masses of home brand products. But is this what their customers want? Not really.

Because of the lack of customer focus, department stores have lost share to specialty apparel retailers that offer narrower but more focused, easier-to-shop, lifestyle-relevant assortments 3. The growth of specialty stores targeting midlife, up-market women has been particularly problematic for department stores because they precisely target the department store’s traditional core customer…

Apart from losing customers, department stores have a 40% overlap. Same old, same old says Phil Wahba in Fortune: “A shopper can visit four department store “anchors” under one roof and it won’t take long for an expert eye to notice that they were selling much of the same merchandise.” Department stores failed lately to recognize what products their customers want.

Pricing with department stores

As far as the pricing of their products goes, most department stores found it hard to let go of their conventional habits. They accumulate masses of products every year only to sell them later at heavy discounted prices.

Maya Mikhailov, co-founder and CMO of GPShopper described in QUARTZ this discounting dilemma of department stores: “Focusing on meeting quarterly budget expectations has caused retailers to overload on sale-based strategies. This means that American shoppers are addicted to regular discounts, and retailers are paying a heavy price in the form of breaches of trust and brand dilution.”

But this’s not only the commodity-like products that department stores are discounting. The luxury brands are now also in the discount cycles of department stores.

“How desperate are department stores to get shoppers in the door and spending money?” asked Laura Northrup in Consumerist. According to Laura, department stores tried discounting prestige makeup for the first time. She wrote “Like drugs of abuse, discounts are addictive and can require ever-escalating dosages to get the same effect that you got when you first started using them. This has prompted established brands, like as Michael Kors to stop supplying department stores with their products.”

Rather than discounting themselves to obsolescence, department stores should think and do smaller. “Successfully selling a smaller line of products rather than letting a larger line linger into discount obscurity is the new way of doing business” suggested Maya Mikhailov (QUARTZ).

The Place where department stores do their business

The biggest problem with the place where department stores do their business at is that their customers are shopping elsewhere. Also, shopping malls, the bastion of department stores, are getting out of favor with retail customers.

“Shopping malls, once ruled by stores like Macy’s, J.C. Penney, and Sears, are seeing fewer visitors as consumers see them as overpriced and inconvenient. With many U.S. malls on a downward slide, some analysts predict nearly 33 percent will be closed within the next few years” wrote John Houck, contributor at Inquisitr. But closings shopping malls are not their only concern…

The online retail channel has ‘opened new doors’ for the competitors of department stores. Just like Amazon, who has been quietly putting pressure on retailers that specialize in apparel and fashion as it pushes into the market once dominated by brick-and-mortar stores (John Houck, Inquisitr). Some industry experts believe the online giant will own almost 20 percent of the U.S. clothing market in four years.

Now let’s consider the Promotion element of the marketing mix for department stores

Promotion at a department store

Not so long ago, a department store exploited its location, its quality of service and its quality range of products to convey its marketing message. However, the market environment of the department store has changed disruptively over the past decade or so. The bad news is that this changes will continue. Sadly, the department store failed to react to it.

During the past ten years the exponential growth of online shopping was facilitated by advances in ITC and digital technology. Just think of the impact that broadband WiFi and affordable smartphones had on the retail industry…

And it hurts department stores. They’re wondering where their customers have disappeared to, and they seem reluctant to go and find them. If you look at the numbers, you’ll know where their customers are – they’re shopping online. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce (Jonathan Camhi, Business Insider).

Changes in the demographics of the department stores’ customers have affected them badly. The middle class, who in the good old days made up the bulk of a department store’s customers is contracting writes Helaine Olen in Slate. In fact, some of those former middle class folks are now upper-middle-class folks. And those whose income went the other way, are favoring more inexpensive options.

So department stores remained with the middle class – which is not visiting their stores. Well, the rest is history, as the saying goes…

Concluding

Bricks and mortar retailers, many that are now battling to stay open, can take note of what is happening with department stores. Using the 4Ps retailers may consider the following tactics:

  1. Product – less is more, make them unique and part of a positive customer experience;
  2. Price – know what your customer value and don’t sacrifice your brand – give your customer a reason to pay a premium price;
  3. Place – know your customer’s preferences. Follow them where they hang out. Online presence is a must;
  4. Promotion – know your customer better so that you can personalize your marketing message.

Remember that the principles of marketing stay the same, in spite of all the disruption that is taking place in the retail market.

Read also: The State of Retail 2017 – The Unstoppable Force of Change

Notes

1 Donovan, R. and Henley, N. 2010. Principles and practice of social marketing: an international perspective, Cambridge University Press.

2 Blythe, J. 2009. The Marketing Mix, In: Key Concepts in Marketing, SAGE Publications, Inc.

3 Whitfield, M.B. 2004. Department Stores: Smarter Strategies, Chain Store Age, 80(8):26A

Images

  1. Business Live
  2. StaticFlickr.com