Shelf-space elasticity is 17%

The definition of shelf-space-elasticity is the ratio of additional sales to additional space allocated in retail settings.

Based on a meta-analysis (Elsend, Journal of Retailing, May 2013) of 1,268 estimates of shelf space elasticities, the author found that:

1. The average observed shelf space elasticity is .17, which varies across product categories, with the lowest estimates for commodities, followed by staples, and the highest estimates for impulse buys.
2. Store size moderates the effect of product characteristics on shelf space elasticity: in large stores, the difference between elasticities for brand versus category is greater than in small stores.
3. Shelf space increases results in greater elasticity estimates than shelf space reduction, a finding that emphasizes the application of shelf space variation as a useful marketing tool.

The author does not explicitly state this, but one assumes that the findings apply ‘within reason’. That is; if you increase shelf space allocation by 10%, sales will increase (on average) by 17% - up to a point.

Also please note this does not mean that sales will increase from 10% to 17% - it means that sales will increase by a factor of 17% (and not by 17%).

Are you ready for pain? (Why PR is going to become more important than Marketing)

BUYCOTT (an app) was launched recently that allows users to boycott the retail brand. Once you’ve scanned an item, Buycott will show you its corporate family tree on your phone screen, and if you don’t like the parent company for whatever reason, you can pick a different brand.(I haven’t downloaded the app because the Android app has been withdrawn because of a flaw. (The app is #10 in the App Store overall, and is getting 10+ new users every second. I also presume it is US only at the moment.)

In a twitter conversation, the person who first tweeted the link and I had a conversation, and her point of view was:

And my view is that, yes, I am more afraid of the leaderless, faceless mobs of the twittersphere than of the (predictable) power-elite.

I have written previously about the power of social to do harm. Some examples of community-powered change are:

• The Arab Spring.
• The Syrian Uprising
• Alan Jones
• Kyle Sandilands

These are all examples of how people power made the ‘authority’ bend the knee to the people.

You may agree or disagree with these ‘causes’, but once the mob had mobilised, there was not stopping it.

Recently there was the example of how Bernie Brookes from Meyer ‘caused a social media stink’ with his comments about the NDIS.

Again, this was a classic case of misguided zeal that led the mob to propose Meyer boycotts. In fact, a local retail consultant actively instigated this initiative under a cloak of self-righteous indignation. Obviously it has now become dangerous to express an opinion, or in Mr Brooke’s case a fact, that the mob might take offense too. I have no doubt Mr Brookes supports the NDIS; as do I and every person who has a heart. Supporting the NDIS (or not) was not quite the point, but the full story cannot always be redacted to 140 characters and reason therefore does not always prevail in a tweet.

(I suppose the point was lost on the ‘consultant-activist’ that such a boycott would actually hurt all the innocent shareholders, employees, suppliers and all their employees and so forth.)

And one more about Abercombie & Fitch to show the power of a CEO to make – or break – a brand can never be overestimated – even in an interview that took place 7 years ago.

(Apparently the mob does not condone target marketing any more.)

And there is more.

Read this story about Global noise and weep I (LINK)

IT’S NOT the first time that everyday people all o

ver the world have decided to reclaim the streets, and it surely won’t be the last. In the face of discontent and apathy about politics – in response to the democratic deficit between citizens, politicians and financial markets – citizens will always look for better alternatives to the existing political structure.

Global Noise is about making ourselves heard. In a democracy, the government should be by the people and for the people. The reality is that we are asked to cast a vote once every three years, watch our elected representatives change all their policies and just shut up. The world is facing a great variety of issues that perpetuate conflict, poverty and political apathy.

Read this and weep II (LINK)

This is the story of how ONE reader sent Victoria’s Secret scurrying for cover.

But because one person was particularly offended by this particular item, and found a ready echo chamber at a web site dedicated to issues relating to race, and then the  online ‘news’ sites like Huffington Post and The Daily Mail reported it as a controversy, the product disappeared from Victoria Secret’s site.

That’s not evidence of peer-to-peer collaboration or effecting meaningful change in the world, is it?

Most brands are realizing that there’s someone out in the ethersphere who will be offended by something it does. Online tech gives everyone a soapbox (again, I’m all for it) and makes anyone a potential rabble-rouser. And then it stops…right there…since very few people are actually equipped to propose real things, inspired to lead one another, or willing to take the time and effort effecting real change takes.

Still, so much marketing gets away with selling us impossible ideals of beauty, happiness, and success, even in 2013.

Corporations and governments should be scared shitless of the day when we of the huddled masses figure out that we can use the Internet to change the things they offer us.

These words are going to prove prophetic indeed. And all people (not only early adopters) will eventually realise the power they have.

Whilst we recognise in principle that power is being returned to the people – the wildcard in all of this is technology.

It will amplify the trends and consequently the potential to do good and the potential to do harm.

Conclusion

People power (the new social era) has positive dimension and there are great business models like  KIVA  and  KICKSTARTER and not mention Wikpedia that capitalise on this.

On the negative side, there is a risk of mob-mentality and combine this with self-righteousness and half-truths, you have a cocktail for disaster.

And the mob will come for you at some stage. The little guys may only warrant little mobs, but don’t bank on that. The main thing is whether you are prepared for the inevitable; because the full force of these faceless masses unleashed on a business can be sufficient to spell the end of your business. You better have a social-savvy PR firm on your side to help you navigate.

Good marketing will slowly build your business. Bad PR will destroy it all instantly.

And finally, which is why I reckon: Long Live the Trolls. (Eventually they will help save the self-righteous mob from itself.)

Dennis Price

Future-proof your business with Ganador

Are you a Type Q or Type R Shopper?

When I completed my own doctorate (waaaay back), one of the tangential observations made was the following shopping typology:

Type Q: The functional, utilitarian patron who shops of necessity, as quickly (hence: type Q) as possible because it is a chore. This type of behaviour is characterised by small but frequent purchases which are purely aimed at acquiring merchandise for consumption. Duration of the visit is usually short, and only a limited part of the centre (if it is a large centre) or a small (convenience) centre is patronised. Target stores are usually supermarkets for grocery shopping. 

Type R: The hedonic shopper who does not necessarily buy a lot but has fun and enjoys the shopping task. The visit to the centre is in a relaxed (hence: type R) manner. The aim is to enjoy the shopping experience and the actual purchase and consumption is secondary. That is the patronage behaviour does not necessarily extend to buying behaviour - or is limited to entertainment orientated consumption.

Type Q and Type R never took off, but the industry has subsequently adopted (none of my doing) the typical distinction of the Social and the Functional shopper. The reason why Q & R works for me is because it relates to two very different customer experiences and hence can be translated pragmatically into specific programs.

Your BODY doesn’t only ‘talk’, it actually thinks

Many people still mistakenly believe that the mind operates like a computer. It doesn’t. We increasingly understand that the brain’s job is not to simply process information but to control the actions of your body. The technical term is embodied cognition.

If you study linguistics you will appreciate how this works – and understand the relevance the sales, communication and persuasion.

If you think of abstract good things (morals, God, virtue etc…) you tend to think of those as ‘up’.

If you think of abstract bad things (the devil, depression, criminals) you tend to think of those as ‘down’.

That is you apply a spatial metaphor to abstract concepts. These ‘embodied metaphors’ are the building blocks of perception, cognition and action.

In practice what this means is that the actual physical experience and expression of the body determines thoughts, feelings and perceptions. Let me illustrate:

People who are holding a warm drink (coffee) feel more positively inclined (warmly) towards the other person.

People who are seated in soft chairs are more flexible in their negotiating positions.

Play along to see if you understand the concept:

You are raising fund for a charity. You have to choose where to position yourself and your bucket. Where would you stand?

1. At the bottom of the escalator catching the people who are descending?
2. At the top of the escalator catching the people who are ascending?

Answers in TOMORROW's POST. (Subscribe now :))

Dennis Price

GANADOR: Building businesses that can jump the curve with certainty.

Coca Cola, Content, Creativity and Community - 2020 (Must Watch)

Do you wonder if this will work? Here is the proof. You are watching a piece of their content.

Does share-of-culture equate to revenue increases? Mmmmmh - that is an interesting question to which I don't have a complete answer.

About four years ago I contributed to The Age Of Conversation - so that says something. By the same token, I observe a great deal of wank being purveyed by faux-gurus of modern marketing.

Their approach to research is changing - and I am pleased to say that I have been advocating that most current research methods and programmes are redundant.

Another interesting point is that they are entering a marketing domain that does not demand that you be a big operator just to play. How nimble will they be?

Finally, in their telling of the story they might reveal more than they intend. Behind it all I hear the sub-text of the marketer who wants to control - even if they are reacting only, they still want to steer the conversation.

How would you like to partake in a conversation that is being 'steered' by a dominant party? Mmmmmh....

All up about 18 minutes - well worth watching both videos.

Would love to hear your thoughts?

Retail story telling (video)

A great example e of telling stories in retail.

I can hear the objections:

• I can't do that.
• Only in New York - it won't work here
• There is only room for one.

That would kinda be missing the point. This is not the only way to tell a story and this particular business model is not the only one that will work.

Shopper marketing actually discourages shopping - the ironic prudent spending effect

This is the abstract of the research by Lee et al (2013) in Journal of Retailing

Retailers use an arsenal of shopper-marketing tools to entice shoppers to spend. We show that such shopping prompts can decrease rather than increase spending by leading shoppers to exercise greater self-control to counter the temptation to spend. The results of three field experiments (1–3) that involved real shoppers consistently demonstrate this ironic prudent spending effect.

Supporting the self-control account, we also find that the effect is more pronounced (1) among shoppers who perceive themselves as impulsive and are thus more sensitive to self-control cues posed by shopping prompts; and (2) for hedonic (vs. utilitarian) items that pose greater temptation. Two lab experiments (4–5) further show that shopping prompts increase the subjective importance of the prudent-spending goal while reducing how tempting hedonic (vs. utilitarian) products are perceived to be, providing convergent process evidence for the proposed self-control mechanism.

So you would have learned a new phrase (ironic prudent spending effect). And if you are like most people, you would think ‘wow, that’s interesting’.

Personally, I think you can make (social sciences) research ‘find’ anything you like. I wouldn't be cutting back on shopper marketing expenditure just yet.

Fascinated by Body Language?

The kinds of things we do - in case you were wondering - is making knowledge like this useful for brands in the retail environment..

You call THAT an experience?

As retailers increasingly focus on creating 'an experience' for shoppers, the digital world is racing ahead doing the same.

The bar has just been raised.

Why 'no problem' is a bad problem to have

What is your problem?

Last week I failed. I gave a presentation to a group and it was entertaining and thought-provoking. Some may even say it was good. But by my standards, unless the presentation actually changes people’s lives, I consider it a failure. (I got the opportunity to repeat the message in a different presentation to different people and succeeded. We live and learn.) 

The message I attempted to convey is one of the toughest ones to deliver because it is contrary to what people think they believe.

The core insight is this: Removing pain is a greater motivator than receiving a benefit.

This means that when you are attempting to persuade people to buy your product you must make it clear how your product achieves this. We refer to these persuasion techniques as ‘omega strategies’ – as opposed to ‘alpha’ strategies which emphasize value.

Now you can see why this is a difficult concept to get across.

This is a list of product innovations brought to market by Johnson & Johnson. This company has been trading successfully since 1886.

1887 - Sterile Surgical Dressings and Sutures

1893 - Baby Powder

1898 - Dental Floss

1897 - Sanitary Protection Products

1954 - Non-Irritating Shampoo

1879 - Antiseptic Mouthwash

1891 - First Aid Kits

1920 - Ready-Made Bandages

1955 - Pain Relief Without Aspirin (TYLENOL® )

Disposable Contact Lenses ACUVUE® 

Minimally Invasive Surgery (MAMMOTOME® )

1931 - Family Planning (ORTHO-GYNOL®)

1968 - Saving Babies’ Lives (RhoGAM®)

Life-Changing Treatment for Schizophrenia HALDOL®

Hip and Knee Replacements

Unblocking Arteries without open surgery (stents)

A Breakthrough in Sun Protection

Read the list carefully and consider this: What do these products have in common?

Every product solves a customer problem. Quite possibly a problem a customer did not know they had. 

The shampoo does not promise shiny hair, it promises ‘no tears.’ 

The toothpaste promises ‘no cavities’. (Check out the top US slogans for toothpaste here.) But there are toothpastes that promise a brighter smile, I hear you say. No there isn’t. What they do is promise you the confidence to smile. 

If you buy a BMW, people won’t laugh at you. People buy fashion not because they want to look good. They think they do. They will say they do. But there is a sub-text which is the real reason. They buy fashion to fit in – because ‘standing out’ runs the risk of looking stupid. But they will say they are buying it to fit in – just like a teenager gets tattoos to express their individuality, and end up with the same look as everyone else.

I am exaggerating, but only a little.

Last week I wrote a post that suggested that customer-centricity might kill your business. I explained why you should not rely on your customer to create new products or offer services. This is because people think they are buying something for one reason, but they are buying it for a completely different reason.

Unless we are solving a customer problem we don’t have a business.

In our case, we could say we help retailers and the retail supply chain not to lose their customers to competitors. What is your problem?

Have fun… 

Dennis 

PS #1: Something for you to like here. (The bribe still stands.)

PS #2: New Winners’ Circle will be published soon. Get yours here.

Ganador are trainers with track record of using smart ideas, structured execution and cutting-edge learning technology to enable people to deliver the ideal customer brand experience.

Behavioral Economics: Meet the Grand Daddy

Daniel Kahneman is a Nobel laureate. His work has influenced much of what we do in terms of customer experience design, sales training and persuasion.

DK is areal though leader and it is well worth watching and listening carefully - there are many hidden gems..

Your Reward

Apologies once again for the numerous re-posts. I have been on the receiving end of those before and now I know why: Feedburner going nuts.

Your reward is 20 minutes with Neil Gaiman. I promise it is worth it.