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Sourcing & Services Matter: Why Price Alone Won’t get your Customers to Stay

Price wars are a st andard challenge of marketers, whether working on the retail or manufacturing side. They have become more frequent in the last couple of years following the recession. Consumers are today even more price sensitive and are searching for great value and even greater deals. However as most retailers are now claiming lower prices, it becomes less of a differentiator. I therefore read with interest that Walmart is moving from its emphasis on low prices to one on sourcing.

Walmart gives serviceIn 2007 Walmart replaced its “Always Low Prices, Always” slogan by “Save Money Live Better”, so this new push with the message “ Made in the US” is worth noting. This latest announcement is made in conjunction with its promise of an additional $10 million in grants to non-profits focused on “on-shoring” manufacturing efforts.

 

Target gives serviceTarget announced last October its plans to introduce the “ Target Sustainable Product St andard” which was developed to “establish a common language, definition, and process for qualifying what makes a product more sustainable.” Target will ask vendors to complete an assessment that is designed to determine a sustainability score for their products. Products will be assigned a score of between zero and 100 “based on the sustainability of ingredients, ingredient transparency, and overall environmental impact”.

 

Both these initiatives show a move to a more caring retail environment. A study run by the Boston Consulting Group at the end of last year, found that more than half of companies with sales greater than $1 billion are actively planning or considering to bring production back from China to the U.S. This rise from a mere 37% just six months earlier shows a significant shift in American sensitivity.

 

Jumping across the “pond” to the UK, something similar is happening in terms of shifting attention from price to value, or should I say values?

 

Tesco gives serviceTesco recently introduced their “ Price Promise”, a pledge to match the price of a basket of both own-label and br anded products at Sainsbury’s, Asda and Morrisons, or to offer customers a voucher at the till for the difference. Sainsbury’s has appealed to the Advertising St andards Authority, arguing that this claim was misleading customers. However, their wrath was, in part at least, sparked by the fact that this new Tesco pledge came in response to their own highly successful “ Br and Match” scheme, although the latter only compares br anded products.

 

Sainsbury's gives serviceSainsbury’s has now retaliated with the launch of a new campaign with the title “ Same price, Different values”, a possible dig at the fact that although Tesco won the ASA appeal, Sainsbury’s might appeal as they claim that their own-label products cannot be compared since many are locally produced. To support this position, the National Farmers’ Union has now taken a stance, backing Sainsbury’s. In light of last year’s  horse-meat sc andal, the values of retailers and the sourcing of food has become even more crucial, and Sainsbury’s sees this latest row as an opportunity to emphasise the difference between itself and Tesco.

 

If pricing has become (still is?) the entry stakes for retailers today, what else can they do to differentiate themselves and propose a viable alternative that appeals to today’s shoppers? Here are a few I came up with, based upon some of the more interesting initiatives and current trends in societal sensitivities:

  • Individualism: I live alone, as do a large minority of people in the developed world ( 47% in Sweden according to Euromonitor) How about offering smaller packs and individual servings? I would happily pay more for the convenience and the guilt avoidance. (I throw out vast quantities of food that is past its sell-buy date)
  • Localism: the horsemeat and other food sc andals have made people wary of buying from countries where they are unsure of their controls, hygiene or ethics. Identified sourcing and traceability brings trust and reassurance.
  • Fair trade guarantees fairness  and serviceFairness: This helps eliminate the guilt attached to buying (too) cheap products. We now know that products from the East are in general cheaper than products from the West. However, we still want reassurance that workers are being treated fairly. Fair Trade associations and the end to child-labour are causes most shoppers would be will to pay (a little) more for.
  • Sustainability: Recent weather changes have finally convinced everyone of the need to look after and protect our planet from further degradation. Therefore sustainability has become something to fight for. Whether this is reducing the use of palm oil to protect Indonesian rainforests or finding alternatives to bottled water which both wastes resources and pollutes the l and, people are dem anding more of manufacturers.
  • Packaging: Packs are no longer just for protection and shelf-impact, they provide information on ingredients, sourcing and links to apps that provide more about the company who made it or give access to reviews from other buyers.
  • Lowe's offers virtual room designerServices: Some retailers are offering schools for cooking, home repairs, creative pursuits or decorating (see Loew’s virtual room designer as a great example of this). No longer is it sufficient to sell products, people are getting help with making the best use of them and thus getting more value from their purchase.

 

These are just a few of the ways that retailers are building their relationships with their shoppers. They may come for price, but that is an unsustainable competitive advantage in today’s world. Retailers that maintain the loyalty of their customers will be offering more in terms of support and services to keep them coming back.  

If you would like to update your own retail environment and services, why not contact us for an informal chat? We can provide shopper journey mapping, in-store eye-tracking, at shelf facial imaging and many more forward-thinking tools.

C3Centricity used images from Dreamstime and named company websites.

New Thinking for Old Ways of Business

I’ve just come back from IIeX-EU (Insight Innovation Exchange – Europe) in Amsterdam, and my head is full of exciting new things to experiment. It’s strange what happens to our brains when we have the chance to get away from the office and THINK! We become more creative, less bound by old habits, and ready to try new experiences.

After these few days away, I am fired with enthusiasm to bring real changes to my own business, those of my clients, as well as to yours through this post. I’d like to share a few of the ideas which were stimulated by some of the best presentations I’ve ever seen grouped into one single conference. Read on for four inspirational ideas for you to implement immediately, to bring new thinking into your own business.

Partner for Growth

Lowes logo eOne of the first speakers at the event was Kyle Nel from Lowe’s, an American home improvement chain. He explained that business is about changing customers’ behaviour and to do this we need to constantly update our methods for underst anding them. Lowe’s finds inspiration in partnering with organisations including Coke, UNICEF and NASA; how’s that for thinking outside the box? By connecting with companies in other industries, their thinking is constantly challenged, which enables them to grow exponentially, rather than in the linear fashion that most of us seem to be satisfied with. Kyle shared how Lowe’s accepts that whilst there may often be disappointments, the one in ten new ideas that truly deliver are worth all their efforts.

NEW THINKING: Find a catalyst for your own growth to bring you new ideas from external sources. Also look outside your industry for inspiration, and partner with a select few industry leaders that are trying new, exceptionally creative things (Like Loew’s!)

Know what you Know

Information & knowledge sharing is essentialGregory Short, author of “The Billion Dollar Paperclip”, suggested that it’s time we took a new look at our business and the eco-system in which it is operating. Amongst the list of things mentioned, he included identifying what you already know. This resonated with me because so often when new clients ask for help, they often already have a lot of the information they are seeking, they just didn’t know they had it!

Haiko van Lengen and Sjoerd Koornstra shared a Heineken case study which covered a similar point on knowledge sharing. They mentioned the 2009 Boston Consulting Group Insight Benchmarking study which showed that most companies are not using the majority of the information they gather.

Haiko and Sjoerd suggested that before doing any sort of information gathering, we should first assess what is already available internally on the topic. This review should include talking to all departments and definitely not just market research. You would be surprised how many companies operate in silos, each buying their own reports and information, and too often without the knowledge of their market research and insight department.

NEW THINKING: Find a way of sharing more information across your organisation, by setting up an easily accessible storage system. This could be as simple as a shared folder or as proprietary as a knowledge management system and library.

Don’t be Scared of Emotions

Plutchik's wheel of emotionsDiana Lucaci at True Impact Marketing, spoke about the surprising habit many marketers have of being satisfied with knowing just the “Who” and the “What” of their customers’ behaviours. She pointed out that it is even more important to underst and the “Why” of customer actions in order to impact them.

With the rapid expansion in the use of neuroscience and biometric measurement in market research, we now have the possibility to underst and a lot about our customers without even directly asking. Perhaps it’s time for you to experiment (again?). Let me know if you’re interested in trying out the leading emotional measurement tool around.

Diana also made a throw-away comment at the end of her presentation that was also later picked up by Daryl Travis during his talk on “Why emotions win the battle of the br ands”. It reminds us that there are simple things we can do that can have an incredibly positive impact on our customers’ loyalty:

“Make sure that checkout, or the last action your customer makes, is a memorable and positive experience” (>>Tweet this quote<<)

Daryl also ended his presentation with another well chosen, inspiring quote from Maya Angelou, the American author and poet:

“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel” (>>Tweet this quote<<)

NEW THINKING: Review your own customer journey maps, but this time as an emotional journey and ensure that the last step is a positive experience – or urgently correct it if it isn’t!

Customers only Care about the Benefit

Benefits are what interest customersThis links to the previous comment on emotions. Michael Bartl from Hyve, mentioned that your customers don’t really care about who or how you solve their problems, only that you have a solution. Whilst this is probably correct in general, I believe there are some customers who do care and you need to know who they are. Concerns about sustainability, sourcing and ecological impact can all be relevant for some industries and br ands, so you need to check whether they are to your customers or a segment of them.

NEW THINKING: Review your advertising and see if you too spend most time speaking about rational product or service elements and less about the customer benefits. If it’s the case, make the swap to a more benefits-driven communications and measure the impact.

These are just four of the tens of pages of ideas I wrote, that were stimulated by presentations I followed during the IIEX-EU conference in Amsterdam last week. I hope they inspired your own thinking and interest in trying out some new things in your own marketing and market research. Let me know if you have any questions or comments, or if you’d be interested in getting some help in catalysing change in your own organisation.

C³Centricity uses images from Dreamstime and  Kozzi

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