It's that time of year again!
I know for most of you Christmas is a long way away, but according to a SymphonyIRI Group Holiday Shopping 2011 survey, 73% of respondents plan to start shopping early (before Dec. 1) in hopes of saving money. Also, 71% of consumers earning less than $100,000 plan to spend less this holiday.
Fourty-four percent of respondents say that their reason for less spending is because they feel worse off financially now than a year ago. As a result, 26% expect to spend less on holiday gifts, 16% will spend less on holiday foods and beverages, and 11% will spend less on beer, wine, and spirits.
As an ag business owner, are you prepared for early shoppers and more people "looking for a deal"? Are you planning on running any holiday discounts? What about holiday advertising? Are you concerned about your sales of holiday foods?
Friday, October 28, 2011
Tuesday, October 25, 2011
Price Competition: Shoppers Value a Bargain!
Do you know a bargain hunter? You know, the type of person that is drawn to a "SALE" sign like a moth to a flame... Most of us know one or two, I'm sure. I learned a little more about these people last week, thanks to a paper presented at a conference by some researchers from Washington State University (Li, McCluskey, and Mittelhammer).
The research team analyzed the responses to "permanent" price drops (that is, those that were due strictly to supply and demand conditions) versus promotional, or short-term, price drops. They used data from supermarket scanners, so they were able to analyze real transactions under real market conditions. They did this for several different types of vegetables.
Guess what they found... Consumers were more responsive to short-term price decreases than they were to permanent ones. This suggests that promotions may be a better method to generate increased sales than being viewed as having low prices all the time. On the other hand, it also means that promotions that happen too frequently may cause customers to pull back when a promotion isn't underway.
This phenomenon doesn't really surprise me. I may or may not be related to a bargain hunter and I have come to understand that the purchase is more than the purchase. Getting a bargain is a badge of honor; a story to tell friends, family, and co-workers. I get that. But there may be other factors at play. In a stagnant economy like this one, we see shows like TLC's "Extreme Couponing" become popular. To get these types of bargains, it often means buying in bulk. So hoarding, or "stocking up" is a factor that drive sales during promotions. (For something like vegetables, this may mean freezing or canning, so be sure to offer tips on how to do that.)
There's good science and economics behind pricing strategies that include short-term promotions. Business owners should think about using them frequently, but not so much that they become the norm. Watch sales (in dollars and quantities) to see how effective the promotions are.
The research team analyzed the responses to "permanent" price drops (that is, those that were due strictly to supply and demand conditions) versus promotional, or short-term, price drops. They used data from supermarket scanners, so they were able to analyze real transactions under real market conditions. They did this for several different types of vegetables.Guess what they found... Consumers were more responsive to short-term price decreases than they were to permanent ones. This suggests that promotions may be a better method to generate increased sales than being viewed as having low prices all the time. On the other hand, it also means that promotions that happen too frequently may cause customers to pull back when a promotion isn't underway.
This phenomenon doesn't really surprise me. I may or may not be related to a bargain hunter and I have come to understand that the purchase is more than the purchase. Getting a bargain is a badge of honor; a story to tell friends, family, and co-workers. I get that. But there may be other factors at play. In a stagnant economy like this one, we see shows like TLC's "Extreme Couponing" become popular. To get these types of bargains, it often means buying in bulk. So hoarding, or "stocking up" is a factor that drive sales during promotions. (For something like vegetables, this may mean freezing or canning, so be sure to offer tips on how to do that.)There's good science and economics behind pricing strategies that include short-term promotions. Business owners should think about using them frequently, but not so much that they become the norm. Watch sales (in dollars and quantities) to see how effective the promotions are.
Monday, October 17, 2011
Marketing Your Products With Charity Donations
In April of 2010, I wrote a post about charity donations. I thought I'd follow up with some more research on what charities customers prefer. Take a look in your refrigerator and pantry. Do you have any products that mention a charity donation? In my kitchen, I've got cereal, granola bars, and yogurt like that. Not all donation advertisements are equal, though. According to a study by The Integer Group and M/A/R/C Research, 43% of women choose brands that donate with every purchase over brands that donate a set amount.
Does the type of charity make a difference to shoppers? The research says 'yes' (the study results can be found at www.shopperculture.com). Women are attracted to causes that invoke an emotional or personal response like disease prevention, faith-based, animal welfare, and child welfare. Men, on the other hand, seem to be attracted to causes of a social nature where money is a fix as compared to an emotional tie.
"Brands need to appeal to men's rationale side, delivering a more rational benefit for their participation in a cause program, which can lead to higher engagement. Men are more likely to support organizations like The Salvation Army or Goodwill, with women saying they support disease prevention causes such as breast cancer awareness," said Craig Elston, SVP, The Integer Group. "If you're targeting women, focus on the messaging as a means to evoke emotion."
As an ag entrepreneur, have you advertised charity donations with the sale of your products? If so, have you seen an increase in sales? If you have tried different charities, have you seen significant differences in the sales of one charity product over another?
Does the type of charity make a difference to shoppers? The research says 'yes' (the study results can be found at www.shopperculture.com). Women are attracted to causes that invoke an emotional or personal response like disease prevention, faith-based, animal welfare, and child welfare. Men, on the other hand, seem to be attracted to causes of a social nature where money is a fix as compared to an emotional tie.
"Brands need to appeal to men's rationale side, delivering a more rational benefit for their participation in a cause program, which can lead to higher engagement. Men are more likely to support organizations like The Salvation Army or Goodwill, with women saying they support disease prevention causes such as breast cancer awareness," said Craig Elston, SVP, The Integer Group. "If you're targeting women, focus on the messaging as a means to evoke emotion."
As an ag entrepreneur, have you advertised charity donations with the sale of your products? If so, have you seen an increase in sales? If you have tried different charities, have you seen significant differences in the sales of one charity product over another?
Friday, October 14, 2011
Social Media Aren't the Only Ways to be Social
I was walking through the soccer fields last week when I had a chance to talk to a lady I know from involvement in various activities in the community. The conversation wound through topics such as our kids, sports, and some work stuff before it came around to Facebook. She has no use for it! She has major issues with privacy but, even if that weren't the case, she just doesn't see a need for it. I hear this a lot, though maybe not quite so adamantly as I did from her. There is a bunch of people that aren't going to latch onto social media like I have and maybe like you have. Business owners and we in Extension must continue to engage people where we can, when we can, and how we can.
One of my social media mentors, Max Spiegel, describes social media as a cocktail party. Party-goers mingle, make small talk with some, have longer, more meaningful chats with others, etc. Based on my experience, I'd agree with Max. Bottom line; business success is all about communication and social media tools are just another way to do it.
There's still very much a role for phones, emails, and maybe even written or printed stuff, like flyers or brochures. None of these are my preferred modes of communication anymore. (My least favorite feature of my cell phone is the phone.) But I know there are certain people I can reach best by email and others that I really have to talk to on the phone. Business owners that desire a personal connection with customers have to meet them where they are. The old advice still works, whether it's in person, in your farmers' market, or some other venue: be engaging, be responsive, don't oversell your business or products, etc. (See goo.gl/ZK1Vl for some tips on how to engage your audience on social media.)
The key takeaway is this: Use the tool that allows you to meet your audience how and where you need to meet them. Don't force them to find you on Facebook if they don't want to. Likewise, get your business listed in Google Places if that's how they find businesses in an area. This stuff isn't rocket science, is it?
The key takeaway is this: Use the tool that allows you to meet your audience how and where you need to meet them. Don't force them to find you on Facebook if they don't want to. Likewise, get your business listed in Google Places if that's how they find businesses in an area. This stuff isn't rocket science, is it?
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