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I used to think the marketing and advertising stopped once retailers got you into their stores. Try again.
Here are just some of the ways retailers encourage you to spend more.
Reward Points
No matter what store I’m at or how much or little I’m spending, I always seem to be offered a discount to open and use that store’s credit card. Now I know why.
The Federal Reserve Bank of Chicago conducted a study on the before and after effects with a 1% cash back credit card rewards program and found the average reward people received was $25 per month yet they spent an average of $68 more per month and carried $115 more in credit card debt.
Credit Makes Everything Look Better
According to Dr. Promothesh Chatterjee, an assistant professor of marketing with the School of Business at the University of Kansas shoppers who use cash view their purchases very differently than those who use credit cards.
“When it comes to product evaluation, beauty lies in the eyes of the cardholder,” said Chatterjee. “People who pay with credit cards focus on the benefits and cool features of a new product, while consumers who use cash tend to focus on the price and other costs.”
Retailers—by constantly reinforcing the use of credit cards—may be affecting not just the amount of money consumers spend but also the types of products that consumers buy. “Paying with credit cards may increase the likelihood of indulgent choices that are less healthy compared to cash,” Chatterjee said. “It’s also possible that consumers primed with credit cards may choose more attractive or high-image products among substitutes and may more frequently include brands strongly linked to benefits.”
Take Your Time
Researches from Bangor University and shopping behavior experts and backed by three multi-national grocery companies have found consumers only respond rationally and mathematically for the first 23 minutes of their shopping trip, after which they begin to think with the emotional part of their brain.
Preliminary results also indicate after 40 minutes of shopping the brain becomes tired and effectively shuts down, ceasing to form rational thoughts altogether.
Now I know why many department stores offer chairs/sofas for significant others to rest while their other half shops. The longer someone spends shopping, the less likely they are able to identify discounts and deals.
Mob Mentality
Research by Ahreum Maeng, an assistant professor in the School of Business at the University of Kansas, finds that in socially crowded environments consumers tend to be more receptive to certain marketing approaches. Specifically, Maeng finds consumers in crowded settings prefer safety-oriented options and are more receptive to prevention-framed messages than promotional messages—for example, preferring toothpaste offering cavity protection to toothpaste promising a whiter smile.
“Our findings indicate a store would benefit by selling and marketing products differently on a crowded Black Friday versus a Tuesday morning in August,” Maeng said. “And even within the same day, stores might consider changing their signage or product placement to account for different levels of crowding.”
Music
According to Daniel Levitin, a professor of psychology and behavioral neuroscience at McGill University, Montreal, shopping to music prompts the release of dopamine, delivers a sense of pleasure and helps focus attention. “This could lead to putting people in a generous mood,” he said.
Companies such as Mood Media, in Austin, Texas and PlayNetwork in Redmond, Washington are helping stores encourage this “generous mood” by creating playlists that match the brand and lifestyle of its shoppers.
Tricia Nichols, senior director of global consumer engagement and partnerships at the Gap said their in-store music aims to capture “optimism, democracy and individualism”.
Songs that broke new ground and had a “pioneering spirit” is what Chad Hinson, director of global brand creative at Levi Strauss was looking for when they hired PlayNetwork.
Abercrombie & Fitch developed its loud, heavy-beat music playlists in-house and makes them available on an app.
Larger stores, such as Macy’s even use different playlists for different parts of the store. In its Young Men’s and Juniors’ departments “We tend to put the volume up a little further there,” said Martine Reardon, Macy’s chief marketing officer because “That’s what that customer likes and expects.”
Big Brother is Watching You
E-commerce sites have been tracking shopper behaviors for years but now the trend is moving to the traditional brick-and-mortar retailers.
Stores are using a variety of ways to track their customers from the high tech (tracking Wi-Fi signals from customers cell phones) to the old school (security cameras) with the overall goal of be able to accurately identify what is grabbing shoppers attention as well as what isn’t working.
According to the Future of Privacy Forum, over 1,000 stores around the U.S. are now tracking shoppers.
Mobile Apps
Moving beyond mass-emailed coupons, Apple recently launched iBeacon. These are sensors in a store that sends coupons directly to the shopper with an iPhone who just past by that sensor.
I imagine it says something like “Hey, you! Here’s a 20% off coupon for that sweater you are standing next to.”
Macy’s is testing a similar system from Shopkick in select stores in San Francisco and New York. When a shopper who has downloaded the Shopkick app walks into one of those Macy’s they receive notifications on their iPhone about specials as well as showing them other items they have viewed in prior shopping trips.
Since Timberland rolled out their version of this technology last summer, they are reporting an increase of actual usage of email coupons from 15% to over 35%.
