All posts from: March 2012
In the last few days, we have been witness to an extraordinary phenomenon: the herd mentality of the British consumer.
We are at least seven days away from any potential industrial action by petrol tanker drivers which could upset the availability of fuel and yet, following government advice to top up our tanks or hoard small supplies, we set off in our droves to forecourts this week demonstrating almost Blitz-like resolve. As a consequence, the independent retailers’ group RMI Petrol reported that demand for petrol rose 172% on a single day, while diesel was up 77%. Halford’s reported a staggering 500% rise in sales of jerry cans.
Some have suggested that the panic-buying is a direct result of the government ‘nudging’ people towards specific outcomes. Perhaps, it has been said, the government needed this to happen for political reasons, as a distraction from the economy, the ‘cash for dinner’ scandal, to back Labour into a corner over union funding – or even to generate a short-term petrol duty bonanza.
But this behaviour isn’t unusual for British consumers. In 2009 Delia Smith’s Christmas television series sparked a rush for obscure ingredients. Sainsbury’s reported sales of cinnamon sticks up 200 per cent on the previous year, while Marsala wine was up 300 per cent and pickled walnuts doubled.
And it’s not only food. Earlier this year Amazon reported sales of telescopes up 491% in the three hours after the transmission of BBC2’s Stargazing Live, presented by Professor Brian Cox.
Whether it is rushing to fill up your car when there is no shortage of petrol or racing to get the last cinnamon stick for a cupcake recipe, this is behavioural economics in action. We, as consumers, are heavily influenced by other people. We tend to observe and copy what others do and, generally, like conforming. And with that, I’m off to fill up the car – like I’ve just seen my next-door neighbour do.
The extent to which brands are using the online medium to engage with consumers – almost at the expense of bricks and mortar retail – appears to be gathering pace.
In the last few weeks chocolatier Thorntons has announced it is to use its website as a “testing ground” for the introduction of new products across the business while Shop Direct is unveiling a virtual changing room so that customers can “try on clothes” online.
They are not the first. Tesco has a new virtual fitting room, which launched for women on Facebook for a two-month trial. It sounds like a great idea. You upload a couple of photographs to create a 3D version of yourself and try on items from the supermarket’s F&F clothing range. But is this move really going to satisfy the consumer’s emotional need to engage with a brand or a product? Surelywhen you start to take away the actual physical experience, which for many consumers has always been a part of the purchase process, the idea falls down.
Last year Polo Ralph Lauren installed a touch screen in the window of its high street shops, which you could use to pick the item you want and the size you want and order it without setting foot inside the shop. Despite positive research findings the actual usage was minimal; it was a good idea but, come the crunch, people like to touch and feel while trying on clothes – and, of course, in premium brand stores you get well informed and attentive staff.
Shopping is a social event for some people but there are others for whom clothes shopping is one of their least favourite activities. For them, the online experience is something of a godsend. Moreover, reviews online from other shoppers – good and bad – provide a guide to purchasing that you wouldn’t get if you wandered around in-store. For these types of shoppers the online experience, done well, helps them make good rather than poor purchasing decisions.
Flip the coin, if you will, to the brand or the retailer’s perspective, and you can see how online could give them access to a growing, almost global customer base that they simply would not be able to access through bricks and mortar stores.
But there is a fine line to tread on the path to online transition. How far can it go before ‘enough is enough’ and customers push back? The answer at the moment is that brands and retailers probably have to do both online and offline really well to cater for all consumer mindsets. But, while there is clearly a place for a very integrated online shopping experience, for some categories the experience counts for just as much.
For buying the weekly food shop or a DVD, going online is almost a given. But buying yourself a new suit – would you really want to put your trust in an online cartoon avatar?
If ever there was a win-win situation surely it is the advent of cause-related marketing; buying a product or service while making a donation to a charity at the same time. It has not only become a staple of the set-piece charity events of the year – Sport Relief, Comic Relief and Children In Need – but is increasingly finding its way into the mainstream marketing activity of many brands.
And it should come as no surprise why. The Pink Ribbon Foundation quotes a study of 2,000 people revealing that 81% would be more likely to buy a product that was linked to a cause while 85% said that they would have a more positive view of the company that made the product. Two-thirds said they thought more companies should be linked with a cause, while 80% said that if price and quality were equal, supporting a cause would make a difference to their purchase decision.
The upshot is that consumers seem to be looking for more from the brands they buy. The latest to do this is Fairshare Music which allows you to download the music of your choice with half of the profits from the download going to a choice one of 18 charity partners. DKNY, which gets the vanilla for its fragrances from Uganda, supports the work of CARE with vanilla bean farmers in the country, while running equipment retailer Sweatshop is throwing its weight behind the Microloan Foundation, to provide training and loans to women in Africa to help lift them out of poverty.
In an article in the Financial Times some time ago Tim Harford explained that there were broadly two types of giver: those who donate out of pure altruism and those who give to get the “warm glow” from having donated to charity. Harford explained that these weren’t necessarily two sides of the same coin. Warm-glow givers, he wrote, don’t think too much about whether the money they give is going to be effective whereas the altruist needs to know their donation is going to be effective. “While the altruist would want the evidence, the warm-glow giver just wants to feel the connection”, he said. The third motivation, Harford identified, was social pressure: the act of giving because we think that’s what others expect of us.
This distinction can be critical in terms of the way brands and consumers act from a cause-related marketing standpoint in an economic downturn. There is an increase in people donating their time rather than their money as a way of making a contribution, though altruists and warm-glow givers alike may be more tempted by the brand charity link. Altruists might give more in a recession because they can see the poor getting poorer and will see that more could be achieved with their donation. Those who seek the rosy glow, however – but are themselves under pressure – may well metaphorically hide behind the sofa rather than donate beyond their means. And that’s why the link between brands and causes can be so effective, because the choice is entirely in the hands of the consumer without pressure from external sources
In balancing the need to create value for consumers while at the same time offering an outlet for our ethical and charitable needs at a time when money is tight, some brands may just have created a win-win giving model for the recession.