What can we learn from the electronics category?

Trend Observation:  I live in Minneapolis, the home-base to retail giants like Target and Best Buy.  So I take no pleasure in sharing a story from today’s New York Times about the shake-up in the retail category of electronics, which focuses particularly on Best Buy.  Click here to see it.

Marketing Implications:  In part, Best Buy’s success was in using their massive size to create a price advantage; their sheer scale and buying power let them out-price competitors (remember Circuit City, or other smaller retailers who are long gone?).  In a way, Amazon and Walmart are doing some of the same things.  Amazon skips the expense of a physical store and staff by selling online, and can thus sell cheaper.  And while Walmart might offer a more limited variety of electronics, it can sell those products cheaper, again, due to scale.  It might seem that a couple of big competitors are doing unto Best Buy what Best Buy did unto others only a few years ago.

While they don’t disclose revenue in the story, Best Buy competitor Abt Electronics is attracting customers with experiences.  Target is also less enchanted with the price strategy, opting to begin carrying more Apple products. 

What is your competitive advantage?  Could it be used against you, in months or years from now?  Is your competitive advantage as relevant as it once was, or should you be considering new approaches?  All of these are questions, of course, that are best answered by involving your best customers and target consumers.  After all… they’re the ones who will decide whether or not someone is “best.”

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Automotive: The market share shuffle continues

Observation:  Over the past few years, Korean brands like Hyundai swooped up impressive market share, just as Toyota was suffering from the angst of a major recall in 2009 and both Toyota and Honda were impacted by the effects of the 2010 Tsunami.  But it seems that those musical chairs are shifting again, according to this recent story from Automotive Week and Automotive News.  (Click to link.)

Implications:  I’m not sharing this story only for the benefit of folks in the auto industry.  Virtually every company wants to grow their business.  But a story like this reminds us to ask some very important marketing questions.

If you expect to grow market share this year, at whose expense will you make those gains?  Where will your new business come from?  What will your marketing message say that is so convincing that people will leave their past provider, and instead, come to you?

Also… which of your competitors intends to grow their own market share at your expense?  How will you defend against that assault, or even grow your own business in the face of that marketplace aggression?   Will that threat come from a competing company within your business category, or is it possible this assault could come from an outside category that you now compete with?  (For an automotive example, see the story immediately below about the increased use of mass transit.)  How will your message help you defend against these new competitive threats?  Should you bother defending (is it really a threat to your core business)?

The answers to all of these questions begin with knowing who your real target consumer is, and the benefits they seek when buying the product or service you sell.  Sure, the competition should be considered!  Absolutely!  But always in the context of what your most important customers want from your product, service, and purchase experience.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Mass transit sees an upswing

Observation:  According to a story in today’s USA Today, more people are taking more trips via mass transit.  The surge is seen as a response to high gas prices (although gasoline prices are a few cents lower than last year at this time).  Click here to see the story.

Implications:  It is interesting to note that for today’s Millennial generation, life does not revolve around automobile ownership the way that it did in the 60s and 70s.

Do you sell a product that can be delivered?  I can think of a lot of things that people cannot take home on a light rail or bus ride.  Simple delivery could be a very important value-added service if this trend grows.

Do you sell cars or light trucks?  It might be time to remind people of the flexibility and convenience that can come with vehicle ownership.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Abandoning the in-store shopping cart: Smartphones intercepting retail purchases

Observation:  Fifty-three percent of mobile commerce users say they have halted an in-store purchase because of an offer or information they found online, while in the store.  That’s according to research from the Internet Advertising Bureau as published today at MobileCommerceDaily.com.   Among mobile device owners, 73% have used their smartphone in-store.  Click here to see the full story.

Implications:   We’ve written about “Showrooming” in this space before (see the series by clicking here), but it seems new data is constantly arriving to illustrate just how pervasive the practice might be.

If you have a physical location—and I’ve suggested this before—wouldn’t it be smart to have a strategy where small business-card-sized brochures could be placed near the price on each shelf, containing the URL to your store’s website (and perhaps an offer that would incentivize the use of your site)?  If consumers are going to take the shopping experience online, at least they stand a better chance of continuing to do that shopping with you.  

[Note:  Thanks to friend and colleague Matt Sunshine for passing along the MobileCommerceDaily.com story along!]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Showrooming strikes again. But this time, Target strikes back.

Observation:  Target has decided to stop selling Kindle e-readers, according to a story from USA Today.  The article suggests that part of the reason might be what is called showrooming; when people take a hands-on look at a product in store, but then go online (either at home or from their phone) to buy the item at a cheaper price from an Internet vendor.  The story indicates that another motive might be the Apple mini-stores that are scheduled for launch in a number of Target locations (Apple’s iPad would be considered a direct competitor to Amazon’s Kindle).   Click here to see the story.

Implications:   One way to beat “showrooming” is to offer a product enhancement, service, or sales experience that online vendors can’t deliver.  It seems to me that Target has decided to do just that… but just not with Kindles.

[To see our prior stories on Showrooming, click here.]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Changes to health care spending

Observation:   Over the weekend, a story from the New York Times explained that health care spending is down… and more dramatically that the economic effects of the recession can be blamed for.  The article strives to explore a number of possible reasons for the decline; read the story by clicking here.

Implications:   If you sell any product or service that is related to health care, this issue impacts you.  We can anticipate that if the number of patients who are spending has declined—or the amounts they are spending have declined—the field of providers that are competing for those patients and dollars is going to be more heated.

So how can health care providers—and health care marketing—effectively capture their unfair share of patients?  Absolutely.  Start by looking at the product or service from the consumer’s (patient’s) point of view.  Follow the money trail, from consideration to admissions to pre-op to discharge.  As a story from NBC Nightly News suggested over the weekend, you might even look at the ceilings of a hospital room, to see what the patients see as they’re lying in bed!  (Click here to link to that video, or watch it in the viewer below.) 

The patient, above all, wants a successful outcome.  But on that journey, they’d also appreciate some empathy, responsiveness and authentic concern from the physician and support staff.  If you can deliver that experience, and explain your unique selling proposition in advertising (on-air, in-print, online), you’ll likely fare better than other providers who are competing for those same patient dollars.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

NBC News footage:

Visit msnbc.com for breaking news, world news, and news about the economy

Surgeon and hotel collaborate for a package of nip, tuck, and tuck you in

Observation:  Today’s Springwise newsletter included a story about a plastic surgeon in New York that has partnered with a luxury hotel where patients can stay during recovery from their procedure.  Click here to see the story at Springwise.com.

Implications:   This story is a great example of focusing not on the practice (business), but on the patient (consumer).

Who could you partner with to build a package that is bigger than either of the companies, products or services involved?  Don’t start by thinking of your existing business contacts.  Start by thinking about your patient—er, customer—experience.  Ask what could make that experience (before, during and after) even better.  Think outside your company’s walls.  Then make the contacts to make it happen.

By the way… talk to your media and marketing vendors to see if they might be a source of some very smart partnerships.  After all, they’re talking to all kinds of business people every week!

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A conversation about protecting competition

Observation:  A story from today’s New York Times—or perhaps it would more appropriately be called a near-editorial—explores the complex relationship between innovation, competition, and regulation.  Specifically, the article focuses on price-fixing allegations in the e-book industry.  Click here to see the story.

Implications:   This is a worthwhile read because so few of us are immune to the forces of disruptive technology. 

What companies could step in from the fringe to steal share from your long-secure revenue sources?  Could it be that the best way to protect yourself from that new competition would be… to make that move first?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Degrees of success compel retailers to make changes in self-service checkouts

Observation:   A story from USA Today indicates that several retailers are making changes to their self-service check-out strategy.  Some report significantly higher shop-lifting in the lanes, and are either installing more sophisticated systems to help thwart that shrinkage, and others are removing the lanes entirely.  Click here to see the story.

Implications:   How do you feel about the self-service line?  Some folks are delighted to have a lane that is often faster… but I’ve talked to others that think they’re doing some of the store’s work without being compensated with higher savings for the lower degree of service.

More importantly… how do your customers feel about the balance of service, swiftness and convenience that you offer?

It can be impossible to please everyone all the time, but the more options you offer, the  more people you will please.  And if you must make compromises, focus on pleasing those people who buy lots of what you sell; the heavy-user target consumer that makes or breaks your business.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The problem with pleasing customers

Observation:   According to a recent report by Forrester, when you exceed a consumer’s expectations, that level of satisfaction becomes the new minimum expectation.  That’s according to an article in today’s Marketing Daily newsletter.  Megan Burns of Forrester is quoted as saying, “People get used to a level of service very quickly, so you’re constantly shooting at a moving target.”  Click here to see the story.

Implications:   In this day and age, standing still is the new falling behind.

This story suggests that companies should constantly be asking (consumers) how they can do even better.  And as a collection of service or satisfaction improvements is developed, it might be wise to roll them out incrementally, so that the consumer notices.  If you bring a huge collection of improvements to market all at once, it might leave the consumer asking “what have you done for me, lately” just a few months down the road.

Are you innovating to the point where you have something new to offer and talk about frequently… as the customer expects?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Never anger a reporter. (And we’re all reporters.)

Observation:   Here in the Twin Cities, one of the biggest business news stories of the day is the announcement that Best Buy is closing fifty stores and cutting jobs at its corporate headquarters (see the Star Tribune story by clicking here).

The coverage inspired me to review some of the material I’ve posted about the retailer, including a post about a nasty review in Forbes (see “Never anger a reporter,” 1/5/12).  But when looking for that original Forbes story, I stumbled across a follow-up that I had not seen until now, published by Forbes on January 9 (see “The People vs Best Buy, round two” by clicking here). 

Implications:  Let me start by saying that my heart goes out to anyone who is losing a job in this restructuring… may you swiftly find a new, fulfilling place to apply your trade and prosper.  Nobody likes to see job loss.

But there are two reasons I revisited this story and feature it again here.  First, in reading the follow-up story in Forbes—“The People vs Best Buy, round 2”—one discovers just how powerful the fallout can be from negative publicity.  In the digital age, consumers have infinite ways to pile on, and add their own two-cents about a shopping experience.  The original Forbes article was forwarded via email, LinkedIn and other means with stunning frequency.  That speaks to the viral nature of the consumer community.

Secondly, the Star Tribune story explains that Best Buy lost $1.7 billion in their fourth quarter, compared to a profit of $651 million for the same period in the prior year.  In other words, the further we moved away from the recession, the worse things got for Best Buy’s bottom line.   That issue dramatizes just how selective an economic downturn or upswing can be:  Like the recession, the ongoing economic recovery will not be an equal-opportunity event.

How is your recovery progressing?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A variety of retailers make adjustments to their pricing strategies

Observation:   An article in today’s New York Times sheds light on the reasons behind pricing shake-ups at stores like JC Penney, Stein Mart and more.  Click here to see the story.

Implications:   Early in the story, this NY Times story righteously focuses on the new sense of control that consumers have over the way business is done.  (Unfortunately, the piece quickly devolves into speculation by pundits about whether the new pricing strategies of various stores will work.  Pundits won’t decide.  Consumers will.)  In an age where competitive shopping can be done before arriving at Store #1, the game has changed.

Of course, there are other ways to attract consumers, beyond price.  (Quality, selection, service, to name a few.)  But the essence of this story is about control:  What customers want and whether you’re delivering it.

Have you sat down for a heart-to-heart with your best customers lately?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Restaurant-quality food, but not from a restaurant

Observation:   A story from Supermarket News this week illustrates just how far grocery stores have crossed the line and moved into restaurant territory with their ready-to-eat offerings.  Click here to see the story.

Implications:   Kowalski’s supermarket—featured in this story—is a great example of how to think beyond the competitors in your category… and considering other categories you can compete with. 

(On a personal note, it’s fun to see this company doing so well, as they used to be one of my favorite clients when I worked with a media company here in the Twin Cities prior to joining CSS.)

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Showrooming: A name for the consumer’s practice of shopping in-store and then buying online

Observation:   A study from NPD was summarized in today’s Marketing Daily, and focuses on the consumer’s new tendency to shop in a variety of channels (small retail, big-box, department and warehouse stores), and then buy the item online.   Click here to see the story.

Implications:   This is a genie that’s going to be hard to put back in the bottle.  So the question becomes, what can you do about it?

Is there any incentive you can offer that encourages the consumer to buy “right then and there?”  Why not offer little notecards or notepads and pencils to consumers who might want to write down details of the product on your shelf… and make sure those note-taking tools have an incentive to check your site first?  (And your URL, of course.)

This all sounds very simple, doesn’t it?  And yet, not too long ago, my wife and I were shopping for a new set of appliances.  I wanted to get the dimensions for the microwave we were planning to install (I was working on the cabinetry), so I ran to our nearest Best Buy to check it out.  When I was going to shoot the price/information tag with my cell phone camera, the department manager came and ripped it out of the display and scolded, “You can’t do that!  It’s not allowed.”  So I went home, got online and checked the details at a competitor’s website (which I should thought to do in the first place).  We ended up buying at the competitor’s store (not just the microwave, but the whole kitchen suite).   Instead of preventing me from getting product and price information, the behavior of the Best Buy associate had the effect of sending me directly into the arms of a competitor.

People will go online for product and price information.  Instead of trying to block it, why not harness that power, and make sure they hit your site first?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Convenience stores are in the restaurant business, too

Moments after posting the story immediately below, I found this piece from Convenience Stores News about the expanding footprint that the ready-to-eat section has in the typical c-store.  Click here to see the story.  (To understand why that's important read my earlier post on the topic, found immediately below.)

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Fast food meets the family dining room

Observation:   This week, I had the pleasure of talking about Consumer DNA with a really sharp marketing team in Orlando.  One of the things we discussed was the impending churn that we can expect in the in- and out-of-home dining category.  During the recession, lots of folks down-graded from upscale to family casual restaurants, or from family casual to fast food, or from fast food to eating at home.  As the recovery picks up steam, the folks who lost market share will try regain it, and the folks who gained share will try to retain it.

When I got back into the office this morning, an FMI newsletter led me to this story from the Orlando Business Journal, explaining how Winn-Dixie is expanding their take-home meal solutions menu.  Click here to see the story.

Implications:   This is another way consumers will be comparing Apples to Oranges… meaning that restaurants don’t just compete with other companies in their category; they must worry about another category they compete with (grocers).

Who are the direct competitors you’re focused on?  (The people who sell pretty much the same thing you sell?)  And while you’re focused on that obvious competition, are there other categories taking a bite out of your sector?  How might you defend?  Or, how can you play offense… and grow beyond your core business to find new veins of revenue?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Smart phones eating into the camera market

Observation:   As the inboard devices become more sophisticated and take photos of higher resolution, lots of people are leaning on their phone for “spur of the moment” shots.  However, consumers still want a point-and-shoot or D-SLR for those really important shots.  That’s according to a story in today’s Marketing Daily.  Click here to see it.

Implications:   Every industry category seems to be going through change, either in response to technology and innovation, or in the aftermath of the recent recession.   

Do customers sometimes choose a cheaper alternative when considering the products you… but then come back to you for a need that is really important?  (Are you seen as the quality choice, or the low-price option?)  Is technology or an emerging competitor eating into your sales?  Sometimes, a shift like this can happen so slowly that you don’t realize the magnitude of an emerging competitor. 

Just ask Kodak.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Smaller candy bars more healthy? Or just more profitable?

Observation:  There was an interesting pair of stories about companies that are changing the size or type of their products… in a quest to benefit the consumer.

The first artice came through Reuters, and indicated that Mars would stop selling jumbo-sized candy bars, in the interest of encouraging a more healthy snacking lifestyle.  Click here to see that story.

The second story came from Marketing Daily, and explained that Tropicana will be developing beverages that contain less juice and more water (even hinting that they are yielding to consumer preference).  Click here to see that story.

Implications:   Both of these stories sound like spin to me, but let’s wait and see what the marketing looks like.  Can Mars explain that the reduction in candy bar size is an effort to help people snack in a more health-conscious manner?  (Will the price of diet-friendly bars remain static?)  How will Tropicana sell the idea that people prefer watered-down juice beverages?  Will either company be seen by consumers as simply trying to adjust products as a means toward a price increase?

I’ve been a copywriter for more than 30 years… and I’m eager to see how these hands are played. 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

If everybody’s doing it, low price is no distinction

Observation:  Today’s Supermarket Guru newsletter from Phil Lempert opines that consumers have come to expect great prices everywhere they shop.  So, to point out the obvious, just having a low price does not make your company, product or service “special.”  Click here to see the story. 

Implications:  A unique selling proposition must be—before all else—unique.  When the market was flooded with discounts during our recent economic turmoil, retailers were forced to become more thoughtful and creative.  Examples?  How about free Wi-Fi in the auto dealer service department so I can work while I wait?  A list of wine pairings offered free at the grocery store where I buy fresh seafood.  Or a hands-on test drive (like the Apple store). 

 Discounting can be a race to the bottom of profit margin.  It’s what you do under the sale sticker that makes you special.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Bank loyalty higher than thought, according to survey

Observation:  A survey conducted by TD Bank indicates that more people are loyal to their bank than wide-spread negative press might lead one to believe.  That’s according to a story in today’s Marketing Daily (click here to see it).

Implications:   This is positive news for people in the financial industry… but I bet the satisfaction level varies widely from one institution to another, depending on the extent to which a bank nurtures their relationship and refines their service to customers.

Like many consumers, my wife and I are satisfied with our primary bank due to the fact that we seldom come into contact with it, directly.  With direct deposit, automated bill pay and online services, it is rare that we actually talk with a human or walk into a bank branch. 

If the relationship that your company, product or service has with consumers is similarly automated, in what ways might you maintain an element of contact or communication with customers that is truly valued and appreciated?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.