The service retailers provide

Sarah Mahoney is a writer for Media Post Marketing Daily, and she posed a great set of questions to Rafi Mohammed, who recently suggested that retailers with bricks and mortar stores should get a lower price from manufacturers than their online-only counterparts. Click here to read the story in today’s Marketing Daily.

Mohammed is the author of The 1% Windfall: How Successful Companies Use Price to Profit and Grow.

Implications: Interesting idea. But is the only way to compete with online purveyors to pay less for product than they do? Or could the retailer convince consumers that their price is actually worth more? (Or is there a balancing act where both approaches can work together?)

I shopped for a technical item this weekend, and found the sales floor help knew less about the item than I did. In that case, the retailer has added little value to my purchase… except that I could walk out of the store with the product in-hand, at that moment.

Think like a consumer: What makes you glad a purchase was made in a local marketplace, rather than from an online merchant? It is service, support, product knowledge, immediacy of access… or something else? How do you/will you communicate that value to your customers? (Can you afford to take their awareness for granted?)

Mike Anderson

Restaurant recovery has a way to go

According to research from Mintel—as published in today’s Marketing Daily—the out-of-home dining business is still dealing with consumers whose attitude is one of restraint. Click here for the full article.

Implications: If you run a sit-down or upscale restaurant, you probably experienced cut-backs during the recession, in which consumers either reduced the number of out-of-home dining occasions per month, or traded-down to a lower priced restaurant for more of their dining occasions (or both).

For the foreseeable future, restaurants of virtually all types will be trying to get the customer they lost to a lower-priced competitor to come back, or get their continuing customer based to dine out with greater frequency.

Which customer type does your restaurant serve? Did they dine at home more during the recession? How do you bring them back? (Will time savings be the key, or is it the long-denied “small indulgence” that will inspire their visit?) Did your customers “trade-down” for some of their restaurant occasions? What are the premium qualities of your restaurant they might miss? (Great service? Amazing food? An atmosphere that allows for conversation above the din of the restaurant?) Did your customers reduce their frequency of visits? How could you build-up that number of stops (do you have a loyalty program or a weekly special feature that’s worthy of an appointment)?

There are many implications to this story. New unrest in any part of the Middle East, of course, can impact the supply of oil to the rest of the world. When supply is short or uncertain, the price of oil generally goes up. Anything that is manufactured, distributed or sold through the use of petroleum can typically be expected to cost more. (This issue is not limited to cars and trucks.)

Mike Anderson

The impact of global unrest on local business

Much coverage is being given to the protests going on in Egypt right now. This morning’s New York Times offers insight as to the potential for global impact, resulting from this rapidly evolving situation. Click here to read the story.

I’m watching for the potential local impact this situation might have on small businesses.

Implications: There are many implications to this story. New unrest in any part of the Middle East, of course, can impact the supply of oil to the rest of the world. When supply is short or uncertain, the price of oil generally goes up. Anything that is manufactured, distributed or sold through the use of petroleum can typically be expected to cost more. (This issue is not limited to cars and trucks.)

If price is the only reason you’re giving consumers in the hopes they will choose your product or service… what happens when your prices go up?

Is it time for you to be thinking about—and communicating—how your product or service adds value to the life of the people who buy it?

Mike Anderson

The Fuel Economy: How might it impact you?

An article from The Detroit News suggests that steadily rising gas prices are hampering the sale of trucks, just as the major automakers are touting their wares at the Detroit Auto Show. (Click here to see the story for yourself.)

It’s natural to think about the impact of gas prices on vehicles. But it might also be time to think about what it might mean on everything else, too.

Implications: Here’s the good news… we’ve been through this before, and recently. A spike in gas prices in 2007 served to accelerate our entry into the Great Recession, because it hit many households as a shock to pay between four and five dollars for a gallon of fuel.

Next time, I don’t think it will be a shock. Consumers will react as if they have seen this before. (Am I the only one who thinks that the new reasonable floor for gas prices is $3 per gallon or slightly higher?)

That said, if fuel prices go too high, the increase will impact consumer behavior. Either they will try to cut down the amount they drive, or the increase in money spent on gas will have to be off-set with a decrease in other purchasing. Stores that deliver (furniture, appliances) might be more attractive to a household that has purchased a fuel-efficient commuter car, instead of a more gas-thirsty truck. People will likely return to a more multi-tasking frame of mind, hoping to scratch more needs of their shopping list with a single trip. Perhaps home entertainment will enjoy yet another phase of growth (home theatre, video games, alcohol, entertainment cooking, etc.)

As the cost of running a household changes, consumers’ needs and priorities will change, too. Those who best anticipate well will be the earliest to effectively respond.

Mike Anderson

UPDATE: Channel-shifting consumers

Speaking of channel-shifting (which I was just a few moments ago; see posting below), here’s a story from today’s Marketing Daily, which indicates that kiosks (Red Box, et al) have replaced retail as the primary destination for movie rentals. Click here to see the story.

Implications: Again, will your next competitive threat come from a competitor… or a new, unexpected adversary?

Mike Anderson

Channel-shifting consumers

The traditional place to buy groceries has long been a supermarket or grocery store. But for more and more consumers, groceries are an incidental item one picks up while shopping at the local discount or drug store. And those alternate outlets are adapting to these customer preferences, by adding aisles devoted to food.

See this recent story from the New York Times for a greater understanding of the matter (click to link).

Implications: Changing channels has hit a lot of sectors. Grocery stores now offer heat-to-complete and deli options that compete nicely with restaurants. Drug and discount stores now offer in-store clinics that compete nicely with the traditional doctor’s office. Banks sell insurance, and insurance agents sell investments.

Will your next competitive threat come from a competitor? Or a new, unexpected channel adversary?

Mike Anderson

The consumer might not be who you think

Back in September, 2009, I offered some thoughts about how the unemployment issues of the Great Recession were impacting men in different ways that women [see “Déjà Vu, Women in the Workforce”]. It simply asserted that companies did not just fire people during the downturn, they fired paychecks… seeking not to reduce headcount, but to dramatically cut payroll. This put a target on the backs of a lot of men in management and in the C-suite. Also, the recession was particularly tough on people whose jobs were tied to manufacturing and construction.

Yesterday, Advertising Age offered a story that explains one of the possible implications of that shift, explaining that more men are in control of the household’s grocery shopping chores. Click here for the full story.

Implications: It’s not enough for a company to understand who their target consumers are. They must understand, also, how their target consumer groups are changing over time. And this isn’t just about groceries and packaged goods. Who’s taking the kids to the doctor? Who’s more likely to have a commute (and thus, decide on the next vehicle the household will purchase and the gas station/convenience store/coffee shop to stop at)? Who’s more likely to purchase business apparel, and who’s more likely to plan the next family vacation? Who will balance the checkbook and pay the household’s bills?

Who will drive the decision about the product or service you sell?

Mike Anderson

Blogs become an increasing point of influence

Colleague and friend Kim Willoughby passed this tidbit along this morning: An Online Media Daily story that suggests the influence of blogs is increasing, particularly where health and beauty purchasing is concerned. Click here to see the full story.

Implications: Consumers read blogs for a lot of reasons: To gain useful insights, information or ideas, to compare opinions, or to get advice, to name just a few. If your company has a blog that fulfills one or more of these needs, your chances for success are pretty strong.

A blog that serves people stands a much better chance of success than a blog that serves a product. What are your people (customers, prospect, users) interested in? What are they doing when they use your product or service? What are the top common denominators that might create a bond between significant numbers of your constituents? If you can find--or build--blogs that speak to those interests, your customers will have you right where they want you.

Should a restaurant blog be about your menu... or should it instead offer ideas to make a "date night" something to remember? Tips about where to find a good babysitter?

Should a blog for an insurance company be about coverage and deductibles... or should it instead offer ideas about how to reduce risk of accident or injury around the house?

If you understand the deeper benefits that make someone want to own your product or service, you will also understand which topics might be good focal points for your site.

Mike Anderson

Less window shopping, more buying?

A few moments ago, Research Brief provided a story about consumer intentions in the foreseeable future, which include paying down more debt, spending more, and saving less. The story was based on research provided by American Express.

To see the Research Brief article, click here.

To see the release about the American Express Saving and Spending Tracker, click here.

Implications: Yesterday, my wife and I went to that great bastion of commerce known as The Mall of America in Bloomington, Minnesota. It’s been cold here, and we wanted to get out of the house… plus, I’m in the market for a new piece of luggage.

The place was packed. And it wasn’t just people wandering around window-shopping. A lot of people were using their long holiday weekend to hunt for bargains. I ended-up buying a new carry-on at a small, independent luggage store… who offered it for much less than the major department store (an anchor at the mall). The gentleman mentioned turned to his co-worker and winked, saying, “Wow, we’re having another really good day!” He was obviously pleased to have the sale.

Anytime I’m walking through a mall or shopping area, I try to note whether people are just walking around, or walking around with bags. If our trip to the mall yesterday is any indication, it seems to me that a lot of people are catching-up on items they may have deferred for a while.

Thankfully, that hunch seems to be supported by more scientific research from American Express!

Mike Anderson

A simple idea to enhance customer experiences

It’s one thing to disappoint a customer… but what if the poor experience was caused by something apparently beyond your control?

Now that my wife and I are empty-nesters, we are a bit more likely to notice when a host or hostess seats us in a part of the restaurant that is filled with kids… especially if the children have poor restaurant manners and the parents lack any desire to introduce them. The meal can be delicious and the service can be wonderful, but we can still leave the restaurant disappointed in the experience.

In this week’s Springwise newsletter, there’s a story about how one transportation provider is separating customer groups in a way that can make life easier for everyone. Click here to read the story.

Implications: Many restaurants allow their seating decisions to be driven by operational issues, such as balancing the work among wait staff. Why aren’t more of those decisions driven by things that might result in consumer satisfaction? It’s not the restaurant’s fault if a family at the next table is being unruly. But it is a problem the restaurant could often prevent. If an issue is not the company's fault, but the company could solve it and chooses not to, isn’t the company complicit in the customer’s bad experience?

When you walk through your lobby, store, or dealership, don’t just focus on your product offering and service personnel. Other elements affect the consumer experience… even some which are beyond your responsibility, but within your ability to improve.

Mike Anderson

A new chapter in return policies?

Amazon.com has launched a new return policy: When you’re done reading the book, they’ll buy it back. Early returns justified a wider application of the program, according to today’s newsletter from Springwise. Click here to read the full story.

It seems to me that this idea fits nicely into the consumer’s stronger sense of post-recession frugality, as well as the desire to be socially responsible (this is a form of recycling).

In another example of "own to rent," Target stores are offering credit toward used-up mobile phones, according to this recent story from Marketing Daily (click to link).

Implications: Auto dealers and tuxedo shops have been doing this for years… why not bookstores? I’m thinking about some retailers who sell rarely-used power tools (although many also offer a rental department), or other situations where single-use items are sold.

For more ideas, browse CraigsList a bit. There, you will find that consumers have plenty of ideas about items they have used but do not need to own, outright.

Any opportunities here for your company here (do you sell anything that is a one-time or rarely-used product)?

Mike Anderson

How to prevent short-term cuts from causing long-term pain

Almost two years ago, I posted a story at this blog which had to do with the risks of cutting innovation in response to the recession [see, “What’s new? Not much,” from February, 2009].

Well, according to a story from the Associated Press, General Motors could be one good example of the consequences a company might face when too many cutbacks are left in place for too long. It might save huge amounts of cash in the short term, but the move does not come without long-term risks. See the story as it appeared today at MSNBC.com by clicking here.

Implications: There are two critical moments in every recession, which impact every company: Knowing when the recession begins, and knowing when it has ended.

Did you cut expenses (translate: Operational Capabilities) when the recession began, which have not been re-instated with the growing recovery? If that’s because you realized the expenses no longer provided an ROI, then good for you! But if it’s because you haven’t gotten around to re-considering the needs of your company or staff, you might want to think about it soon. In this example, GM cut their R&D budget. But other budgets to review might include personnel, operations, facilities, advertising, and marketing (in no particular order).

Cutting expenses in times of turmoil can be both urgent and important. Getting back into growth stride once the recession subsides is no less important… but it can seem less urgent. And that’s one thing that can make a recovery even more dangerous than a recession.

Mike Anderson