The Exaggerated Death of Retail

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Amazon is a retail juggernaut.  Last year the company was responsible for 5% of total US retail sales (online and offline).  Their growth and expansion seems unstoppable at the same time that we see other iconic retailers (Sears, JC Penney, Radio Shack, Payless Shoes, etc.) struggling to stay alive.  Given the convenience and potential for cost savings it’s easy to say that the future of retail is online and brick-and-mortar establishments are a thing of the past but this FastCompany article,”The Future Of Retail In The Age Of Amazon“, offers a different perspective.  Fair warning – this is a fairly lengthy article but it provides a number of good discussion topics.

The article starts by discussing the decline in traditional malls but talks about investments being made by the Mall of America to attract younger buyers.  While online shopping has certainly contributed to traditional store closures, the article also claims over-expansion and lack of investment are significant contributors to decline as well.  Even with all of the well publicized store closings there was still a net increase of 4000 stores in 2017 and a higher increase expected this year.  The article spotlights Target and talks about some of the investments they’re making to move back to partnered custom products and emphasize visual merchandising in their store design.  Much of the article alludes to the idea that a focus on the shopping experience can provide a unique value proposition that allows traditional retail to differentiate itself from online retail.

Students do a surprising amount of traditional retail shopping and you can get some good discussions started when asking them to articulate why they choose to buy in-store as opposed to buying online.

New Year’s Resolutions

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Every New Year people make their resolutions and so many of those resolutions are related to fitness or weight loss it creates a situational market opportunity for companies in the fitness industry.  Those companies focus much of their marketing spend on the first few months of the year to capitalize on consumers’ best intentions.  If you consider gyms, there are many different gyms to choose from and they all offer the same basic equipment.  Ask your students how a particular gym could differentiate itself from others in the same geography.  Write their ideas on the board and afterward show them this video from Planet Fitness.  Afterward, ask them how Planet Fitness tried to differentiate itself (products and services) in the commercial and see how it compared to their initial brainstorm list.

Five Psychological Principles To Guide Your Holiday Marketing Campaign

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Many retailers and producers depend heavily on holiday shopping to hit their annual goals.  The challenge is often trying to differentiate your wares and offerings from the multitude of other vendors trying to do the same thing.  This Forbes article, Five Psychological Principles to Guide Your Holiday Marketing Campaign, discusses psychological influences and how marketers can tailor their marketing campaigns to capitalize on consumer buying behavior.  The five principles they discuss are:

  1. Urgency and scarcity
  2. Social proof
  3. The Baader-Meinhof phenomenon
  4. Paradox of choice and compound value
  5. Anchoring and Decoy pricing

Many of these concepts are discussed in Essentials of Marketing in Chapter 5, Final Consumers and Their Buying Behavior.  Ask your students to provide examples of producers/retailers that have utilized some of these techniques recently!

Marketing Head-Scratchers

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Have you ever seen an advertisement that caused you to scratch your head and ask “What were they thinking?”  There’s no shortage of examples of culturally insensitive or politically incorrect ads but sometimes I see things and just can’t figure out how a company decided this was the best way to promote their product.  A student recently shared an example with me when she was stumped.  Here’s the ad that was pushed to her phone:

This cosmetics ad for a firming treatment features Sega’s popular video game icon Sonic the Hedgehog.  Capitalizing on video game popularity isn’t new but what is surprising is the product it was attached to.  Firming cosmetics are anti-aging cosmetics and it seems to me that there would be a pretty small intersection of customers who identify with Sonic the Hedgehog and customers who are interested anti-aging products.  Maybe I’m wrong but it led to a good classroom discussion.  If you have an idea of why Glamglow thought this was a good idea, please post a comment and share!

Smartphones top $1000 price point

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Smartphones revolutionized the world and it wasn’t long after the first smartphone was released that everyone wanted one of their own. For years, smartphone manufacturers were able to capitalize on unmet demand but as the product-market reached maturity and demand became saturated, manufacturers needed to find ways to entice users to upgrade in order to protect their new revenue stream.

The classic approach in technology is to release new versions of products. If a manufacturer delivers enough added value with the new release, existing consumers will be willing to buy the new product to replace their old one. But how much is necessary to entice consumers to upgrade? That answer is dependent on several factors that influence consumer buying behavior. These influences are reviewed in detail in Chapter 5 – Final Consumers and Their Buying Behavior.

This article, “Your Next Phone Will Probably Cost $1000“, talks about the latest generation of smartphones to hit the market and the various influences that will determine their success or failure. In particular, the article notes that this is the first generation of products to pass the $1000 price barrier.  The article suggests that surpassing that psychologically significant price barrier may slow adoption of the new line of phones.

Ask your students how many have purchased or intend to purchase one of these new phones, when they purchased (or intend to purchase), and why they chose to upgrade.  This can lead to a good discussion regarding all of the influences that impact that purchasing decision. Some will choose to buy primarily because of psychological social needs – the desire for status or acceptance from peers.  Others will apply a more economic assessment.  Those individuals may justify the purchase based on faster performance, larger screen sizes, new features, etc.  A full discussion of the various factors that influence consumer purchasing behavior is covered in Chapter 5 – Final Customers and Their Buying Behavior.

This conversation can also apply when covering the adoption curve discussed in Chapter 13. In any given classroom you’re likely to have students that can be classified as members of the early adopters and early majority segments of the adoption curve but you may also have members of other segments.  Asking students from each group how they make decisions about when to buy can really help illustrate the differences between segments.