Behind Costco’s Treasure-Hunt Shopping Strategy

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This Wall Street Journal video “Behind Costco’s Treasure-Hunt Shopping Strategy,” describes Costco’s marketing strategy. (see also this article at Business Insider).  Surprisingly, the store makes it hard to shop there – for example, it changes the location of some products and have limited selection. You might question whether this is customer oriented. But it seems to address other customer needs – including the joy of shopping and the fun of finding bargains.

This video might be fun to show when covering consumer behavior (Chapter 5) or retailing (Chapter 12). It might also be shown after the video, “A Brief History of Retail.”

 

 

How the Pandemic is Changing Consumer Behavior…

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Over the last year, many of us have had conversations with our students about how the pandemic might permanently change consumer behavior. While the short-run changes (greater sales of Peloton bikes, more home projects – go Home Depot, and lower sales at restaurants and movie theaters, and of course no indoor concerts) are interesting, I think the fun stuff is thinking about which changes will stick. I like to use this topic as a way to get my students thinking. So I ask them, “Which pandemic changes in consumer behavior are likely to stick?” I often use this as a small group activity so they can chat with classmates.

After soliciting their ideas – and of course asking them “why?” I like to share with them what some of the so-called experts think. This article at McKinsey.com “The great consumer shift: Ten charts that show how US shopping behavior is changing” has lots of good stuff to share with your students — and here is another article. You can cut and paste some of the charts (data is good) into your PowerPoints and either confirm or supplement they ideas they come up with.

Critical Thinking for Students – What businesses are harmed (helped) by the pandemic?

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OK, life gives you lemons (or worse, far worse, a pandemic), how do you make lemonade. Because the pandemic is everywhere these days, we might use this current event to get students to think about the impact on various types of business. You might ask your students questions like…

  • What types of products (or companies) are likely to do particularly well (or poorly) in the pandemic? And more importantly why?

Many of their answers can be tied back to consumer behavior changing. This gives them the opportunity to see how understanding customers influences business. For more interesting examples you might share with your students, consider these articles: “Puzzles, hair dye, yeast: Companies thriving during COVID-19,” and “Early department stores were incredibly innovative. What happened?” to find less obvious examples.

  • How should companies engage in promotion during the pandemic? Why? 

Again, more examples from successful and less successful companies. See these articles about advertising “We have hit peak pandemic advertising, and now they’re just annoying,” and “Brands With Strong Twitter Personalities Stay the Course During Covid-19” (you may need to sign up to access that last one — you can get three free articles a month after signing up).

Amazon’s advertising platform turns off customers…

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It seems like we talk about Amazon a lot here at Teach the 4 Ps. For several reasons Amazon is a great class example. First, it is a brand that everyone knows and most of our students use on a regular basis. Second, they are at the leading edge of so many new marketing practices. Third, Amazon offers the opportunity for examples that reflect many marketing practices (and many chapters). Today, we are talking about Amazon the online retailer, as an advertising medium. After Google and Facebook, Amazon is growing fast as an advertiser. A Wall Street Journal article earlier this year pointed out that “54% of people looking for a product now begin their search directly on Amazon…” Search advertising has traditionally been Google’s sweet spot.

This article, “Ad Business a Boon for Amazon But a Turn-Off for Shoppers,” (November 26, 2019) points out that Amazon may need to be careful with all the advertising. Some customers are getting annoyed with the online retailer for serving up too many ads. Customers just want the product they are looking for–but they often have to search through many “sponsored posts” before they get there.

This article or example may be used in your marketing classroom in a number of ways. If Amazon wants to do well by customers, is this the right way? Is this customer-oriented behavior (Chapter 1)? An interesting counter-example might be drawn out by asking students if they have ever gone to Amazon looking for one thing, then seeing an ad for a competing product, and ended up buying the competing product. Was that information useful?

The question gets further muddled when the article also notes that ads like this might help Amazon deliver one-day service that customers love (Chapters 10 and 12). It also suggests changes in consumer behavior (Chapter 5). And then of course the article highlights how Amazon is becoming a new advertising medium (Chapter 15). Lots to potentially talk about here.

“Green” attitudes change consumer behavior—the “5 Rs” (#M4BW)

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The following is a direct quote from the forthcoming 17th edition of Essentials of Marketing.

Many consumers are showing increasingly positive attitudes toward sustainability—and these attitudes are changing some people’s behavior. While some are choosing brands they view as more sustainable, others are changing their behavior more radically. Some advocates of sustainability encourage people to practice the “5 Rs of sustainability”: (1) refuse—stop buying stuff; (2) reduce overall consumption; (3) reuse—choose reusable, not disposable, products; (4) repurpose—use product packaging, for example, for some other purpose; and (5) recycle. While most of us are familiar with the last R, the other 4 Rs are moving from fringe behaviors to being increasingly common. This may have implications for marketing managers: greater practicing of the 5 Rs may lead consumers to buy less stuff and to be more selective in what they buy.

This might be another way to foster debate around marketing for a better world (#M4BW). While a brand like Patagonia, which positions itself as extremely environmentally-friendly, might be able to get away with an advertising campaign like its “Don’t Buy This Jacket” from a few years ago, can other brands promote reduced consumption? This certainly puts #M4BW to the test and may be worth a classroom debate.