Monday, August 24, 2009

Discounting While Preserving the Brand

Anyone who’s been shopping lately has seen it: the store wide sales, discounts, coupons and massive price reductions taken at the cash register. While back-to-school shopping last weekend, we saw it up close and personal. As a shopper, it makes me a little crazy not to know what the actual price is of the items in my hand and a little excited when it rings up as less than I calculated. As a strategic marketer, it makes me crazy to see across-the-board discounting on the rack and at the register.

In recent articles in Business Week, Retail Customer Experience, and elsewhere, the experts are weighing in on when, where and how to discount. There’s great retail advice out there. Kate Newlin’s recent article for Retail Customer Experience offers advice about the antidote to price-based competition. How do we kick our own addiction to price promotion? She asserts “We have to return our focus to the shopping (not buying) process, enhancing, entrancing, and engaging the customer and the salesperson in the dance.”

Kate advises clients on how to avoid discounting and how to contain the damage if/when they do by:
  1. Hiring front line people with a passion for the merchandise
  2. Branding the experience, differentiating on elements of style and design
  3. Changing the tone, acknowledging that the customer knows the economy is in free-fall and expects a deal
In an August 14 article in Business Week, Steve McKee shares 3 rules for discounting wisely. They should discount briefly: make the rationale behind the discount credible (and obvious) to consumers, so they don't perceive it as an act of desperation. They should also discount credibly: for a limited time to treat a specific condition. And last, McKee contends they should discount creatively: by focusing on other elements of the marketing mix. I agree with McKee that in your customers' eyes, your product is either worth regular price or it's not.

I have one more tip. Retailers have the data to know which merchandise drives the sale of additional items, but still take across-the-board discounts. When they have to discount, smart retailers promote the items they know will lead to increased units per transaction at full or close to full price. This allows them to continue positioning themselves as the leader in their core driver categories and reinforces the brand for better days ahead.

Do you know which items or subcategories drive basket size? How well does your promotional strategy line up?

Monday, August 10, 2009

Using Mobile Apps to Build Customer Loyalty

When my kids were little, we knew where every public restroom was in town. At any moment, one of them might have to "go." Not only did we know which stores had public restrooms, we knew exactly where the restroom was located inside the store. Whether it was grocery store, the drugstore, book shop, video store - or somewhere in between - wherever we were, we could get a kid on the pot in less than 3 minutes.

So, I smiled when I saw that Huggies was doing a mobile campaign. Potty training is a big deal in kids' lives, and having the Disney characters "call" to talk to a 2 or 3-year old is her or his dream come true. The potty-training kit tie-in is clearly designed to generate measurable sales from the promotion. But will it get moms to buy Huggies training pants? Thankfully, potty training is a relatively short-lived stage for most kids. The real play here may be to build a relationship with the mom so she chooses Huggies diapers for her next child.

What would be truly useful to parents with kids who are potty training? While we knew the restroom map by heart for our small town, once we ventured outside Mill Valley, we were in trouble. We would have loved a mobile app that used GPS to show all of the public restrooms within a block or some self-selected distance of our location.

Come to think of it, that could be useful for another set of Kimberly Clark customers, too. Obviously, different positioning, imagery and langauge would be key, but the same basic data would be helpful for Depends users, who are getting younger all the time.

Saturday, August 8, 2009

Redefining Multi-Channel Retailing to Get Results

Health care is top of mind for lots of folks, these days as health care reform seems hopelessly bogged down in Congress. Meanwhile, costs continue to escalate. It's well-documented that providing home care is far less costly, more comfortable and potentially more effective than caring for patients in the hospital. And effective home care for chronic conditions can even help to avoid hospitalization entirely. Home care has been a fragmented industry about which information on effectiveness, patient satisfaction and comparison pricing has been hard to get.

Enter Walgreens. I've written before about the drugstore chain's move to provide in-store clinics for walk-in patients as well as clinics that operate at company workplaces, like Disney World in Orlando and Harrah’s in Las Vegas. In a throw-back to the days when doctors made housecalls, Walgreens is now offering home health services.

Through its acquisition of OptionCare, Walgreens delivers home infusion, respiratory/oxygen and medical equipment services through more than 100 accredited home care facilities in 36 states. The extension into home care means Walgreens can meet its customers' OTC and prescription needs, as well as their needs for infusion services, respiratory therapies and durable medical equipment.

In some ways, the move parallels Best Buy's acquisition of the Geek Squad, which extended the retailer into helping customers make their consumer electronics work. This is a new type of multi-channel retailing. It's not just about store, mail, web and phone orders.

Best Buy's in-home services represent a move out of consumer electronics retailing and into home integration or simply into making stuff work. Similarly, Walgreens in-home services represent a move out of the drugstore category and into longevity or independent living.

Which retailer will be next to see the opportunity to redefine multi-channel and transcend their category?

Thursday, August 6, 2009

Going Green to Broaden Appeal

The recession has breathed new life into doing it ourselves. Whether it's home cooking, sewing, entertaining at home, or home repair, consumers of all ages are doing more of it. As home sales have dropped off a cliff, home center stores like Lowe's and Home Depot have repositioned themselves away from home improvement and toward home repair.

Our work in the category shows these two locked in a battle for share. A year ago, Home Depot looked to be on the decline but more recently has been resurgent in multiple markets. We conducted research with homeowners this Spring that showed Home Depot was distinctive in its appeal to 30-year old homeowners. Teaching homeowners to rely on the home center when they're young is a strategy for assuring customer loyalty as they grow up.

Yesterday, the Home Depot Foundation and Habitat for Humanity International announced they are expanding their Partners in Sustainable Building program into a $30 million, five-year effort to construct at least 5,000 homes to meet Energy Star guidelines, or even higher green building standards. Given millennial interest in doing good and all things green, this promotion may grow and strengthen Home Depot's hold on this prized target. As Carol Phillips pointed out in a recent blog post: "Gen. Y is on track to become the greenest and most humanitarian generation in U.S. history. If one wants to do business with them they had better be very green and very nice to their fellow mankind."

In a category where merchandise and store experience are largely the same, social conscience and social responsibility may help consumers tell brands apart. Could be good news for causes, and brands that embrace them.