Preempt Customer Decision Making January 2016
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During a typical decision process, consumers identify a need for a product or service, search for information, evaluate alternatives, and make a decision (a purchase). After consumers buy a product or service, they engage in various postpurchase evaluations and behaviors. The idea of preemptive distribution involves a company's inserting product-and-service options into the decision process so that consumers will simply fail to consider competing companies as relevant. Such preemption might require reading consumer tastes early, providing more convenient information and shopping channels more quickly when a consumer need arises, and delivering products quicker than competitors do.
The future of retail will center on a race among companies to beat competitors during the unfolding of the consumer decision process.
Northwestern University (Evanston and Chicago, Illinois) Kellogg School of Management professor of marketing Eric Anderson and colleagues recently analyzed data from a large retail chain to identify what they call "harbingers of failure"—consumers who consistently choose products that will ultimately be market failures. When they release new products, companies often court early adopters—consumers who are the first to a store to buy a new product. The assumption is that early adopters encourage other people to buy the new product; however, relying too heavily on the opinions of early adopters could be problematic. According to Dr. Anderson and his colleagues, some early adopters are harbingers of failure and regularly buy new products that will ultimately fail in the mass market. The researchers suggest that identifying whether a new product or service is popular with harbingers of failure can prevent the costly mistake of launching the product or service (at least in its initial form) to a larger audience. Canceling the launch of such doomed products early enables decision makers to focus on launching viable products before competitors launch similar viable products of their own.
Although companies spend a great deal of time and effort designing marketing campaigns, few of them are aware of the complex dynamics that exist among messaging styles, product types, and consumer responses. Recently, Theodore J. Noseworthy of York University (Toronto, Canada) and colleagues from other universities showed that creating an exciting buzz as part of a product launch can overwhelm consumers when the product is not easy to understand (its benefits are ambiguous). During one study, the researchers asked participants to evaluate three ads for a single brand. The first ad featured content congruent with the brand, the second ad featured content moderately congruent with the brand, and the third ad featured content extremely incongruent with the brand. The researchers varied arousal (excitement) levels among the participants by having some participants complete a moderate workout, some complete an intense workout, and some complete no workout. Participants who did not exercise (and therefore had the lowest levels of arousal) were able to follow and accept the extremely incongruent ad more easily than were the participants who exercised. Participants who performed moderate exercise tended to favor the moderately congruent ad, whereas participants who performed intense exercise (and therefore had the highest levels of arousal) had negative reactions to all three ads. The researchers concluded that generating a great deal of excitement about the launch of an innovative product can backfire: If consumers cannot figure out what an innovative new product does, their excitement can turn into anxiety and tension.
In recent years, multichannel shopping has become a reality for many shoppers. For example, a shopper may search for product information online on a home computer, try the physical products in a local store, compare prices on their smartphone while they are in the store, and ultimately purchase the product online from the retailer with the lowest price. Similarly, a shopper may use online research to construct a focused shopping list and then visit a local store with digital coupons on a mobile device to purchase only the products on his or her list. Multichannel shopping has made consumers savvier and less likely to give in to impulses in stores. Diminishing impulsive shopping appears to be hurting some retailers that rely on basket share from impulse purchases to meet profit targets.
Consumers' adopting specific purchase patterns is at the heart of Amazon.com's (Seattle, Washington) Dash Button—an internet-connected device that enables customers to order a single household item (such as laundry detergent or a packaged-food product) literally with the push of a button. Consumers may place the brand-logo-emblazoned button in storage areas such as closets or shelves so they can immediately reorder a fixed amount of a certain product (by brand) when they notice low stocks. The Amazon Dash Replenishment Service is a future extension of the Dash Button. The service will work with sensor-enabled devices, such as washing machines and coffeemakers, to reorder supplies automatically without requiring users to push a button. Amazon is able to compete with typical supermarket distribution networks by offering an early-order system that essentially preempts the trip to the supermarket. And in 2011, South Korean discount-store chain Homeplus (Tesco; Cheshunt, England) took advantage of the fact that many South Koreans who have little time to go grocery shopping own smartphones that enable online shopping. The company leveraged smartphone technology to turn subway billboards into virtual stores. The subway billboards show photographs of products that Homeplus sells. Each product has a QR code, and shoppers add a product to their virtual basket by scanning the item's code with their smartphone. They can then complete the order and arrange the delivery of their items, eliminating a trip to the supermarket.
Finally, some technologies—notably drones—will enable retailers to compete by cutting the cost of product delivery and by potentially shortening product-delivery times. Researchers from the University of Cincinnati (Cincinnati, Ohio) and AMP Electric Vehicles (Workhorse Group; Loveland, Ohio) are developing HorseFly—a delivery drone that deploys from a compartment in the roof of AMP's electric delivery truck. HorseFly can carry 10-pound loads, which is double the weight of what Amazon is aiming for with its delivery drones. The drone deploys from a truck near its delivery destination rather than from a distant warehouse and can recharge its battery on the truck, thereby eliminating a variety of concerns about long-range drone flights. Because HorseFly removes the need for delivery trucks to stop at every destination so human employees can deliver small packages, AMP believes that use of the drone will cut delivery costs and enable companies to deliver packages more quickly. However, US Federal Aviation Administration (Washington, DC) regulations do not yet permit the use of drones for package delivery.
Early product research, product-launch methods, and novel information-dissemination, ordering, and distribution models all converge on the general idea that the future of retail will center on a race among companies to beat competitors during the unfolding of the consumer decision process.