LocalCenters.com » Consumer Behavior

Starbucks New Logo

LC — Mon, 10 Jan 2011 19:10:01 +0000

Starbucks CEO and Founder Howard Schultz has announced a new logo for Starbucks. In this video, he explains the evolution of the siren, and how it was time to “take her out of the circle.” So far, the comments have been reported to be overall negative. Do you find it interesting that the company name has been removed, and what do you think of Starbucks logo 2011?

The New AIDA Part I: Transformative Value

LC — Mon, 10 Jan 2011 05:59:58 +0000

AIDA (Attention, Interest, Desire, and Action) is a self-explanatory sequential marketing process, and as valid today as it was in 1898 when first coined by E. St. Elmo Lewis who created the AIDA marketing funnel model for the life insurance sales industry.

The objective in selling any product from a pack of chewing gum to a mansion is to convince the prospect that your product or service is of greater value to her than the cash or available credit she now has. However, a distinct and sequential process of persuasion must be implemented prior to the customer agreeing to trade her cash for your offering.

Internet marketing guru Frank Kern recently released a pre-sales video in which he presented the “new” sales sequence, with the first step being “massive transformative value.” Marketing gurus are expert in recycling old concepst into new rhetoric, and Kern’s suggested criteria necessary for making a sale not only shadows AIDA; it improves upon it.

Without the prospect’s attention, a sale is not possible.It is no longer enough to get the prospect excited;Frank Kern says she must envision the possibility for transformative value, and for big ticket items, Kern invokes the necessity for massive transformative value.

Too often, retail merchants fail to show the transformative value of their products or service. Recently a shift toward commoditizing products and services by competing largely on price has cut margins in many industries by half. The appliance business is a good example; one large dealer recently reported than while in 2006 his margins averaged 34%, his 2010 margins were a paultry 14%. The problem starts from the “Attention” phase when we promote price first and fixate the prospect on price alone, resulting in the near exclusion of overall value and benefits of the offering.

There’s a saying that we can’t change the direction of the wind, but we can change the direction of our sails. Substitute “sales” for “sails” and one may envision alternate strategies to de-commoditize our products and services, even in the face of stingy consumer spending. One method is offering a stronger money-back or service guarantee than the competition. Another is batching products and services. This method combines several items as a package and typically includes some high margin offerings thrown in to compensate for the lower margins of the primary product.

Imagine a beauty salon offering a haircut for their standard price of $30, but a coupon for 50% off on a second visit but only during shoulder (light sales) hours. That’s net 25% off and it fills a chair that would likely go empty. The transformative value is the customer putting aside the initial cost, as the subsequent cost makes lightening her wallet today a little easier.

Groupon is a phenomenally successful marketing approach, wherein the services are usually cut by 50% in price, but paid for prior to use. The merchant usually gets a check before the customer is ever seen, and the customer’s transformative value is purchasing a product or service she likely has not before, and would not had the price not been so attractive. The services are often scheduled in shoulder periods and in at least 15% of the cases, are never utilized. The pricing gets the prospect’s attention; the quick cash and ability to manipulate the product delivery is the benefit to the seller. And of course, Groupon takes their cut too.

When evaluating the sales approach for any product or service, consider what approach, offer, or package will be perceived as transformative value, rather than focusing on margin-killing, price sensitive selling. In Part II we will discuss the new paradigm of “Interest.”

The Missing Ingredient in McDonald’s Big Mac

LC — Thu, 10 Jan 2008 18:00:00 +0000

I have a great deal of respect for McDonald’s, and a good bit of that is from my experience as an employee back in the $.15 burger days. They taught me how to work in production.

In grad school we studied their new product introduction cycle; it’s one of the most sparse in the industry. There was a three year void of new products between the existing line and the introduction of the Big Mac, way back when. McDonald’s doesn’t make many mistakes, and they still have the highest margins in the industry. And as we discussed in this recent article, they are still tops with us boomers.Yet, the “how many MBAs did it take to screw this up??” resurfaced yesterday when I bought my first Big Mac in several years, at the drive-thru.

Being a dedicated multi-tasker, as you probably are as well if you’re in this business, I often eat while I drive. I know, I know, that’s a no-no. As a matter of fact, Nation’s Restaurant News in May 2001 cited a study of “vehicular dining.”

According to recent studies conducted by the American Automobile Association and by the Public Health Department in San Francisco, drivers who ate and drank — coffee, milk shakes, colas, juice and other nonalcoholic beverages – behind the wheel were at least as dangerous as those who talked on cell phones.

However, at least 80% of us DO eat or drink while driving occasionally, and that fact is inarguable. A marketer, be them a one off strip mall retailer or a multi-national corporation, must meet the market and customer needs, and McDonald’s didn’t meet mine yesterday.

Driving up Interstate 5, yakking with some broker on the cellphone with the bluetooth, sipping my Coke, I opened one of the two Big Mac boxes (there’s a 2 for $4 deal going, how could I say no), I was horrified to discover the missing ingredient–NO PAPER WRAP! The cardboard box was the packaging and I knew what you see on the left was going to happen.

I ended up with half a head of shreaded lettuce, secret sauce, and burger juice running down my arm, onto my jeans, and the landing spot was the seat of my SUV. It was a damn mess and I blame the Ivy League schools for turning out too many knuckleheads obsessed with saving $0.002 per product delivery while marketing and product delivery get ignored.

I had the same question about the genius boys several years ago when I left KFC with a HALF a drink holder! Instead of the usual four-place cardboard holder, they gave me a half a holder for 2 drinks. How the hell does THAT work? Try balancing two sodas in traffic without a base to hold them. Did the packing managers miss their basic physics class?? Bet they saved a quarter cent though, and got a weekend in Dollyland as a bonus.

When the customer leaves your store, or your drive-thru, the customer experience continues until the product is consumed, stored, or discarded. An omission like this can cost any retailer a customer. Jamba Juice has “customer walks” several times a day, not only to insure the path to the store is free of trash and debris, but the trip out of the store when the customer first tastes the product is equally as pleasant.

What do you do to insure that a positive customer experience continues after you’ve got their money?

The #1 Restaurant Choice for Baby Boomers Is….

LC — Fri, 04 Jan 2008 06:18:49 +0000

Restaurants and Institutions Magazine has published a study on quick service restaurants, comparing the dining out habits of the baby boomers to those of the younger Gen Y. While about 15% of the boomers visit a casual dining store at least once a week, less than 12% of the Gen Y’ers have the same patterns.

Dinners edge out lunches for the dine out meal of choice, but breakfasts are gaining some ground too.

As to the choices, it’s obviously not going to be the same fast food restaurants for this health-conscious crowd. Right??

Maybe we aging folks just have too many memories, or maybe too many of us worked there! Read the full article from Restaurants and Institutions

Retailer Reports 30% Credit Card Declines and Bad Checks

LC — Fri, 04 Jan 2008 05:27:02 +0000

Some of our merchants are membership-based and funds are either withdrawn from checking or a credit card automatically.

This afternoon I received a call from one of my best tenants, requesting a split rent payment schedule in January; the reason for his request is pretty clear with the headline above. Thinking there was a processing error, he called the company who processes the payments, only to find that they’ve been flooded with similar calls since January 1 from all over the nation.

Obviously the payors are contractually obligated to make good their commitment, however this is an alarming percentage of defaults.

While the major credit card issuers’ mid-December estimate of a 4% default rate falls far short of the reported 30% declines which could be simply over-limit in some cases, it’s still up 26% from the previous period according to a recent CNN Money article. We’re all familiar with home equity defaults and foreclosures; so what’s next? Auto loans, and debt on those toys like Waverunners is my best guess.

What do you think?

Oh, and of course I agreed to half the January rent now and half on the 15th. When you’ve got a great tenant who has a plan and gets blindsided you go to the wall for them.