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    Issues:

    MARKETING PSYCHOLOGY REPORT
    May/June 2001
     
     
      SAM AND RICARDO own a small paper products company. Their goal
    is to develop a strong retail market for recycled paper products,
    especially through Web site sales. It hasn't been working out as
    expected.
     
      "What's the problem?" asked Sam. "Our recycled products are
    competitively priced, even with shipping costs. But there are so
    many other green-focused paper companies out there, its hard to make
    any money."
     
      "But people are as concerned about the environment as ever,
    maybe more so now," said Ricardo. "What can we do to sell more?"
      Sam talked to a friend who knew about buyer psychology, since buying
    first happens in the customer's mind.
     
      Sam's friend looked at the marketing materials of Sam's company
    and its competitors, then pointed out a positioning solution.
      "Your e-mail marketing letter tells people about your recycled
    products, but not why to buy them from you," said his friend.
      "But we say its recycled paper and that it will save trees.
    What else can we do?" asked Sam.
     
      "Research shows that people are more likely to buy a product or
    service from a company which they have something ideologically in
    common with," said his friend. "In other words, they want to know
    that you think alike about critical issues, like the environment."
      "You mean separate from our paper?" asked Sam.
      "Right. If you like someone, you're more likely to pick them
    over their competitors to do business with. And we tend to like
    people who think like us."
     
      Sam tried this out on Ricardo, who immediately understood the
    idea. "That is so very true in Mexico," he said. "Why didn't I
    think about it sooner!"
      "So what do we do?" asked Sam.
      "We become more than a paper company to them, we become people,"
    answered Ricardo.
     
      Ricardo wrote a new e-mail letter that not only described their
    products, but emphasized the company's beliefs and actions in
    protecting the environment from polluters and clear-cutting timber
    companies.
      "This letter makes me proud of what we've done and what we're
    trying to do," said Sam.
      "It helps customers to see us as people like them, not just a
    company selling recycled paper," said Ricardo.
     
      The letter worked better than they hoped. Not only did people
    order paper, they asked Sam and Ricardo about ways they could help
    protect the environment in their areas. This led to a chatty
    newsletter about green resources and ideas tried in other places.
    Not only were Sam and Ricardo doing good work and selling paper, they
    were building up a loyal customer base and creating word-of-mouth
    advertising that would keep them growing for years.
     
      LESSON: If you can narrowly define customer niches in which
    members share common beliefs or viewpoints, look for ways to show them you
    share some of those beliefs. Also look for ways to demonstrate your commitment
    through your product or service.
     
      For example, Ben & Jerry's Ice Cream is popular with
    environmentalists not only because of its great taste and funky
    product names, but because the company gave money to save the Amazon
    rainforest, and now uses a new packaging technique which reduces toxic
    water pollution. In short, people feel good about buying Ben & Jerry's Ice Cream.
     
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      THE PSYCHOLOGY OF PRICING:
     
      Pricing is tricky, and many books have been written about it which are worth reviewing.
    Here is one point to remember: Price has nothing to do with your product, and everything
    to do with the buyer's perception of your product. You can prove it to yourself.
     
      Imagine a beautiful, dark-green glazed vase. It has a discrete
    price tag on it of $100. While a buyer's evaluation of the fairness
    of that price has something to do with the features of the vase (shape, quality
    of glazing, etc.), it is also influenced by extraneous factors.
     
      Imagine the vase sitting on a low metal shelf in the Housewares
    section of K-Mart, along with two dozen identical vases. Would a
    shopper think the $100 price was fair? Not likely.
     
      Now imagine the same vase on a glass shelf at eye-level
    in the Home Decoration section of Macy's. Now how fair would it
    seem? Maybe a little pricey, but the buyer would be willing to be
    convinced of its worth.
     
      Now imagine the same vase in the fine crystal section of Saks Fifth Avenue,
    sitting on a velvet cloth atop a stone pedestal and covered by a glass case.
    Now how fair does the price seem? If its displayed like that in Saks, it must be valuable,
    so $100 may actually seem like a bargain! The vase didn't change, just its display and environment.
     
      The LESSON is, "Don't ignore all of the factors extraneous to
    your product or service which influence the buyer's perception of its
    value. By changing those factors, sometimes at little cost, you can make your
    product seem cheaper or more valuable than it is currently priced."

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    MARKETING PSYCHOLOGY REPORT
    July/August 2001
     
      BLYTHE AND MURRAY have a furniture store in a good part of town
    which they purchased from the founder, who was retiring. In the last
    eightmonths they've seen business decline and few repeat customers.
      "What are we doing wrong?" asked Murray. "It's the same
    store, same location, same employees, same stock, but sales are down
    20%. What are we overlooking?"
      "Something is sure a problem. Traffic has fallen off, too,"
    said Blythe. "Do you think something is upsetting our customers?"
      "Like what?" asked Murray, sniffing the air. "It smells OK in
    here, the lighting is fine, and we've even got nice music playing.
    Your idea about the snacks was a good one, too."
      "I'll ask a friend about this," said Blythe. "He's a
    marketing psychologist. He should know."
      The next day Blythe talked to her friend, and came back to
    Murray with a serious look on her face. "He suggests that we might
    have an employee problem we don't know about," said Blythe.
      "But they're the same employees that Ralph had," said Murray.
      "Yes, but they're not working for Ralph any longer. Let's do
    what my friend suggests and see."
      "What's that?"
      "Let's take a test."
      Blythe pulled out a single sheet of paper with ten questions
    on it. "We've got to answer these honestly," she said. "No
    fudging." Then she handed the test to Murray and they began. This is
    the test they took.
     
    THE CUSTOMER SERVICE QUIZ: (choice = points. Add up your points.)
     
    1) Do you spend time face-to-face with customers asking their
    opinions about your business operations, products and services?
    (This means more than saying, "How's our service?" as they're
    leaving!) Never = 0 Up to 5 customers/year = 1
    Up to 15/year = 2 Over 15/year = 3
     
    2) Do you ask customers what new products or services they would like?
      No = 0 Yes = 1
     
    3) Do employees from your purchasing and product development
    departments meet with customers to hear their opinions?
      No = 0 Yes = 1 Formal customer advisory panel = 2
     
    4) Do you collect survey data on customer satisfaction and share the
    results with all departments? (Remember, everybody ultimately works
    for your customers!)
      No = 0 Yes = 1
     
    5) Do the real needs and satisfactions of your customers play an
    important role in your business plan and decisionmaking process? (If
    money nearly always trumps customer service in your business, you
    don't get a point!) No = 0 Yes = 1
     
    6) If a customer has a legitimate problem or complaint, do you 'go
    the extra mile' to make him/her feel good about your company, or just
    fix the problem? (It's the difference between "Sorry the hem is
    torn, just get another and we'll exchange it." and "Sorry the hem is
    torn, let me get you another one, and here's a 20% off coupon for
    your inconvenience.") Fix the problem = 0 Do more = 1
     
    7) Do all employees dealing with the public receive extra
    compensation for outstanding customer service? (Recognition is nice,
    but its money that counts!) No = 0 Yes = 1
     
    8) Honestly, does your sales staff think of customers as (a)
    individual human beings to be helped, or (b) cattle to process?
    Cattle = 0 People = 1
     
    9) Do most customers return to buy from you again or refer others to
    you? No = 0 Yes = 1
     
    10) Is it your operational policy that customers are nearly always
    right, even when they aren't? No = 0 Yes = 1
     
      "So, how'd we do?" asked Murray.
      Blythe added up the score and read the scoring rules. "It says
    that if we score below 6, we've got some real customer service
    problems to solve that will likely require an attitude overhaul and
    employee retraining. 6 - 8 is fair to good customer service. 9 and
    above makes us a model for others."
      "And we got what?" asked Murray.
      "A two. And I'm not even sure our employees really think
    customers are people."
      "So we need to start doing some of the steps the quiz suggests."
    They began by talking to customers that came into the store and those
    in Ralph's card file. Sure enough, the employees had slacked off
    with the new, looser management style of Bythe and Murray, which made
    customers feel unappreciated.
      After six months of customer service retraining, monitoring, and
    constant customer evaluations, the store is doing better than ever.
    Blythe and Murray have even set up a Web site. And the first thing
    they told their Web designer was, "This site had better be the
    friendliest one on the entire Web! We want our visitors to feel like
    we care about them when they visit our site."
     
    LESSON: Follow the Golden Rule - treat people like you want to be
    treated. Do you follow the Golden Rule? This quiz may have given you
    a hint, but you can't really know unless you regularly ask the most
    important person for your business success - your customer.
     
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