Getting consumers to buy a product from a retailer can be more challenging than many people realize, until they try to do it for themselves. It usually doesn't take long to see that simply having a great product isn't enough to drive a lot of sales. Getting customers to buy from a retailer requires a good product, at a good price and at a place that inspires the right kind of mood. A new study suggests that business owners can create the right mood by using sales to incentivize consumers.
Whether people realize it or not, consumers buy items when advertising and marketing manage to make people feel a certain way. Sometimes, this is obvious, such as the way trendy clothes are supposed to make the person feel "cool". A recent survey from Hawk Incentives of 2,000 consumers found that sales and discounts increased sales by making the customer feel smart.
According to Hawk Incentives, the lion's share (97 percent) of respondents answered yes when asked if they were looking for deals when shopping and 92 percent said they are "always" looking. And even with the economy doing better than during the recession, consumers are obsessed with deals. More than half of respondents (56 percent) reported they are more likely to look for deals this year versus last year and of that number, 35 percent are "much more likely" to look for deals this year.
When people say they are bargain hunting, the terminology makes for a good analogy. Part of what makes hunting or fishing so engaging is the search. Finding that great camping spot or the best fishing hole makes people feel good. The same is true for shopping. The research from Hawk Incentives found that 40 percent of the surveyed consumers said they "feel smart" when they can find the best deals.
"Smartphones and instant access to deals via thumb swipes and mouse clicks have perpetuated deal-seeking behavior, and shoppers now have an emotional and habitual propensity to stretch their dollars and maximize their purchase value," said Theresa McEndree, the Vice President of Marketing at Hawk Incentives. "Our research finds that consumers are going after the best deals with a vengeance, and deal seeking doesn't seem to stem from necessity. Retailers wanting to engage existing and prospective customers can offer deals such as rebates to help meet consumers' expectations for receiving the best deal while also collecting data to help promote future purchases and boost sales."
It's important to keep in mind that a good price and the feeling of getting a good deal can be more important than other factors, such as brand recognition. Nearly nine out of ten (89 percent) of the Hawk Incentive respondents named price and 82 percent named quality as top factors affecting their purchasing decisions. Nearly double the percentage of people who cited brand name as their top purchasing factor (45 percent).
The principle that sales makes customers feel smart can be best seen through the classic tales of J.C. Penny's ill fated plan to remove all sales. In 2012, the company made a huge announcement that it would get rid of all sales and switch to a more straight-forward approach of pricing. They thought consumers would be happy to get rid of prices that were marked up just for the sake of having a sale that shows it marked down. The plan was an abject failure and they quickly returned to the old method of pricing and sales. The data from Hawk Incentives shows why this happened. Sales make people feel smart and getting rid of that part of the experience hurt J.C. Penny's.
Read the Hawk Incentives eBook "The Recession May Be Over, But Deal Seeking Isn't" to see more data from this survey. There's a lot of useful information that business owners can use to create better marketing plans in the near future.
And for more recent research, read this article on recent consumer data from the National Retail Federation.