Retail IS Marketing

We’ve been hearing about the eminent death of brick and mortar retail for a very long time. And while the industry continues to be squeezed as more people shift their buying habits online, retail is far from dead. It does, however, need to evolve and think about how it can remain culturally relevant. A lot’s been said about how consumers today don’t settle for just great products. They want their brands to reflect their lifestyle and values. Things like authenticity, ethical behavior, relevance to their identity matter more than ever before. Retail shopping is becoming more complex and is more than a place to make a purchase – the retail experience is a marketing platform. With the increased use of online shopping and the ease of access to a more and more locations, people are making choices based on underlying desires, not just functional needs. Thinking about the retail experience as a marketing tool will increase loyalty and sales. Treating your retail experience as a marketing tool involves six crucial elements:

  1. Tell a Great Story

The term “lifestyle” is thrown around fairly freely, but for us it’s about storytelling and engaging with people in a conversational way. A retail brand needs to be viewed in the same way a customer might view a friend who’s changing and evolving, but still has a strong sense of DNA. That means having a clear tone, but not being restricted by a rigid set of rules. It also requires that the brand communicate its story in everything it does, from traditional adverting, to how employees interact with guests, to its presence in social media. Every touch point needs to align with the other to create a clear, singular expression of why the brand exists, not just what it sells.

  • Unexpected Topics

Your brand shouldn’t be pigeonholed; it should be seen in a light where there is meaning and narratives are celebrated. A retailer can’t be afraid to venture outside its vertical and engage with people in unanticipated ways. This isn’t to say that the brand should jump into every conversation for the sheer sake of having a voice, but it should think creatively. For example, knowing banks need to attract younger customers, why not have a pop-up retail presence at a music festival? If your brand sells men’s clothing, why not host a happy hour? The point is, being an unexpected part of a conversation makes your brand more relevant in daily life.

  • Guides, Not Clerks

Going forward, in-store staff will have to be more educated and receive more training than retail staffers get today. That will of course lead to a larger training investment by the retailer, but the benefit is that there will be greater incentive to reduce staff turnover, which in turn will improve the shopping experience for consumers by making staff more knowledgeable and able to build lasting relationships with customers.

  • Technology

Technology will continue to change the store experience. Not just technology for the supply chain that gets products into the store faster and more reliably, but technology that consumers can use in the store. The technology that’s coming will recognize the consumer when they come into the store and make recommendations that are relevant and time-saving for them. It will also help retailers to organize and present products in ways that are more relevant to how consumers actually shop. With that in mind, staying ahead of the curve will ensure customers think of your brand first when deciding where to shop.

  • Create a Stage

Shopping is seen by most marketers first as a function and secondarily as something that serves emotional and social needs. Even as we talk about retail therapy, we revert in marketing to discussions about seemingly rational behavior. In fact, entertainment and a memorable in-store experience probably have more to do with a sale than the product or the ease with which people find it. Choice equates with enjoyment, turning shopping from labor to entertainment. The retail environment is an expansive, immersive media platform. People create memories within places if storylines develop and form personal connections. The stronger the connection, the more likely they are to frequent the space and to buy.

  • Foster Social Roles

When shopping is done with others, as a family or with a friend, it is as much about establishing social bonds and being an outing as it is about fulfilling specific needs.  It has replaced the park, the lake, etc. Brands that encourage people to interact both with each other and the space leads to a greater sense of brand affinity, reinforces the roles people have adopted for that shopping excursion, and creates a shared cultural connection.

Even as we talk about retail therapy, we often revert in marketing to discussions about seemingly rational behavior. But it isn’t so simple anymore. Shopping is about more than just getting more “stuff”.  Brick and mortar shopping as it is practiced today in particular jumps the line between a transactional and social experience. Shopping is as much about entertainment, establishing cultural roles and teaching cultural norms (or rebelling against them) as it is about anything else. No doubt we’ll see a range of creative ways in the future of dealing with the diversifying modes of shopping. For example, product companies may provide space to relevant service businesses. A luggage or travel store can have space for a Kayak or Expedia kiosk or service desk. The point is that it’s going to take creativity to get maximum leverage out of limited capital. But the payoff is a stronger connection to a brand, increased loyalty, and more dollars spent.

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Retail Behavioral Economics

Agencies have been applying behavioral economics, sometimes knowingly, sometimes not, for years. But as a formalized discipline, behavioral economics is a relatively new school of thought at the intersection of economics and psychology (when compared against economics as a whole).  At its core is a simple principle: human beings are predictably irrational. The discipline has been used to shed light on all sorts of entrenched patterns of behavior, such as why gamblers are willing to keep betting even while expecting to lose, or why people who want to save for retirement, or to eat better, or start exercising and quit smoking, end up doing no such things. Long before behavioral economics had a name, agencies and marketers have been using it using it. “Three for the price of two” offers and extended-payment layaway plans became widespread because they worked, not because agencies had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount. In essence, it’s about targeting behavior humans are hardwired for.

There’s nothing new in finding the psycho-social hook that triggers a reaction. What is new is an interest in systematizing behavioral thinking and using the discipline more conspicuously to shed insight on the challenges advertisers face. Advertising is a business that tries to shape how people think about their choices – it taps into the underlying triggers that drive our beliefs, actions, and passions. Neoclassical economics can explain ads only as providing information. But if the seller can invest in advertising that frames the choice, that frame will skew the buyer’s decision. In other words, a more systematic approach can unlock significant value and increase share of culture by targeting actions to match practices, beliefs, and the reptilian brain.

A shot before bedtime: Take a product’s cost less painful. In almost every purchasing decision, consumers have the option to do nothing: they can always save their money for another day. That’s why the marketer’s task is not just to beat competitors but also to persuade shoppers to part with their money in the first place. According to economic principle, the pain of payment should be identical for every dollar we spend. In marketing practice, however, many factors influence the way consumers value a dollar and how much pain they feel upon spending it.

Retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy. One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. But emotions experienced in the present—now—are especially important. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.

Another way to minimize the pain of payment is to understand the ways “mental accounting” affects decision making. Consumers use different mental accounts for money they obtain from different sources rather than treating every dollar they own equally, as economists believe they do, or should. Commonly observed mental accounts include windfall gains, pocket money, income, and savings. Windfall gains and pocket money are usually the easiest for consumers to spend. Income is less easy to relinquish, and savings the most difficult of all.

Technology creates new frontiers for harnessing mental accounting to benefit both consumers and marketers. A credit card marketer, for instance, could offer a Web-based or mobile-device application that gives consumers real-time feedback on spending against predefined budget and revenue categories—green, say, for below budget, red for above budget, and so on. The budget-conscious consumer is likely to find value in such accounts (although they are not strictly rational) and to concentrate spending on a card that makes use of them. This would not only increase the issuer’s interchange fees and financing income but also improve the issuer’s view of its customers’ overall financial situation. Finally, of course, such an application would make a genuine contribution to these consumers’ desire to live within their means.

Become the icon: Harness the power of a default option. The evidence is overwhelming that presenting one option as a default increases the chance it will be chosen. Defaults (what you get if you don’t actively make a choice) work by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we’re “given” something by default, it becomes more valued than it would have been otherwise. And we are more loath to part with it.

Savvy marketers can harness these principles. An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, “We have already credited your account with 100 calls, how could you use those?” Many customers did not want to give up free talk time they felt they already owned.

Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options. That principle is particularly relevant in a world that’s increasingly awash with choice. A default eliminates the need to make a decision. The default, however, must also be a good choice for most people. Attempting to mislead customers will ultimately backfire by breeding distrust.

Limit the options: Don’t overwhelm consumers with choice. When a default option isn’t possible, marketers must be wary of generating “choice overload,” which makes consumers less likely to purchase. In a classic field experiment, some grocery store shoppers were offered the chance to taste a selection of 24 jams, while others were offered only 6. The greater variety drew more shoppers to sample the jams, but few made a purchase. By contrast, although fewer consumers stopped to taste the 6 jams on offer, sales from this group were more than five times higher. Large in-store assortments work against marketers in at least two ways. First, these choices make consumers work harder to find their preferred option, a potential barrier to purchase. Second, large assortments increase the likelihood that each choice will become imbued with a “negative halo”—a heightened awareness that every option requires you to forgo desirable features available in some other product. Reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.

Brand matters: Position your preferred option carefully. Economists assume that everything has a price: your willingness to pay may be higher than mine, but each of us has a maximum price we’d be willing to pay. How marketers position a product, though, can change the equation. Consider the experience of the jewelry store owner whose consignment of turquoise jewelry wasn’t selling. Displaying it more prominently didn’t achieve anything, nor did increased efforts by her sales staff. Exasperated, she gave her sales manager instructions to mark the lot down “x½” and departed on a buying trip. On her return, she found that the manager misread the note and had mistakenly doubled the price of the items.  In this case, shoppers almost certainly didn’t base their purchases on an absolute maximum price. Instead, they made inferences from the price about the jewelry’s quality, which generated a context-specific willingness to pay.

The power of this kind of relative positioning explains why marketers sometimes benefit from offering a few clearly inferior options. Even if they don’t sell, they may increase sales of slightly better products the store really wants to move. Similarly, many restaurants find that the second-most-expensive bottle of wine is very popular. So is the second-cheapest. Customers who buy the former feel they are getting something special but not going over the top. Those who buy the latter feel they are getting a bargain but not being cheap. Sony found the same thing with headphones: consumers buy them at a given price if there is a more expensive option, but not if they are the most expensive option on offer.

Another way to position choices relates not to the products a company offers but to the way it displays them. For instance, that ice cream shoppers in grocery stores look at the brand first, flavor second, and price last. Organizing supermarket aisles according to way consumers prefer to buy specific products makes customers both happier and less likely to base their purchase decisions on price, allowing retailers to sell higher-priced, higher-margin products. For thermostats, by contrast, people generally start with price, then function, and finally brand. The merchandise layout should therefore be quite different.

Marketers have been aware that irrationality helps shape consumer behavior for a long time. Behavioral economics can make that irrationality a bit more predictable. Understanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value.

The Return of Tabletop RPGs: Musings from GenCon and the Branding of Inclusion

gen-con.jpgGrowing a Belief

Gaming is not going anywhere, but the business does need to grow. Even with the successes and growth of RPGs in recent years, there is always a need to secure old fans and new fans alike. As the industry matures, the established brand names wield the power to influence, build, and shape gaming culture as a whole. Brands like Paizo Publishing and Wizards of the Coast are among the foremost cultural creators, especially considering the recent mainstream popularity of properties like Dungeons & Dragons (D&D is, for the world, the bastion of play). Of course, gaming culture mimics culture as a whole, reflecting or even predicting waves of great social change as they happen. When calls for accessibility, inclusion, and diversity ripple through the country, they also sound in the gaming community. Brands recognize this. They also understand that their core audience is at risk should they pivot too quickly to answer. This creates a limiting cycle wherein a brand cannot evolve for the sake of preserving its core audience, and the core audience defends the brand to the point of excluding potential new fans. Likewise, society takes baby steps forward while simultaneously bolstering the status quo. But in looking ahead for both culture and gaming, these trends signal the strongest long-term return will come from investing in and standing with this inclusive, belief-based audience. And each of these challenges is a tremendous opportunity if brands focus on them correctly.

While belief-based messaging is not new, the trend within advertising and strategy is in a rekindling stage. This means researching, pinpointing, and applying the ideals shared by customer and brand alike, allowing brands to get themselves a piece of their audience’s cultural pie. And it’s more than penning some messaging that strikes a fleeting chord with a tenuous audience – it’s shaping a brand oeuvre that, while nimble, will stand with its target audiences and embody their beliefs throughout their lives. At the same time, value exploration lets a brand rediscover and project its own authentic personality and voice, meeting overlooked or untapped audiences halfway and effectively breaking out of the self-defeating cycle of audience preservation. It leverages the belief that a brand isn’t so much an object as it is a dialog. It’s a tactic that both strengthens a brand’s link with established customers and strategically hones branding to attract new fans. This belief-based approach has proven itself valuable and lasting, and we use it to bring the same enduring brand legacy to clients.

GenCon 2018 – The Year of Inclusion

Being headquartered in Indianapolis gives us a vantage point for attending and analyzing GenCon every year, which allows us to watch the evolution of the con’s internal culture and also its effect on the city and larger gaming world. This year we observed that diversity and inclusion featured as centerpiece topics for many panels and as major considerations in convention participant guidelines. While the con carried on with its usual electricity, these voices for inclusion stood out as louder and more numerous than they have been in years past. The national zeitgeist has been around movements like #MeToo, Black Lives Matter, LGBTQ rights and representation, accessibility, and gender nonconformity. Ever a microcosm of the larger cultural conversation, these audiences’ voices are finally, actively being heard at GenCon and in the gaming world, and they are waiting for a response. While they wait, it creates a reverberating cultural dissonance between rapidly evolving cultural demand and what influential brands slowly say and make.

While some segments of gaming culture have made strides to represent these values, the demand for outwardly inclusive products is not being met by the major players in the market. Any movement toward these values is usually driven by proactive community members rather than brands themselves. Of course, smaller brands have popped up with products and communities that serve these belief-based buyers. Blue Rose and even well-established games like Shadowrun are considered inclusive RPGs. Outside of RPGs, One Deck Dungeon and Ashes: Rise of the Phoenixborn are well-received for their representation. Major brands may actually have comparable products that would serve this audience well. But overall, big brands seem tentative about directly catering to those outside their core – in all likelihood because they do not want to risk alienating segments of their cornerstone players. And if you looked at overall sales and brand awareness, these major brands would appear to be winning; D&D and Magic the Gathering remain the biggest names in the RPG and deck-building game markets. On the other hand, brands taking belief-based stands and fostering inclusion-focused communities are responding to this potent cultural calling and gaining long-term edge because of it. In the end, it is up to the bigger market leaders to recognize this shift and join in riding the wave now, rather than being left rudderless in the current. Being one of the biggest names in gaming, Wizards of the Coast is in a unique position to both capitalize on this demand and expand its keystone audience in the process, influencing much of the industry to do the same.

Recently, our research focus has been on roleplaying games. And Dungeons & Dragons is the grandfather of them all. Roleplaying games are, at their core, inclusive. In an ideal world, all audiences recognize that they provide a dynamic system of play and a fantastical world that anyone can adapt. The basic system is a sandbox for

people to build whatever adventure they want to play and be whoever they want to be. So, a brand might focus on this versatile content, touting its inclusiveness and their willingness to rewrite the source materials. Yet, for its myriad merits, D&D has become stereotyped and, effectively, owned by a niche audience. The universal appeal of the brand and the game itself is still there, but this core audience has culturally constructed walls impeding adoption. In other words, many of the core audience are perceived as gatekeepers. An RPG is only as good as those playing it – and D&D’s current core, targeted audience is loyal, but not perceived as inclusive. Wizards of the Coast is presented with a worthy challenge: both the product and the audience need to become more welcoming to diverse, new fans, but only the product seems directly controllable.

Focusing on shared values solves this disconnect among brand, product, and audience. And integrating the correct shared beliefs both into what a brand says and does publicly and the brand’s parent company itself will only further this connection, creating lasting brand love. Streamlining this integration and closing the gap between audience and brand ideals allows the brand to bottle cultural lightning for themselves. For a brand like Wizards of the Coast, inclusivity should be the value integrated first on the controllable side – the thoroughness and thoughtfulness of the integration standing in the way of any knee-jerk claims of inauthenticity. A diligent transformation will spurn some fans but invigorate others to adopt and practice these values. It all starts with the brand itself, changing the product and the culture from within, and then without. To put it simply, a shared value approach amplifies the brand’s stand for inclusivity and diversity and transforms the core audience from gatekeepers into welcoming advocates, opening the floodgates for long-term returns.

Importantly, when it comes to inclusivity and diversity, a brand must show – not tell – its intended audiences their shared values. Continuing the example, Wizards of the Coast has spoken of inclusivity as a marquee value for a long time, but the meaning of the word loses effect on these potential audiences when it’s not fully ingrained in brand infrastructure. This means not focusing the conversation on small updates, but going above and beyond internally to get product elements right. This means not only relying on a trusted team, but bringing in diverse writers, creatives, and community leaders to work with them. This means not campaigning to point out the steps you’re taking, but behaving as usual while thoroughly melding these values with the brand’s day-to-day process. And those potential audience members who have been critical before will be the ones paying attention to this internal shift, adopting the game out of curiosity and appreciation for the brand’s evolution. It is a slow, deliberate, and thorough process that culturally galvanizes increasing long-term audience payoff. It is added value without taking away any offerings the core audience loves. The value-based audience pays close attention to authenticity when deciding which brands they share their values with, meaning in this case, the practicing is leagues more important than the preaching.

As curious new folks take an interest in the brand, the gatekeeper members of the core audience step into action. Some fans act as a welcoming committee, excited by the prospect of new players. While others become more entrenched, seeing themselves as righteous defenders of the purity of their game and brand. These feelings are not all bad, as the passion can be redirected in Wizards of the Coast’s favor. But, by standing for inclusivity, Wizards of the Coast takes back ownership of its brand. Core audience members, gatekeepers or otherwise, will tend toward reflecting the brand and practicing shared values. New people are interested in the game, which the brand shows them means better products and new adventures. A growing audience then acts as a catalyst, rather than a trap trigger. Beyond controlling the product, a brand with a firmly held belief can, via ripple effect, influence its current audience, bolstering the welcoming committee by converting others from territorial soldiers into fierce brand advocates.

So What

In the end, a brand taking a stand for something is a big idea. It’s a change, no matter how steady the adoption or smooth the transition. Yes, brands like Wizards of the Coast may lose some people from its core audience. But if a brand officially aligns itself with a value it, theoretically, always had, those fans were never core brand evangelists to begin with. Simply, those who don’t share brand beliefs will self-select out. And this is, in the long-term, ultimately a positive. This venting of wall-builders will allow new fans in, healing, diversifying, and growing the core audience. It is a long play brand strategy built on the brand’s values, broader audiences, and a growing foundation of fans. Standing with those who call for inclusivity, diversity, accessibility, and visibility is a brand investment in a burgeoning audience that will become part of its core audience in the future, allowing Wizards of the Coast and similar tabletop gaming brands to reclaim ownership of their principles and, potentially, lead the entire industry forward.