Posts Tagged ‘L. Bolton’
Monday, November 22nd, 2010
With the holiday shopping season kicking off on Friday, retailers are falling over each other with their black Friday sales designed to get shoppers into their stores. According to Smeal’s Lisa Bolton, however, the retail industry should be trying to wean consumers off of their focus on price.
From Smeal’s Research with Impact website:
There are other elements retailers need to think about and push for in order to take some of the emphasis off price.
“Besides having the right price promotions in place, it’s critical to consider the consumer’s overall shopping experience,” Bolton says. “Retailers have to figure out ways to get beyond price and offer something that consumers are looking for.”
She adds that thinking about elements like parking, cart availability and overall atmosphere are not trivial. These details help create a pleasurable experience that may entice shoppers to come into a store, stay longer, and purchase more.
On the other hand, Bolton knows that the recession has made consumers overly sensitive to price. The continual low prices have conditioned consumers to buy on promotion, so it will be a challenge for retailers to change consumers’ mentality.
“This is a difficult problem for retailers,” she says. “If you move away from price and your competitor stays with price, then you’re at a disadvantage, so it’s almost as if the whole industry needs to figure out how to move consumers away from price.”
In an ideal world, retailers want to move away from price altogether and get consumers focusing on quality. However, Bolton thinks that this ideal world may be far off. Given the past few years, she admits it’s going to be challenging for retailers to wean consumers off sales promotions.
Friday, February 26th, 2010
Over the past year, we have discussed everything from the housing industry to Starbucks coffee, thanks to insights from our expert faculty at Smeal. Thank you for your support and readership. We look forward to the year ahead and hope we continue facilitating discussion and producing content of interest to you.
Below is a recap of some of our most viewed posts, addressing several key issues that made the past year a challenging one for business.
Several car companies took a hard hit as the economy tanked and stock prices dropped, forcing them to close plants, layoff workers, and turn to the government for support. In early June, President Obama announced that General Motors filed for bankruptcy and gave Washington a 60 percent stake in the company. Smeal’s Terrence Guay provided a detailed analysis of GM’s history, highlighting the many places they went wrong, in his post, “What Happened to GM?”
The housing industry is slowly on its way to recovery after a volatile year. An unstable mortgage market and a suffering real estate market brought about decreased lending and mortgage defaults. In September, Smeal’s Brent Ambrose addressed the transformation of Fannie Mae and Freddie Mac in his post, “Breaking Up Fannie Mae and Freddie Mac.” In addition, Smeal’s Austin Jaffe outlined ten principles to help navigate the new real estate economy in his October post.
With the Obama administration came the appointment of various czars. One that made headlines was Kenneth Feinberg, the pay czar, proving that executive compensation was a hot topic in 2009 and Smeal’s Don Hambrick, Ed Ketz, and Tim Pollock had much to say about it. In May, Hambrick noted that an increase in CEO’s stock offerings could potentially lead to more risk-taking by the CEO. In his study, he suggests a better way to compensate CEOs. In addition, Ketz recommends giving shareholders more influence over corporate boards in his July post. Pollock goes as far as to say that it is going to take a cultural shift, not a pay czar, to rein in executive compensation.
Retailers had to adjust their strategies given the decrease in consumer confidence and lack of spending. In July, handbag retailer Coach, Inc. aimed to lower prices, while maintaining its luxury image. Smeal’s Lisa Bolton offered various strategies for marketers to position their luxury brands in a weakening economy. Starbucks went through the same dilemma as they adjusted pricing to portray the image of being both an affordable and premium brand. Smeal’s Jennifer Chang Coupland thought this might be a rather risky approach and outlined the reasons why in her August post.
Tags: Ambrose, Coach, Coupland, Executive Compensation, GM, Guay, Hambrick, Housing, Jaffe, Ketz, L. Bolton, Management, Marketing, Pay Czar, Pollock, Real Estate, Smeal, Starbucks
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Wednesday, September 9th, 2009
Smeal’s Lisa Bolton explains why consumers often hold on to stuff that they no longer need or even want:
A lot of marketing research concerns itself with the acquisition of goods but what about their disposition? A recent New York Times Magazine article takes readers on a visit to self storage facilities—and did you know that there are seven times more storage facilities than Starbucks coffee shops in America?! It turns out that we are squirreling away all kinds of things, not just in our basements and attics and garages, but in storage units that charge a monthly fee for the privilege. In addition to wondering why people are accumulating so much stuff, all of this storage begs the question: Why don’t people just get rid of it?
There are a lot of reasons—from sentimental attachment to the efforts involved in disposal itself—but I’ll just focus on two here. First, consumers may be falling prey to the “sunk cost fallacy.” Having invested money in buying something, people continue to (irrationally) focus on these sunk costs rather than focusing on the future costs and benefits. Firms and governments do this too when they continue to invest in new products and projects that are failing and don’t make economic sense—Concorde anyone?
Second, consumers may hang on to all this stuff in order to avoid waste. I don’t mean wasted money (which is a lot like sunk costs) or environmental waste (although that may also be a concern), but instead I am referring to waste arising from “unused utility.” We may have gotten all the use that we want from an item, but, if the item still has additional leftover utility, we will be reluctant to get rid of it. As a result, our storage units start filling up with VCRs and furniture and other items that still have plenty of use left in them—even though we no longer want or need them. Waste not, want not!
Which reminds me: Does anyone need a gently used VCR or high chair? Both have plenty of use left in them!
P.S. Aside from storage facilities, there are lots of other ways to dispose of your stuff—from Goodwill to Freecycle to our very own Trash to Treasure annual sale here at Penn State. So if you can’t use the stuff yourself, maybe someone else can!
Thursday, July 30th, 2009
A recent article in The Wall Street Journal looks at handbag retailer, Coach Inc., and its efforts to maintain its luxury image while lowering prices to meet weakening consumer spending. Chief Executive Lew Frankfort says he doesn’t believe consumer spending will return to prerecession levels, so he wants to keep Coach within the “sweet spot where we believe the market will settle.”
Smeal’s Lisa Bolton studies pricing and consumer spending and offers additional strategies for marketers to position luxury brands:
Coach and other luxury brands face a dilemma in the present economic situation: how to accommodate more frugal consumers while defending the luxury image of the brand? One approach is to use price promotions but such promotions can cheapen the brand image and “train” consumers to expect price discounts in future. (It doesn’t do profit margins any favors either!)
Another approach is to extend the brand into lower priced offerings, as Coach has done with its new Poppy line, for example. Although doing so also runs the risk of undermining the brand image, Coach is moving in this direction because the company believes that the changes in consumer spending will be long-lasting. Indeed, why are consumers willing to pay hundreds of dollars for a handbag? Understanding that question is more critical than ever in today’s marketplace. Research suggests that consumers purchase luxury brands for a variety of reasons—including a belief in the superior quality and workmanship of the products, the desire to reward oneself and self-indulge, and of course, the status and exclusive image of the brand.
For consumers, a lower-priced luxury brand offers a reference point for evaluating whether a higher-priced brand offers sufficient luxury to offset the price. The risk, of course, is that consumers will simply see the lower-priced brand as luxury for less, undermining the higher-priced brands. Hence the need to offer unique associations to differentiate the luxury brands further and justify the price differences—as Coach has tried to do with the “youthful energy” and “playfulness” of Poppy.
To manage the impact of extending the brand downward, marketers will need to carefully position luxury tiers and communicate that positioning to consumers, while at the same time watching out for the bottom line.
Looking for an upside to all of this? Well, the price of a nice handbag is now cheaper … if you can afford it to begin with, that is.