Creative Pricing Strategy Creates Retail Consensus

General Views From Inside a Mall of AmericaBath & Body Works: The Shopping Experience
I recently visited Bath & Body Works at the Mall of America for an observational study I was conducting for my Buyer Behavior class at the University of Minnesota. From the outside, I noticed the store was very well lit. It was one of the few stores in the mall that had product on the outside of the doors before you enter the store.

The products outside were candles and lotion, which not coincidentally are a great attraction for sampling or stopping to take a sniff. Observing the store from the outside, I noticed numerous people, even if they didn’t go into the store, stop and smell a candle or take a free sample of lotion.

This was just one aspect of Bath & Body Works attempt to build what as Robert Cialidini and Steve Martin call a “consensus.”  To execute on that Bath & Body Works purposefully placed their most engaging products at the front of the store to make the store look busier and therefor appear to be more attractive to passersbys.

The second major aspect I noticed of attempting to build a social consensus was the prices set for sale items in the front of the store. Strategically, these were marked “Six for $25” or “Two for $20” or something of the like, which would inherently make consumers spend more time sifting through the product before making a purchase. Thereby again making the appearance of a very popular place to go shopping with deals that customers can’t keep their hands off. I thought this approach was genius.

Deeper into the store, I noticed that sampling was highly encouraged. Every type of lotion or body spray had an open bottle with a huge try me sticker on it. In addition, two giant sinks encouraged customers to sample the various kinds hand soaps. This was what Robert Cialidini and Steve Martin described as “reciprocity.” If you try enough of these products, you’ll eventually feel like to you have to buy something.

Finally towards the back of the store before you are getting ready to check out, there were a couple of large display tables, one table was targeted at children shoppers, while the other was targeted toward men. The table of targeted towards children had multiple levels and were the perfect height children of all heights to get something in their hands.

Other Observations

  • In terms of targeted customers by fulfilling one of the trio of basic needs, power, affiliation and achievement, I did not see this at all. Unlike many other stores in the mall, none of images in the store had people in them. Instead, they were all of water, fruit or flowers. My guess is that during some focus groups with their target market, the suburban & rural mom 25-54, they found that most of them were not impressed by alluring images of people who portray power, affiliation or achievement.
  • The scent inside the store was not as overpowering as I remembered. I can remember going to the store with my mom, probably 15 years ago and being overtaken by the array of scents. This is something they must have changed since that time and I think it was a very good move. I no longer felt the urge to leave as quickly as possible.
  • Surprisingly, I did notice a lot of women shopping the items along the walls behind the center islands. My guess is that they were probably repeat customers looking for  specific products.

Marketing Manager Recommendations

If I were the marketing manager for Bath & Body Works, I might consider creating a loyalty program. I didn’t see anything in particular driving a loyalty program and I think it could be helpful considering it is competing against other retailers like Target and Walmart for the share of wallet on soaps, lotions and candles.

I also checked the website and I did not see any programs designed for automatic monthly delivery. What if customers could sign up online to receive shipments of their favorite hand soaps each month?

Finally, given the competition, other than super friendly sales people, I didn’t see much signage indicating that the store was an “authority” in the space. There were no ingredient cards or visuals explaining why Bath & Body Works products were any better or different from the competition. At best, there were some signs outside of the store boasting of “new fragrances, new formulas, and new looks” but nothing further explaining any of it scientifically. Selling commodities at a premium price can be challenging. I would put some more focus on reinforcing the superiority of the product.

 

Loyalty Program Insights & Quick Win Sales

loyalty284x200Your Loyalty Program Is Betraying You by Joseph C. Nunes and Xavier Drèze in the Harvard Business Review laid out numerous key insights related to why many rewards and incentive programs fail and why many win.

To summarize what I thought was the biggest challenge described in the article, how do we [companies] find incentives good enough to change behavior, but not so generous that they erode margins?

And it’s not that companies have a hard time understanding this concept, it’s that they have a hard time sticking to it and evolving with it in a manner that doesn’t sway from the vision.

How often do you think executives coming to the end of a fiscal quarter or year ask a marketing manager to come up with a lever they can pull for a quick win in terms of an increase in sales and revenue? In the tough  retail environment, it is probably more often that we would like to admit. And facing this situation one of the simplest levers to pull is to inundate your best customers with a strong offer or incentive to buy now. It’s this type of short term thinking, I think adds to the erosion of a lot of loyalty programs and marketing managers need to manage it carefully.