ETD: 698 I Say, No, Shoppers Do Not Shop for Price?; Class
action suit against credit card companies; Retailing in 2023
E-Tailer's Digest
etd_post@gapent.com
Thu, 26 Jun 2003 10:49:09 -0400
E-Tailer's Digest --- Everything for the Retailer
Issue #0698 June 26, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] I Say, No, Shoppers Do Not Shop for Price?
[3] Class action suit against credit card companies
[4] Retailing in 2023
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[1] Greetings.
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Hi All:
Today we have another excellent piece from Alan J. Zell, Ambassador of
Selling who spent over 25 years in retailing. Since 1983 his business
offers workshops and consulting on business topics that affect
sales. Alan's last post generated a lot of discussion from list
members. What do you think about today's topic?
Thank you for your kudos on the special report - "Retailing in 2023." We
have some comments posted today. Let's hear from you.
I'm back from Las Vegas. Excellent show. Small number of attendees
(1,800), but large number of visitors (138) and large number of leads
(23). That's my kind of show.
My apologies for the two digests you may have received on Tuesday. I
accidently sent it to the old list server. I will remove that list server.
Now, let's get to everything for the retailer.
Sincerely
Dr. George Matyjewicz
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] I Say, No, Shoppers Do Not Shop for Price?
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Is this question being asked because we want to blame customers on
demanding lower prices or is it because we have taught customers to shop
for price by putting so many things on sale? Which came first?
Do shoppers shop for price? I do not think so although others say that in
most cases the answer should be "yes. " I would agree that price is factor
when all things are the same. But, as you know, not all things are the
same just as people, nee customers, are not the same.
Price is thought to be the reason people do not buy because it is the
excuse people use when other things do not fit what they are doing or want
to do/use or would like to do/use. When surveys are done on what criteria
people use to make a decision to buy price is often 5th, 6th or 7th in
importance. Getting to the point where price does become a factor means
that there has been a discussion or thought (discussion with one's self)
about what may be eventually be purchased.
The first decision, of course, concerns if there is a need and how can it
be used or what does it go with. If there is no need or use for it, being
on sale has no effect whatsoever. So, if one gets past this point, then
size or color or material comes into play . . . if it isn't the right his
size, then who cares what the color or material or price is? If there is a
use and the right size, either color or material take on some importance
before price does. There are a lot of decisions that come into play on the
way to make a decision and when the customer gets through these 3 or 4
steps, then price becomes a factor. Certainly, on one wants to pay more
for something that they have to if all other things meet the criteria set
by the customer.
Before a customer will go shopping or, for that matter, listen to or react
positively to a telephone, direct mail or media advertisement or to
something someone had told them has to be a need . . . a need to buy
something for using or giving. Until the need arises, price is not a
consideration. Once the idea comes into mind they will, possibly without
realizing it, come up with a price range in mind. When they look into it
further and all other things fit, they will go over the amount they had
been thinking about or they will go for the lowest price.
In the scheme of things, shoppers do not shop for price, they shop for
"added value" . . . they want to get more for what they are paying for
or, they will only be willing to pay less since they do not see that they
are getting the added-value.
Oh, you might ask, what about impulse buying? Look at it this way, there
is no such thing as impulse buying. No one buys anything without having
had some inputs (media, movie, TV, photo, etc )or conversation or thoughts
about it. It put an idea into their head. It just sat somewhere in their
memory and was not pulled up until there was a reason to buy it. Nowhere
was price a factor in their earlier decision not to buy it.
It is interesting that the majority of consumer products are usually on
sale. Sometimes, even, before the product has been offered at regular
price. The regular price is called "suggested retail price." Many years
ago I challenged a vendor about the SRP of some of their products as there
was no reason for the high retail price with a consumer promotion
discount. My cost was about the same as before. He looked me in the eye
and said, "Mr. Zell, that's a suggested retail price. I suggest you go
jump off the bridge but you don't have to do it, do you?" 'Nuff said.
It is well known that most "sale" prices, other than close out sale goods,
are a discount from SRP where the markdown has been built into the multiple
of cost. My calculator says that you can't give away what you don't have
to give. There has to be enough markup to cover the costs of running the
business as well as paying for the goods. One can't give away 25% or 35%
or 50% if one does not have it to give away. Merchandising products this
way has become the norm.
Some products, because they distribution is controlled or the markup is so
low , do not go on sale as a regular practice. However, there are those
that, even then, will be willing to cut the price in order to make the sale
or increase their market share. Anyone can cut the price of something in
order to sell it. Eventually, unless there is extra markup in the original
price, selling something at the lowest price may become unprofitable.
Another factor that comes into play that causes price to be the prime
reason why price is thought to be a reason while people buy is that so many
products have become commodities . . . that stores are all carrying the
same goods . . . and this has caused vendors and stores to "buy' their
customers by putting the goods on sale.
In addition to things being on sale, the other format is rebates. What
makes this, hopefully, a plus for the vendors, is that many people do not
ask for the rebates . . . and those unredeemed rebates are all profit.
Is "on sale" and "less rebate" losing their effectiveness? When will
prices go back to being respected as the true value of something? I'd like
to think so but I am realistic enough to know that it will be some time
before it happens and by looking at newspaper advertising, I think it will
not happen.
So, rather than asking, "Do customers shop for price?" maybe we should be
asking, "Where did this idea that shoppers were primarily "shopping for
price" come from?" Was it that customers demanded lower prices or is it
because the retail industry has taught customers to shop for price by
putting so many things on sale?
I believe it was the latter. I think it started when the retail and vendor
management changed from merchants to managers. They did not
understand how the public saw their goods as having value other than
selling the goods for less.
Alan J. Zell, Ambassador Of Selling
azell@aol.com
Winner of the Murray Award for Outstanding Achievement in Sales & Marketing
Chairman, PNW Sales & Marketing Group
Please visit the articles about selling and business topics that affect
sales at www.sellingselling.com
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[3] Class action suit against credit card companies
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If you (as a merchant) have ever had a dispute with a credit card company,
you'll be interested in learning about the following class action suit:
http://www.cyberlawattorney.com/classaction.htm
Anyone care to comment?
Martha Retallick, "The Passionate Postcarder"
http://www.PostcardMarketingSecrets.com/
+++ [Moderator's Comments] +++
Interesting suit. In part it states...
The complaint charges that Visa, MasterCard and their co-conspirators
(i.e., their issuing and acquiring banks) violated Section 1962(c) and
1962(d) of the Racketeering Influence and Corrupt Organizations Act,
Section 16 of the Clayton Act, Section 2(a) of the Robinson-Patman Act and
other unlawful business practice violations by conspiring to commit fraud
and theft through means of wire and mail when processing merchants
Internet, telephone and mail order transactions. The complaint alleges that
the Defendants breached their contract, their implied covenant of good
faith and fair dealing, duty of care and fiduciary duty as a banking
institution by failing to take appropriate measures in addressing fraud and
theft in the Internet, telephone and mail order industry. The complaint
further alleges that Visa and MasterCard failed to disclose certain supra
competitive transactional and penalty fees to Internet, telephone and mail
order merchants and forced such merchants to pay such supra competitive
fees with the abuse of their monopolistic powers. Moreover, many of these
supra competitive fees were only stated in their unpublished rules and
regulations, which were never disclosed to merchants at the time of
contracting. Furthermore, the complaint alleges that in cybershoplifting
scenarios, there are virtually no set of facts or documentation in which an
Internet, telephone and mail order merchant could argue to prevent
Defendants from debiting penalty fees from their merchant accounts. As a
result of these unlawful acts, according to the complaint, Internet,
telephone and mail order merchants have paid virtually all of the costs
associated with fraud and theft in their industry while Defendants made
millions of dollars from their supra competitive transactional and penalty
fees.
George
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[4] Retailing in 2023
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George: How about a robot to put away groceries? Your 2023 projections
sound like living in "The Jetsons" cartoon but with autos and roads instead
of air flight. :)
Marty Oskvig
www.creativememories.com/mos
+++ [Moderator's Comments] +++
Great idea. They now have a robot that cleans floors ("Roomba"), which I
hear works fairly well (not an endorsement). So why not a robot to put the
groceries away? My wife would be the first to buy it ;-).
George
+++ Next Post +++
You gave the impression that online grocery ordering services have failed,
for several reasons having to do with things "missing from their business
plans". Seems to me that you should check out NetGrocers/Nexpansion's
"Endless Aisle", and perhaps Peapod too, to learn about online grocery
services which are apparently making a heck of a "go" of it *right now* -
despite your disapproval of their business plans. Endless Aisle, in
particular, has been growing like topsy - every few months there's yet
another announcement about a new chain of grocery stores which has signed
on for the service - and I have to assume that that's happening because the
new ones are seeing successes for the ones which had previously signed up!
I know it's tough to keep up always with current information about
etailing, George - but you're in a pretty trusted position as the publisher
of the Digest, so you've obviously got to be extra careful about statements
presented as facts ...
Regards,
John Vinokur, President
Payment Central Inc.
"The TRULY-secure payment-acceptance specialists!"
mailto:arti(at)securenet.net
+++ [Moderator's Comments] +++
I am very familiar with Peapod, having done a study in the industry for a
then competing service. Unfortunately, they are not a success story. They
are an ordering service who partner with grocers to deliver goods to the
home. I did go to their site once again and entered my zip code in
Atlanta, New Jersey and my office in NYC. Nope. No service. Seven market
areas in the US is not a success story.
And I had them both in mind, when I said they are missing the
boat. What are they offering? I still have to enter my list. Sure, I
can use last week's, but that doesn't save me much. Why don't they give me
software to use at home? Why don't they provide scanning
equipment. Order takers save me nothing.
BTW, I do want to mention that I am not endorsing any product or
service. In that article I mentioned Kazaa and Apple. I don't endorse or
recommend either. Rather I was trying to identify that the technology is
there for a new form of retailing.
George
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Links to follow
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