Thursday, January 28, 2010

Psychology of Retailers

I read an article recently at “It’s Your Money”, which talked about that restaurateurs are using menu psychology to increase the profit. It’s not only them, I remembered reading many other instances where organizations use such measures to promote sales, to increase their profit and to sell exactly what they want.

1) I remember one of the corporate trainer once narrated this instance: When Close-Up entered in Indian market, Colgate was number one brand in tooth pastes and it was very difficult to beat them. Close-Up came up with a unique advertisement which said that “Only Half the Brush is what it needs to clean your teeth.” Campaign was a huge success and more people started using Close-Up, but profit never showed that success. After more brain storming they realize that because now people are using less toothpaste, its lasting for long, hence more users but still same number sales. They increased the diameter of paste’s tube and profit increased in proportion to sales.

2) In one of the management subjects I studied in graduation, I remember one of the case study where they revealed that keeping women cosmetics close to diapers in a super mart increases its sale as well.

3) Also, one of my friends who worked part time in one of the Indian super mart, Big Baazar, once told me that they keep small items like dusters, chocolates, mints, etc near the counter because they have huge margin. While customers are waiting in line for their turn, they look at those low cost items and decide to buy it without giving much thought even if they don’t need it.

Menu Psychology might be a new concept for restaurateurs, it's not new for retailers in general. As a customer, you have to be responsible for your money. No one cares for your money more than you.

1 comment:

  1. Pricing consultants devise pricing schemes whereby for the flagship product that's meant to be marketed most they create at least ONE higher-priced model that's just a little "too expensive" which results in customers choosing the second expensive, i.e. the one they wanted to sell most. Had that been the dearest, they would have often settled for the next down the line and so on. When it comes to small items that may be ok but when "teaser" rates are stuck onto things in the six digit arena it gets beyond the joke:
    Of Mortgage Brokers, ARMs, Attrition and Marathons