Using representativeness, availability and anchoring to grow sales

In the past 20 years the science of behavioural economics has been adapted by consumer packaged goods manufacturers to create a revolution in shopper marketing. Independent retailers in the convenience channel will see the benefits of this thinking all around their store.

For example, confectionery companies ask you to arrange your assortment according to shopper needs so that a hungry builder can find what he is looking for and a dieting social worker can find what she is seeking. Or in the beverages chiller, a brewer suggests how you should arrange your stock to make it easy for customers to find what they want.

However a lot of this marketing investment may not work if the shopkeeper does not get the context right for her shoppers, suggests a new book The Irrational Consumer by by Enrico Trevisan.

Trevisan, an expert in pricing strategies, says that “the value created by a product and the resulting willingness to spend are strongly influenced by how the choice relating to that product is presented and in turn how it is categorised by the potential customer regardless of his individual peculiarities”.

Trevisan observes that marketers put the emphasis on the background of shoppers and which circumstances have the greatest impact on their buying decisions. However, he says the context of the sale often has more importance.

For an independent retailer, this means that experience that you deliver to shoppers changes the probability that you will make a sale and make a shopper happy to return.

There are three basic ways in which humans make decisions based on:
1. representativeness
2. availability
3. anchoring.

People are not rational and they take shortcuts in making decisions. In organising your store you need to think about how to take advantage of the way people think.

Representativeness is about how people judge things. For example, Trevisan says “if the colour of a bag I see in the shop window is very similar to what my wife normally likes, I will be inclined to think that the colour will be OK.”

Similarly, shoppers generally think that if they go to Aldi they will get a great deal and if they go to Waitrose they will be buying top quality stuff. People are at risk of making mistakes when they “focus excessively on similarities and neglect other types of information”.

How might you use this knowledge? If you want to sell fresh and chilled food, then you need to create the atmosphere that shoppers associate with fresh and chilled.

Availability is about the frequency with which people see either a product or an activity. The more something it talked about, the more attention it gets and the more likely people are to recall it.

Trevisan provides an example about buying a car, where he compares a big survey conducted by an independent automobile organisation with the personal story of a taxi driver. The taxi driver’s tone of voice, facial expression and body language were far more persuasive than the large sample size of the survey in helping him to make a decision about which car to buy.

In your shop, good body language and selling skills from you and your colleagues has a similar impact on shoppers.

Anchoring is about how people respond to decisions based on what information they are given. The science shows that giving people a randomly generated number changes how they behave and how much value they put on a product or service.

In your shop, the lesson here is that simply having a promotional display will persuade shoppers that you are offering great deals. The better you do the display the better your chance of persuading them you offer good value.

The ultimate lesson is to watch your shoppers, try things and try to understand why they work. Don’t rely on distant marketers to know your shoppers better than you.