Today’s retailers have little margin for error as they compete in multiple channels. Consumers have plenty of power packed into their smart phones and can easily take their business elsewhere if they don’t like the price they see in the store. McKinsey analysts argue that merchants can deliberately sway consumer emotions and position themselves as value operators in all channels by emphasizing details in their marketing that extend beyond price .
There is no shortage of studies that point to price as the tipping point when consumers are ready to buy. And if the price doesn’t look right, merchants fear that the elephant in the room, Amazon, is breathing down their back, prepared to grab the sale. Not so fast, say McKinsey analysts. While price may be at the top of the consideration list, other factors come into play when consumers think about value:
- Price 24%
- Experience 17%
- Trust 17%
- Assortment 12%
- Return policy 12%
- Product research 11%
- Delivery cost 4%
- Loyalty 3%
The analysts point out that many merchants play the price game. Amazon, for example, may have made its name as the discount king of electronics, but its prices on apparel are more than what shoppers might pay at well-known discount department stores. However, consumers flock to Amazon because the company is perceived to offer great value.
Here are three steps that merchants can take to position themselves favorably with respect to value in the mind of the consumer:
- Figure out which products everyone wants to buy – such as the latest electronic gadgets.
- Set the price as low as possible on those products to make sure consumers understand the merchant is competitive.
- Make sure prices are the same in all retail channels. This means in the store, in catalogs and online.
To preserve profitability, merchants can position more expensive product models next to the lower-priced versions. Consumers who were originally lured by a low price can be easily upsold.
The final piece of this puzzle is to carry out effective marketing campaigns. The lower-priced products should be heavily promoted to make an impression on the consumer. At the same time, merchants must advertise the other value factors that sway consumers – easy returns, free shipping, price matching. By staying focused on the multichannel value message, retailers can improve their competitive position.[Source: Helbling, Jeffrey et al. Value Proposition in Multichannel Retailing. McKinsey Quarterly. May 2011. Web. 16 May 2011]