Know-How Exchange : Strategy

My view from working about the retail sector particularly in the UK is that 'gifting' is starting to really emerge. There are obviously a number of issues here:

social: we appear to be becoming a more giving society, I know retailers in this sector in the UK are seeing revenues growing when the price is static or declining, which would suggest that more and more 'gifts' are been sold. A recent report by Hitwise confirms this where they are seeing a 13% increase in Flowers, Gifts, Video, Games and Music (mainly concentrated around November to April).

economic: we have more money to spend, sure we can spend some of it on ourselves, but lots more shoppers appear to be buying traditional 'gifts' (flowers, jewellery, vouchers etc)

apathy: we have a busy calendar, we get christmas over with, when we are planning valentines and easter spending, then we are looking at home improvements in the holiday season, then holidays only to plan christmas again, and with birthdays, mothers day, fathers day and now grandparents day, its jus getting too much and apathy is settling in, which is throttling back spend.

retailers: I think retailers are largely to blame too (both online and offline), apart from Christmas and Easter, little effort is put into gift displays and merchandising (offline), banners and search terms (online), no-one is putting their heart into promotions to help grow off season gifts.

ebay: ebay is causing problems with gifting, haven't auctions grown by 40% in the last 12 months or something! Do people visit ebay to buy gifts or buy for themselves? I think its mainly the latter!

Anyway, thats my view :-)

I personally hate to provide information that will someday be used against me... but.. for the sake of the science of marketing here is an idea.

Basically, people want to be "proper". There are lots of articles and other information floating on the "proper" tip for waiters, bellmen, doormen, garbage men, maid, bartender, etc. I recently saw an article on the proper amount to spend on a gift for High school and College graduations. In a conversation with my advisory group several said they pleased to see they were in the right range. I suggest placing articles on proper spending with the idea of driving it higher.

Hope this helps....
Frank Hurtte

Sandy,
The dilemma you presented has many uncontrollable variables. The mere use of marketing alone won’t change them. It goes to the very core of a culture and a society sometimes with, sometimes without marketing.

Marketing can, however, be a good start, but any effort must be collective along with legislation (official or not of holiday observances), pop cultural (it must be accepted naturally).

The international Children’s day for example was celebrated at different times by the two former Germany’s. One was June 1st, the other was in September. When the Germanys united, the September date was the official date, but a large number still celebrate it on June 1st, despite the marketing efforts to keep the other date.

The other holidays can learn from Christmas to boost spending, although there are limits how successfully they can be compared to Christmas.

Christmas transcends age, gender, geography, culture, language, economics and yes, even history and religion. My Muslim and Buddhist friends even celebrate it. The Christmas success story on spending is beyond the retailers’ or even the individual consumers’ control. No one and nothing comes close to the impact that Jesus has made on the spectrum of the human experience. That’s why in the Western culture, the financial impact of Christmas appears unmatchable.

However, some of the Christmas lessons can carry over to the other holidays though not as big. The first is the pooled marketing efforts. When an entire industry agrees to promote and conduct business in a special way because of a holiday, people take notice with their pocket books.

Here we have once a year, No Sales Tax Weekend. It’s an unofficial celebration where the state declares that any purchase made on certain types of merchendise such as clothing, jewelry, books, decor, etc and within a certain amount, is tax free. The merchant is not required to pay sales tax, and therefore, cannot charge it to the consumer. It has been very successful in driving sales up for that weekend in the double digits. Pooled ads promote it so that all businesses can benefit.

Once in a long while a marketing blitz is so successful, it affects society’s very perception. The DeBeer’s “A Diamond is Forever” did that and made the diamond the standard by which all other engagement and wedding rings are judged. Despite controversies and economic shifts, diamonds remain the most coveted stone for these events, bar none. Along with shifting the standard to the diamond, the amount of consumer spending also increased significantly.

In the east coast, people tip service providers during Christmas. Yes, we go back to Christmas again, because it serves as the standard. This practice does not involve gifts, but cash and cash equivalents. People tip their bell hops, security guards, postal worker, dry cleaner, cabbie, etc, etc. Some service providers get nearly as much in tips as they do in income... over $20,000 for one lucky hotel attendant.

Why not extend this practice to the West Cost and Midwest and include gifts and gift cards? It would drive consumer spending in the double digits just like the tax free weekend and DeBeer’s.

Sandy:

Look at Hallmark and other greeting card companies for your cue: Pump up the holiday with heart-felt reasons to honor the person which is most closely associated with that holiday. They do this through direct and indirect advertising and with repetition. Luckily greeting cards' price-point is very low, but their margin is high. Still, it is a competitive market sector and...like I mentioned the "H" name...they have established a high-visibility brand (most of their commercials also have the recepient turning over the card to see that it is a Hallmark card).

There's no real 'secrets' here...people respond (with gifts) to those people they FEEL deserve it. If you can find a way to the consumer's heart, their pocketbook will follow!

Good Luck,
Debi Brady
Writing & Marketing Consultant

Dear Sandy

Whist I come to terms with an ex-Xerox executive partying at the college disco (You lucky sod!) I’ll collect my thoughts on this one.

The old phrase “Think Global Act Local” springs to mind, though few seem to know that it appears to have been conjured by Patrick Geddes a Scottish Town Planner for his book Cities in Evolution, not as a marketing topic. OK that’s enough chat up lines for the school dance.

To add a different dimension to this I’m taking a predominantly numerical approach to your question rather than a subjective one. I don’t think that you can arrive at an attempt at an answer without both.

The trend to multiculturalism, whether it’s a good thing or a bad thing does mean that a retailer needs to be aware of the sensibilities of every sizeable and identifiable community so that they can both serve their needs and equally importantly, avoid offending them. The experience of, I believe, Interflora comes to mind when it globalised the purchasing of flowers for it’s franchisees via a vast ERP system (SAP or Bahn) to optimise the purchasing from growers and minimize waste. A great idea you might think given the short shelf life of the cut flower and the known purchasing habits around Christmas, Easter, Mothers Day etc. Wrong! It resulted in glut and famine and missed out on opportunities which a global approach could not forecast.

Every town and city has its own festivals and every ethnic group has its own, often local traditions. The solution which is glaringly obvious to everyone apart from the Stalinists who promote “Big” ERP and “Big” CRM was to have each and every florist forward their own forecast based on their local knowledge. The total picture then emerged and to boot, it even gave Interflora the detailed logistics of how to get their deliveries sorted out.

Having that knowledge is then down to the local retailer and it’s nothing new. This is think local, act personal! The Victorians and Edwardians were extremely good at localised CRM from the shop or the store. Have a look at our CRM history on:
https://www.unimaxsolutions.com/html/about_crm.html
where you can see our complete take on the subject. Knowing what your customers want on a one-to-one level allows you to promote to those needs and to do the reverse, to draw customers to your promotions on the pretext of a gift for an event of which you have knowledge. It could be a birthday, a personal anniversary, a local celebration or a national holiday which is supported by the customer.

Let’s go back to the global level. Any organisation with a large enough body of sales data is able to associate that data with events in a calendar through data mining. You don’t need a vast budget to do this if you represent a smaller outfit, neural software will do the job for you, if you are prepared to learn how to use it or are prepared to pay for a bit of consultancy.

www.neuralware.com produces a package called NeuralWorks which I am still getting my head around, but their previous offering; Predict, was as easy to use as a spreadsheet and would find associations in the data which were quite impervious to low-level statistics or just looking. It will also help to forecast from known data, what might happen in the future without the need to build complex and inevitably flawed models. This is a useful step and can result in providing powerful guidance of where and when to conduct promotions. It will also guide the more sophisticated into how to conduct those promotions.

When you take this down to a local level, you are faced with some apparently contradictory facts which you can resolve to your advantage. Firstly, the same statistical analysis will bear fruit, associating known local and national dates with historic sales data. OK the numbers are smaller and the error is likely to be higher, but you are not looking to do this to lab standards, are you? The historic data can then be used to generate a forecast. By the way, if you are really keen on this, you can do it at product level – barbeques and sunny weather and disposable nappies in convenience stores in the financial district at 6.00pm come to mind.(A prize to anyone who knows the reason for the latter association – the purchasers were mostly men)

You can then carry out a forecast based on your local-knowledge predictions and see how the two compare. Analysis by difference is a favourite tool of mine, because if each approach has its own validity and its own inherent unknown flaws, the differences, once explained tend to highlight positions and insights which are not available from either set of base data, nor are they available from the primary analysis.

Once you have the figures, you will need to work out how to respond to them and that’s another dilemma. Marketing both follows markets and leads them! For example, the swine-at-the trough festival that we used to call Christmas was initiated by a religious festival where the giving of gifts was symbolic of the gifts of the Magi to the Christ child. That’s marketing following a market, a market created by a religious festival.

That it now starts in August and involves an orgy of spending which has all but obliterated the true meaning of the event is an example of the marketing leading the markets, by the nose in this case. It is also an affront to most Christians and a reason why many extremists of other faiths feel that they can carry out acts of terror in the name of their religion. Whilst I can’t agree with that sentiment, you ask yourself – is it a pleasant celebration of our tradition or is it obscenely decadent? And if we are decadent, aren’t they justified in blowing us up in the name of their faith?

That is probably about the limit to which the marketing can lead and if you look very carefully at your sales figures, you will see that there is already a correction on the way, lead in America by the religious right, but it shows up in the figures more than it does in their rantings. When you start to see a downturn in the derivatives (That’s the differential in calculus) that is when the smart marketers ditch product and move onto new ones – Apple and the iPod are an example of that. The same could be said for promotion of an event – in this case “Commercial Christmas”. Spending ever more money on promoting Christmas, starting in June if necessary, will produce incrementally lower returns on your investment. The eventual public backlash will catch out a large number of retailers and manufacturers, leaving them with stock on the shelves and bankrupt factories.

So, in conclusion, I think that your question is both timely and wise. It is only by diversifying the events which trigger the giving of gifts into as many personally relevant categories as is possible that we can avoid the over-concentration of effort I have referred to above. And in the end that is to the good of the retailer, the manufacturer and to the consumer. That it also benefits my personal religious and moral beliefs is a plus, but it is a plus for me. I can’t speak for anyone else, but maybe there is a truth somewhere in that which will be a parable for modern times!

Regards

Steve Alker
Unimax Solutions