Thursday, May 31, 2007

New research highlights the presence of Strategic Consumers

A new piece of research from Gérard P. Cachon and Robert Swinney at Warton ( suggests that there may be three types of shoppers which retailers need to consider when setting stock levels and retail strategy. To quote:

“Some shoppers just can't help themselves and buy mostly on impulse without regard to price. Others are die-hard bargain hunters, who only open their wallets for a discount.

“Then there are the strategic consumers, who are willing to buy full-price sometimes, but at other times they will wait for a bargain. According to new Wharton research, it's these customers that retailers need to focus on in order to reap the full benefits of lean retail inventory management and variable pricing”

If this article is correct then the current model of release at top price, take the profits then discount towards the end of a products lifespan is not going to last. The research looks at retailers like Zara and airlines such as Southwest and highlights their policies which commit customers to an early purchase rather than waiting for discounting to take place.

For marketing analysts, there is an interesting suggestion here. Whilst most segmentation is behavioural is terms of how consumers actually use products or interact with them, retailer segmentation is typically behavioural. The question now is can you use store card data to identify the strategic customers and can you bring forward their purchases? Any ideas if this has been done anywhere and what it actually meant in practice?

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