By Glenn Saunders – In one of my favorite marketing books, The 22 Immutable Laws of Marketing by Al Ries and Jack Trout, the authors outline some rules about what makes certain companies successful. For instance, one of my favorite “laws” in the book is the law of leadership which means it is more advantageous to be first in a market than it is to have superior product or service. In today’s world, think of Uber and their domination of the ride-sharing phenomenon, albeit with some questionable business tactics. Uber is a prime example of the law of leadership and a testament that some of those “laws” still hold true. However, I would position one new law with regards to the digital disruption that has occurred in the past few years.
In digital, being different pays. Amazon is widely accepted as the owner of the online retail concept. They invented the modern web interface design for the online shopping experience. Most e-commerce companies try to imitate the Amazon experience, with varying levels of success. However, we are noticing that there is a new niche emerging. Instead of offering everything from A to Z as Amazon does, many companies are differentiating themselves by offering scarce (at least perceived scarcity) or a smaller number of items.
- Scarcity of Product Availability: An online retailer who might offer art supplies for a specific creative project may only stock the item components for a given month. Once those components to create the project are sold out, the company will not order any more thereby creating a constrained supply and increasing demand. If the customer wants to complete the entire project, they will need to purchase all of the items early in the month, before they sell out. This sales model relies on a sense of scarcity to drive psychological behavior enticing customers to purchase more product. Customers perceive that the detriment of not purchasing a product outweighs the cost of the purchase (http://www.nunwood.com/the-psychology-of-the-supermarket/). There is only a limited supply so I need to buy them before they run out. Another correlation most would understand is the limited number of seats still available at a given price on an airline.
- Limited Product Offerings: Another way in which companies are differentiating themselves is by simply offering fewer products. One recent article which highlighted this approach (http://www.cnbc.com/2016/03/22/the-anti-amazons-two-brands-shaking-up-retail.html) shows how MM.LaFleur started reducing the number of products offered on their site. MM.LaFleur at its core is a service company where products are simply part of the delivery model. The stylists at MM.LaFleur curate, personalize and deliver a limited amount of products to its customer base thereby limiting the amount of searching and time spent by its customers. That time saving is their value proposition to its customers (busy professional women). They will spend their time creating a limited catalog of stylish items which a professional woman can then browse and shop confidently and quickly versus the endless catalog of items on some larger sites. The value and differentiation is in the service but the economic transaction is in the product purchase.
- Using On-line Presence For Research/Brick and Mortar Presence for Purchase: Recently, Accenture published a thought leadership piece outlining that 76% of consumers prefer in-store customer service so that they can engage with a human regarding a purchase. While I certainly understand that approach, I think the majority of millennials (the largest consumer segment) will continue to prefer to shop online. And while the transaction may take place in the store, the selling and research will continue to be made online. The retail aspect of the purchase is simply the closing of the deal. I believe customers will be educated about their purchase and know exactly what they want by the time they enter a brick and mortar store. This is the omni-channel experience that is so important to B2C and even B2B companies. Both the online and the in-store components of a customer experience are critical to a successful customer experience.
At Kraft, we specialize in helping companies engage with their customers via online, retail and other channels. We help companies deploy NetSuite for inventory, procurement, retail and financial management. We integrate with our customers’ preferred e-commerce solution whether it be NetSuite SuiteCommerce, Shopify, Magento or a custom web store. We are a partner to our customers and live our motto “Client Success, Employee Success.” Join us for an event to learn more about how Kraft can help your company be different with digital.