Category — Consumer Behavior

Cosmetics companies are turning to e-commerce as a channel to sell certain discontinued items, reports Tatiana Boncompagni in the New York Times (5/3/12). The insight is that the first thing some shoppers do when a favorite perfume, shampoo or shade of lipstick is discontinued is to try to find it online. The beauty companies, meanwhile, can get a good idea which of their de-listed products are in demand by monitoring social-media sites as well as comments on their own websites. Charles Denton of Erno Laszlo actually found himself personally responding to some 200 emails a day from customers complaining about discontinued items, prompting him to reinstate a couple of them.

Bobbi Brown recently launched “Facebook campaigns … asking fans in various countries to vote on their favorite shades of discontinued products.” The winning choices will be available only via a Facebook link or on the Bobbi Brown website. Guillaume Jesel, svp global marketing for MAC, compares contests in which consumers vote on their favorite discontinued items to Dancing With the Stars. “It’s the same revolution you see in other industries,” he says. “You let the consumer take the steering wheel for a while.”

Hilary Jones of Lush, a UK beauty products company, says bringing back old items is mostly about fostering good will. “It’s not a hugely commercial thing for us,” she says. Others find the online line extensions to be welcome relief from the traditional “one in, one out policy” employed by brands and retailers alike. “At the shelf, you have to think about turnover,” says David Lonczak, a vp of ecommerce and digital marketing for Drugstore.com, Beauty.com and Walgreens.com. “That doesn’t make it possible to carry these tertiary products, but there is still a reasonable amount of business there,” he says.

A free repair service for broken household items is as much a social as an ecological concept, reports Sally McGrane in The New York Times (5/9/12). Martine Postma launched the Repair Cafe Foundation the Netherlands two-and-a-half years ago "after the birth of her second child led her to think more about the environment." As Martine explains: "In Europe, we throw away so many things … It’s a shame, because the things we throw away are usually not that broken." Her thought was that "helping people fix things was a practical way to prevent unnecessary waste."

The Foundation has now "raised about $525,000" from various sources, including the Dutch government, and there are some 30 groups that "have started Repair Cafes across the Netherlands, where neighbors pool their skills and labor for a few hours a month to mend holey clothing and revivify old coffee makers, broken lamps, vacuum cleaners and toasters," among other items. Martine thinks it’s the practical nature of fixing things that makes the idea go. Compared to "ideals about what could be," says Martine, this is "about doing something together in the here and now." The "togetherness" part of actually is another key element.

"What’s interesting for us is that it creates new places for people to meet, not just live next to each other like strangers," says Nina Tellegen of DOEN Foundation, which granted $260,000 to the Repair Cafe. Nina says it has been a boon to older folks, in particular, who still remember how to work with their hands. William McDonough, an architect, notes another important relationship: "The value of the Repair Cafe is that people are going back into a relationship with the material things around them," he observes. Martine, meanwhile, sees a global movement in the making, having fielded inquires about the Repair Cafe from France, Belgium, Germany, Poland, Ukraine, South America and Australia."

How we feel about ourselves has a lot to do with the prices we are willing to pay, reports the Economist (5/5/12). Ayelet Gneezy and a team of researchers at the University of California conducted a series of studies suggesting that “a desire to think of yourself as a good person” can drive how much you’ll pay for something. Their research, published in the Proceedings of the National Academy of Sciences, also found “that allowing people to name their own price may result in fewer sales than the old-fashioned approach of simply setting a single price for everybody.” One experiment involved “53,000 customers of a theme park, who were photographed while riding a rollercoaster.” All customers were allowed to name their own price for the photo, but some were told that half of the price “would be donated to a children’s charity.”

Interestingly, the price offered by those giving half to charity was five times that of those who were simply asked to name their own price. However, “only half as many people” in the charity group chose to buy a photo at all. The researchers say that “the two results are linked: because the ‘right’ price for the charity-and-photo combination was felt to be much higher, a significant number of people preferred not to buy at all than to damage their self-image by offering a miserly price, and, by extension, a tight-fisted donation to a deserving cause.”

A second experiment involved buying photographs from a boat ride — with the price set at $15 for one group, $5 for another and “name your own price” for the third. All three groups were told that the normal price was $15. Demand rose at the $5 price point and fell among the “name your price” group. The researchers say this is because “an overly low price can feel unpleasantly parsimonious.” In a third experiment, restaurant patrons were allowed to pick the price, but some had to pay in public while others settled up in private. Those who paid in private “chose to pay more, on average, than those who paid in public.” Researchers conclude that this means “it is your conscience that prods you to be generous, as opposed to pressure from your peers.”

When we talk about ourselves it “triggers the same sensation of pleasure in the brain as food or money,” reports Robert Lee Hotz in the Wall Street Journal (5/8/12). “Self-disclosure is extra rewarding,” says Diana Tamir, a Harvard neurologist, who, along with Harvard colleague Jason Mitchell, conducted “five brain imaging and behavioral experiments” into the brain’s response when we tell “others about what we feel or think.” According to Diana, “People were even willing to forgo money in order to talk about themselves.”

Most of the subjects of the experiment were “Americans who lived near the university.” They were offered “money if they chose to answer questions about other people, such as President Obama, rather than about themselves, paying out on a sliding scale of up to four cents. Questions involved casual matters, such as whether someone enjoyed snowboarding or liked mushrooms on a pizza … Despite the financial incentive, people often preferred to talk about themselves and willingly gave up between 17% and 25% of their potential earnings so they could reveal personal information.”

Diana and Jason also used brain scanners to track “changes in blood flow between neurons associated with mental activity, to see what parts of the brain responded most strongly when people talked about their own beliefs and opinions, rather than speculating about other people. Generally, acts of self-disclosure were accompanied by spurts of heightened activity in brain regions belonging to the meso-limbic dopamine system, which is associated with the sense of reward and satisfaction.” James Pennebaker of the University of Texas thinks the results make sense. “We love it if other people listen to us,” he says. “Why else would you tweet?” The study is published in the Proceedings of the National Academy of Sciences.

Turning brand names into verbs or vernacular “may be as important to a new company as sleek site design or a sophisticated set of algorithms,” reports Jenna Wortham in the New York Times (5/6/12). After all, we live in an age when LOL (laugh out loud) and OMG (oh my God) are defined in the Oxford English Dictionary. We don’t look things up; we Google them. We don’t call friends; we Facebook them. We don’t post photos; we Pin them. We don’t share our thoughts; we Tweet them. Twitter, in fact, has spawned an entire microsyntax (follow, @, and #hashtag) to a point where you don’t necessarily need to be a Twitter user to know what these terms mean.

“People are trying to understand what market they own in an industry that is flooded with similar companies,” says Jordan Cooper, a venture capitalist. “If you can take a piece of language that is commonly used and be associated with it, it’s a very powerful way to say you’re leading in your space.” Andrew Kortina and Iqram Magdon-Ismail say they were acutely aware of this when they named Venmo, their payments company. “We were playing with different root words for buying, selling, paying,” says Andrew. “Eventually, we were talking about Latin, tried Venmo, it was available and felt like a verb. We tried it, ‘Just venmo me for it.’ It worked. So we got it.”

The challenge is that it can be difficult to impossible to make a fabricated term stick. “It needs to feel more organic than strategic and tap into a human impulse,” says David Lee of SV Angel, an investment firm. “If something catches on, it can translate to a human behavior that becomes part of the language of the web.” Or, as Jordan puts it: “It’s not something a company can force. It happens on its own because a company has created a new behavior that has penetrated the industry.” Bing didn’t make much of an inroad against Google, for instance, while “Pinning” on Pinterest caught on easily. “When they go viral,” says Susan Etlinger of the Altimeter Group, “they’re naturally lightweight and unpretentious.”

A roundtable discussion on consumer and shopper insights, with Stephanie Cota of Mattel Brands, Hermann Deininger of Adidas, Sally Grimes of Newell Rubbermaid, Alfredo Martel of Caribou Coffee and Kevin Lane Keller of Dartmouth College.

What is the hardest thing to get right with consumers today?