How Social Media Really Affects Spending (Infographic)

How exactly does one go from friending to spending? In July, Vision Critical market research released "From Social to Sale," a survey of social media purchasing trends, to answer that question. 

 The findings just may make you rethink your social marketing practices.
 

What You Need to Know About Pricing

In Impact Pricing: Your Blueprint for Driving Profits from Entrepreneur Press, pricing expert Mark Stiving offers practical advice to business owners on how to price products and services. In this edited excerpt, he explains several important pricing concepts.
Price may not be the basis of your corporate strategy, but you must have a pricing strategy to implement your corporate strategy. Remember that pricing strategies are big-picture decisions that provide guidance to the people within your organization who actually set prices. They are your pricing processes and policies.
When you ask a marketer "What are some pricing strategies?" you will likely get the answer that there are three pricing strategies: neutral, penetration and skimming. Do a Google search on "pricing strategy," and you'll find the same answer over and over: neutral, penetration, and skimming. These certainly are pricing strategies, but they are not the only ones. A better way to look at this is that these are pricing strategies to define the general level of prices.


Neutral Pricing
Neutral pricing, the most common pricing strategy, means that you price so that your customers are relatively indifferent between your product and your competitor's product after all features and benefits, including price, are taken into account. Of course not all customers will be indifferent. Some will like your offering better, others will like your competitor's better. From this perspective, think of neutral pricing as maintaining the status quo. You aren't trying to gain or lose market share. Most pricing in relatively stable markets would be considered neutral. As you walk through a grocery store, the prices you see are neutral. Although you may use a combination of neutral, penetration, and skimming prices, you will most often use neutral.
Penetration Pricing
Penetration pricing means pricing more aggressively than neutral. It can be used to gain market share relative to your competition -- but be careful. This can and does start price wars. No company wants to lose market share, and if you lower your price in an effort to gain market share, your competitors are likely to lower their prices just to keep their share.
A more appropriate and common use of penetration pricing is to speed up the growth of a newly forming market. Low pricing is often justified to quickly grow a new market and to gain the largest share as the market grows. This strategy works best when you are the first entrant, or one of the first entrants, into a market. Penetration pricing in this situation may also deter other companies from competing when they recognize there are not huge profits to be gained.
Forward Pricing
Forward pricing is another term similar to penetration pricing, but with a focus on future costs. If you're building a product and it costs $1 to make, you probably don't want to sell it for less than $1. However, if you know that once you sell a million units, your costs will go down to $0.30, you may be willing to sell at a price lower than your current costs knowing that your costs will be lower in the future. The forward part of the name indicates you're looking forward in time to estimate what your costs will be and using that cost as your basis for pricing.
Skimming
Skimming is the opposite of penetration pricing. Companies skim in an effort to segment the market, to get the customers who are willing to pay more to do so. The two common implementations of skimming are at new product launch and at the end of a product's life.
When companies skim during new product launch, they are selling to customers with a high willingness to pay. Once this market is depleted (or at least slows down), the company lowers the price to sell to the next tier of customers.
A recent, famous example of this was the initial release of the Apple iPhone. Apple released the iPhone on Sept. 5, 2007, for $599. Apple fans rushed out to purchase the iPhone. Two months later Apple lowered the price to $399 to capture even more customers. The earliest adopters paid $200 more for the privilege of being first. In this case, though, Apple got a black eye. The huge price decrease was too much too soon according to the early adopters. Remember, these early adopters were big fans and Apple risked losing significant customer goodwill from these, their best customers. Apple eventually gave each of the early adopters a $100 store credit.
Skimming as a market entry strategy only works when you have a monopolistic position (the iPhone was unique). The lesson from Apple's case is to bring your price down slowly. The news articles at the time didn't berate Apple for lowering the price, they berated it for lowering the price too soon.
The other common use of skimming is at a product's end of life. Sometimes firms would like to discontinue a product but have too many customers who have a continuing need for it. In this situation, the company may gradually increase prices over market value to gain more revenue from these customers. The firm is trading off being able to compete for new business for additional revenue on existing business. One big caution is that customers, especially loyal customers like these, don't like to have their prices raised. You must have a good explanation and possibly an alternative offering.
It should be apparent that these three strategies follow specific corporate objectives. If a corporate objective is to raise ASP (average selling price), then skimming may be appropriate. If a corporate objective is to win market share, then penetration pricing is needed. If the corporate strategy is to generate and capture value, then neutral pricing would be appropriate.
Value-Based Pricing
Value-based pricing, another pricing strategy, is the most important. The idea seems simple. How much is your customer willing to pay? Set the price at or just below that point.
However, the implementation and usage of value-based pricing is much more complex.
Throughout business history, firms traditionally used the cost-plus method of determining prices. They determined how much their product cost to make and then added whatever margin they thought they deserved. Hence, the term cost-plus. Cost-plus pricing has some advantages: It's simple, you don't have to understand your customers, and it's easy for you and your competitors to get in sync. However, cost-plus is not optimal pricing.
You have to make a strategic pricing decision. Are you going to use cost-plus pricing or value-based pricing (or some other method)? If you want to increase profits, you will commit to using value-based pricing. As you learn more about value-based pricing, you'll learn that it's impossible to implement perfectly. After all, our customers never tell us exactly how much they're willing to pay. However, value-based pricing is accepted by pricing professionals and consultants as the optimal pricing strategy.

For McRib Fans, Search for the Sandwich Is Worth the Effort

McDonald’s will not offer the McRib nationally this year, giving those on the hunt for the polarizing sandwich a new set of challenges.
The fast-food chain, which has been busy with new food and beverage offerings, is allowing local franchise groups to decide whether to carry the seasonal sandwich. Markets including New York, Chicago and Dallas will have the McRib as a local option.
For many, finding a McRib will take more effort than in previous years. Fortunately, McRib fans are used to the struggle associated with finding their beloved pork sandwich.
“Prior to [the last three years], the McRib would pop up at random places during the year,” said Alan Klein, creator of the McRib Locator, a website and Android app that tracks where the sandwich is available. “I recall one March a friend sent me a picture of him eating a McRib on a Florida beach while I was freezing in snowpacked Minnesota with no McRib.”
The McRib, a boneless pork patty molded into a rib-like shape, slathered in BBQ sauce and topped with pickle and onion, made its debut in 1982. After three farewell tours in 2005, 2006 and 2007, the sandwich has only been made available for short time periods and in limited regions in the U.S. The last three years, McDonald’s has put McRib on the national menu for a period near the end of the year, usually in late autumn.
The limited access to the McRib has produced cult-like fans of the sandwich. Its popularity becomes clear when viewing Klein’s McRib Locator, which a McDonald’s representative now recommends as a tool for customers seeking the sandwich.
Klein created the McRib Locator in 2008 as a meteorologist exploring how to use Google Maps. The first time the McRib returned nationally, the site received over 90,000 views on a single day, overwhelming its hosting service. While recently the site has averaged around 2,000 views a day, the return of the McRib to franchises has caused a spike, hitting 7,000 views yesterday.
“For some, they like the sandwich as it bring something different to the menu that has not been replicated by other venues,” said Klein. “Of course, there is also the limited availability component where fans want to get their McRib before it is gone.”
This year, the McRib Locator has already charted around 1,500 sightings, with 300 confirmations (confirmed by users emailing Klein a photo of their receipt).
McDonald’s embraces the sandwich’s elusive appeal. “The McRib only comes once a year and you never know when. Tasting one is like catching a glimpse of a falling star. Or Bigfoot,” reads one McDonald’s 101 reasons to eat a McRib.
For McRib super-fans, comparing the sandwich to a falling star is hardly a stretch. “I nearly drove four hours last year to get one, however found there was one closer as I prepared to leave,” said Klein. “If the McRib were to return to a more sporadic availability I certainly could see myself taking a longer trip to find one.”
McDonald’s decision to put a hold on the national launch of the McRib stems from “a busy fall with new food and beverages,” according to McDonald’s representative Tyler Litchenberger. McDonald’s plans to launch new menu items, including Mighty Wings, Southwest Premium McWrap and White Chocolate and Peppermint Mocha, in November and December.

5 Ways to Keep Customers Knocking on Your Door For More

How does one go from investment banking to starting a wildly successful online jewelry store? Just ask Amy Jain and Daniella Yacobovsky, founders of BaubleBar, who did just that. After meeting nine years ago in a banking class at Harvard Business School, they ditched the prospect of becoming financial analysts to open BaubleBar.

The two were shoe shopping at Saks Fifth Avenue together when they realized they never shopped for jewelry because they could never find jewelry they liked that was reasonably priced. They decided to take it upon themselves to fix this problem.

1. Get personal, even -- no, especially -- online. 
Interacting with your customers or clients on a personal level is very important if you want to build loyalty. BaubleBar takes a great online experience one step further by offering their customers in-person services. Though we live in a digital society, there is no better way to build loyalty than face-to-face interaction. This will make your customers feel special.

At BaubleBar, SWAT (Service With Accessorizing Talent) Stylists help customers pick out pieces that are right for them. Whether, you are looking for a piece to match a certain outfit, be worn on a special occasion or just can’t decide between two necklaces, someone at BaubleBar can help you.

2. Make your customer experience consistent throughout your brand.
Cohesion is a necessary component to creating a company that people fall in love with. BaubleBar has a major challenge because it is hard to translate an online store into a brick-and-mortar shopping experience.

Opening a physical store when you have an online presence will only be successful if you duplicate the look, feel and mood of the virtual counterpart. Your customers already know what to expect, so don’t change it up too much. Jain and Yacobovsky have done this through their first brick-and-mortar location, The Bar, in New York City. Regardless of how they decide to expand, they know everything has to have the BaubleBar signature touch.

3. Partner with influential people who have their own following. 
It doesn’t take an MBA from Harvard to understand why it's important to involve bloggers and style influencers with large followings. To do this, BaubleBar started the Guest Bartender series. Each month they introduce a new style personality who curates a special collection based on their personal aesthetic.

The personalities that BaubleBar teams up with have loyal followers of their own who trust their opinions. By giving customers a new collection each month, the brand gives them something new and exciting to look out for.

4. Reward your best customers.
Ultimately, as an entrepreneur, if you say customer service is your number one priority, you have to put your money where your mouth is and do something generous for your customers. Jain and Yacobovsky have done just that with their customer loyalty program, The Vault, which allows customers to earn points when shopping or inviting friends to join. 

5. Build customers into your branding. 
BaubleBar posts pictures of their fans wearing their jewelry on the homepage of the website. Actively encourage your customers to participate in your brand, then showcase their participation. This gets people talking and helps build a community.

Every aspect of BaubleBar’s branding is well thought out. The result is a business changing the way consumers shop for jewelry. When you are thinking about your overall brand, you should never be scared to go down new avenues. Just make sure they are consistent with what you have already created

10 Commandments of Retail Sales

Retailers could be in for a hard time this holiday season. According to Morgan Stanley, the American consumer is showing signs of being spent out and fatigued with uncertainty.

Regardless of the holiday season predictions, retailers must be on top of their game. They are all experiencing intense competition for the consumer, shrinking margins and a shopping season that's five days shorter. Consumers will not tolerate sloppy sales approaches and a poor experience. If retailers want to be effective this holiday season, they must vow to serve the customer with these 10 retail commandments.

1. Thou shalt not believe anyone is “just looking." 

A customer can “just look” on their tablets, smartphones and home computer. Disregard this idea that any buyer is just looking and respond with: “90 percent of the people that come here start off by having a look. Why did you come today?" Show them specials, updates and other inventory choices that may not appear on your website.

2. Thou shalt never ignore the customer. 

They come to buy. Don't make them hunt for a sales associate. It is better to pester a customer with offers of help than it is to ignore. Seems pretty basic, but how many times have you seen sales associates congregating at a register or zoned-out folding a pile of shirts?

3. Thou shalt aggressively sell. In highly competitive times, set higher sales targets.

 Selling beyond ordinary expected levels requires a commitment to aggressively selling to every customer and making the most of every opportunity. Begin with a team meeting that sets targets and objectives. Then provide the tools to accomplish them.

4. Thou shalt never let the customer wait. 

When customers wait they become agitated, restless and uncertain. No customer should have to wait for anything. If your payment system is not efficient, you put the entire sale at risk. Make sure you sales process is fast, friendly and easy to move through. Waiting for an open cash register should be a thing of the past with card readers and swipers.

5. Thou shalt treat every buyer like they came to spend money.

 Don't qualify the customer's ability to make a purchase. Treat anyone who enters your store as if they have money to spend regardless of what they say or how they act.

6. Thou shalt greet every customer at the front door.

 I once went to a major retailer and it took over 17 minutes before being acknowledged. Appoint a greeter who makes the customers feel welcomed and directs them to the department they need. "Thanks for coming. What can I help you with or what department can I direct you to?"

7. Management shall engage with every customer.

 One way to increase both the customer experience and customer loyalty is to make sure management engages with every customer. This separates your business from the competition and increases value to the customer.

8. Thou shalt provide the best solution, not just the lowest price.

 People buy things to solve problems. Salespeople must ask the right questions, listen to the customer and know available inventory to provide the best solution. "Why did you come here today?" or "What are you looking for here that you didn't find online?” should be asked of every customer.

9. Thou shalt attempt a second sale. Every product purchase creates an opportunity for another product sale. 

Wait until the first product is all but rung up and offer other products that would best support the first purchase. “We have great gloves to match that coat. Let me show you.” People are open to buying more to justify their first purchase. Product saturation not only increases profits, it ensures customer loyalty.

10. Thou shalt help customers extend beyond their budget. 

Never believe a customer when they say they can't afford something. They can and will buy beyond their budget and do so everyday. Almost every household in America including the government extends beyond their budget. Acknowledge the idea of a restricted budget and keep showing them your products, services and solutions that are more valuable than the budget that is restricting them.

Great retailers must look for ways to go above and beyond for customers and provide an exceptional customer experience leading to loyalty and referrals. Your people should treat every customer like a millionaire who is ready and able to buy today. Retailers who do this will see how easily they win over cynical customers and turn them into loyal, frequent shoppers.

The Psychology of Discounts and Deals (Motiongraphic)

Everybody loves a bargain -- it’s business, but it’s also psychological.

The human ability to count is hardwired into several parts of our brains, according to this motiongraphic from eBay Deals. Even before we are able to count, infants develop expectations for what should be the result of an addition or subtraction equation. When the brain perceives larger quantities, then the specific numbers fade away and infants only understand the proportion between two numbers.

And so it is with customers and their knee jerk reaction to getting a deal. Customers will be further incentivized by larger-percentage discounts.

Learn more about the psychology of discounts in the motiongraphic below.