Merchandising Issues: Customer Decision Points

Screen Shot 2013-03-10 at 6.51.18 PMGood merchandisers highlight their range of assortment in a way that customers can easily see the trade offs among their choices. An efficient merchant will select the best assortment to properly give customers enough – but not too many – choices. There is a customer decision point you should be well aware of.  That is the point where a customer will abandon your store due to a lack of acceptable choices.

Here are examples:

 

    1. A customer with $1500 to spend on an engagement ring walks into an upscale jewelry store.  The lowest priced ring is $4900.  The customer will abandon the store.
    2. A customer wants a mid-range calculator with limited scientific functions.  The store offers several student calculators under $10 and old-school desk calculators with paper rolls for over $75.  The customer will abandon the store.
    3. A customer is not sure which vacuum cleaner she wants.  It must be lightweight, under $120 and have upholstery attachments.  The only models in stock are either lightweight and under $80 without upholstery attachments or commercial-grade with easy attachment choices but priced at $199.  This is the most common scenario where a retailer offers only an opening price point and a high–end choice (Good/–/Best.)  While many retailers (and their vendors) like to speculate that the customer can be sold up to the high-end model, there are studies that indicate abandoning the store is common without a relevant middle selection.  Many valuable customers who could afford to purchase the high-end model will opt to shop elsewhere where they perceive that they have more choices. (And may still buy the $199 model!!)

In fact, the best way to move transaction (total $ per purchase) up in an assortment range of $9, $19 and $39 is to move the middle selection.  Opening price point shoppers who select the $9 choice may not be able to move up to a $15 choice.  Most shoppers self-identify as moderates, meaning the middle choice will almost always be most attractive.  So a move to $9, $25 and $39 will be more effective than moving either the upper price point product or the lowest price point product.

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