How Retailers Get You To Buy: Pricing & Product Strategies (Video)

What do retailers know from the information on your sales receipt? From the sales receipt alone, they know what was bought for what price at what time -- and that's enough for them to know what customers "need," where to place certain  merchandise in the store, and what coupons to offer customers. (And if customers use a loyalty card, the information is further customized specifically for them). This is another use of "Big Data" to gather the information needed to zero in on the customer, and merchandise to make more sales.  

In this Forbes.com video, "How Retailers Get You To Buy," CEO Dan Fishback, of DemandTec, an optimization network for retailers and consumer products companies, explains pricing and product placement strategies based on What the retailer knows (and does) with the information they have on you. 

For example: From every receipt captured, the retailer ascertains, from that huge amount of collective data, that there's an audience of mothers with children -- and the retailer, in this case, Target, puts the Cheerios that the two-year old-wants at floor level, so they'll be sure to grab it. Then, above the Cheerios, at mom's eye-level, the store promotes the mini-wheats (which don't have the brand loyalty) with a discount, in order to drive the volume of that product.

Another example is diapers: Fishback points out that the store is clearly set up to accommodate families, and the diapers are located way in the back of the store, so that families have to pass by games, electronics, movies, toys, transformers, Barbies, i.e. walk the length of the store, to get there. That is to say, put the premium item where you have to pass all the other temptations, to expand the number of items the customer will put in their basket.

Eventually, says the video, you'll see -- and expect -- that coupon on your phone when you walk in the store. The retailer wants to customize the store with items you need and coupons provided to you in real time, so the customer will say, that's my store because it provides customization that makes it feel "it's mine".

Bottom line:

In the next year or two, says Fishback, customized ads and loyalty on the smartphone will be the breakout moment for leveraging the collection of all this data and the applied mathematics that a company like DemandTec Inc. does, to better inspire and create loyalty for retailers.

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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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