Decoy marketing: giving customers a little nudge

At the nexus between marketing, consumer behaviour and good ol’ fashioned psychology, decoy marketing is a popular retail technique used to steer or “nudge” the consumer towards a targeted product.

Say a customer is shopping for a new set of premium bed linen. Sheet set one is made from a 500 thread count Egyptian cotton-blend, and retails for $200. Sheet set two is made from 1200 thread count pure Egyptian cotton, and retails for $400. Faced with these two choices, many will purchase the cheaper option, feeling that the pricier set is too much of a splurge.

Decoy marketing, however, introduces a third middle option – a decoy – whose sole purpose is to nudge the consumer away from the “competitor” (the cheapest option), towards the pricier “target” option. So, in the case of our bed linen example, we introduce a third sheet set made from 600 thread count pure Egyptian cotton that retails for $389. Suddenly, the $400 set seems like a steal!

Welcome to the decoy effect.

In a nutshell, this strategy uses clever pricing to steer the consumer away from the decoy towards a certain choice. This is known as “asymmetric dominance” – the decoy is priced to make the costlier, more profitable option look more appealing. In the process, the decoy is “dominated” by the perceived value of the target product.

By utilising cognitive bias, the decoy effect unconsciously directs the consumer to make the purchase. Unconscious is the crucial word here. Few people will purchase a product if they know they’re being coerced.

The decoy effect falls under the umbrella of the brilliantly titled Nudge Theory – more commonly known as “nudging” – defined by Richard Thaler and Cass Sunstein. Faced with what psychologist Barry Schmidt calls the “tyranny of choice”, the majority of consumers will experience a level of anxiety that impedes their decision-making.

As Inside Retail explains, in order to simplify this process and make a purchase they feel is good value, consumers rely on a couple of key choice attributes, namely price, quality and convenience. By manipulating value perceptions, decoys nudge the consumer towards a particular outcome while still giving them the illusion of making a completely logical choice.

A little bit sneaky? Maybe. Good business practice? Definitely.

Next time you find yourself online or in-store deliberating which item to choose, weighing up their features, their quality, and which one seems the best value, consider whether you’re being nudged. It may give you a wry smile.

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Retailing cannabis: A budding industry that’s started to bloom

Image via www.takearecess.com

Whatever your thoughts are on marijuana, one thing’s for sure: the industry is growing like a weed since last year’s sprawling ‘Farm Bill’ passed in the US.

The bill removed all hemp plants and derivatives with THC (the psychoactive compound in marijuana) levels below 0.3 percent from the drug schedule, thus opening up the doors for a whole new legal industry based on consumable cannabinoid (CBD) oil and leading to an explosion of new products. 

These food products won’t get you high, but proponents claim they’ll chill you out and calm you down, kind of like an anti-coffee. They may even help ease pain or improve concentration, although this isn’t proven.

This came not long after Canada legalised the sale of recreational marijuana nationwide in October. And although marijuana is still technically illegal at a federal level in the US, it’s (perplexingly) legal in 10 US states and counting. Next year New Zealand is set to hold a referendum where the legalisation of cannabis is widely expected to pass. There’s even talk of Australia and The UK following suit. 

Across the Western world, it’s looking like we’re at the start of a green rush. Let’s take a glance at what this has looked like in the burgeoning edible cannabinoid space, as well as some standout pot shops, or ‘cannabis dispensaries’ as they refer to themselves.

Image via www.takearecess.com


Time to take a recess

Recess is a new flavoured sparkling water that’s infused with hemp extract (no psychoactive THC) and ‘adaptogens’ (herbal extracts) to promote feelings of wellness, balance and clarity. ‘Not tired, not wired’ is the tagline, and there’s three delicious sounding flavours – Blackberry Chai, Peach Ginger and Pom Hibiscus.

Not only is the packaging gorgeous, their pop-up store in NYC (above) is particularly ‘grammable – the perfect place for visitors to grab a colourful can of ‘cool, calm, collected’ goodness. Interestingly, Recess is using this pop-up as an event space too, hosting singles nights, art and music afternoons, mindfulness workshops and even a tarot card reading night in order to create a brand personality that resonates with their core demographic of millennials.

Photo by Patrick Fore on Unsplash

Sweet relief

Got a sweet tooth? You’ll be pleased to know you can now sink your teeth into these CBD-infused jelly beans. They’re the brainchild of David Klein, famous for creating the delicious (and sometimes not so delicious!) Jelly Belly jelly beans before selling the brand way back in 1976.

In total, there are 83 flavours (38 traditional, 38 sour, and 10 sugar free), and each jelly bean contains 10mg of CBD. Yum. 

Into the weeds

Image via www.planet13lasvegas.com

Planet 13

Perhaps not surprising, the world’s largest cannabis dispensary is in the grand ol’ USA, in Las Vegas to be precise. Planet 13 is absolutely huge at 40,000-square-feet, and is fitted out like a blend between an Apple store, a (tacky) jewellery store and a spaceship. Since it only opened in November last year, it’s too early to know whether it’s already turning a profit, but its build cost a whopping USD$7.5 million! 

Image via www.adweek.com

MedMen

With 15 stores from across California, Nevada and New York, MedMen is taking the States by storm. Each store is unique, however all are clean, minimalistic and upmarket. Nothing like your traditional ‘stoner’ culture shop. In fact, MedMen has been running a huge above the line campaign for about a year now, aimed at shifting perceptions and encouraging Americans to ‘Forget Stoner’.

Image via www.diego-pellicer.com

Diego Pellicer

Set foot in Diego Pellicer in Seattle and you could easily be forgiven for thinking you were in a fancy hotel. Billed as ‘the world’s most luxurious pot shop’ Diego Pellicer stocks everything a cannabis connoisseur could ever dream of, from pre-rolled spliffs to edibles to vaporisers and even body lotions.

Oh, Canada

Since medicinal cannabis has long been legal in Canada, (and many stores were openly flouting the law and selling to any adult regardless of whether or not they had a prescription), the cannabis market in Canada is significantly more mature. As a result, some retail stores seem a bit outdated compared to those in the US. There are, however, notable exceptions.

Image via fireandflower.com

Fire&Flower

Light, bright and inviting, Fire&Flower has 13 locations open already across Canada, with another 4 opening soon. Staff are, according the company, all highly knowledgeable ‘cannistas’, who can help customers find the perfect product for them. Aimed at a cashed-up clientele, and with retail stores in premium CBD locations like Toronto’s ritzy Bloor Street, there’s not a Bob Marley poster in sight.

Image via citycannabis.co

City Cannabis Co

Looking like a cross between a trendy café and an Aesop store, City Cannabis Co has two stylish locations in Vancouver, with plans to open more across the country in the coming years. Customers can individually buy up to 30 grams of high quality bud, as well as a wide range of other cannabidiol-based products. 

There’s no denying there’s an enormous market for cannabis and CBD products around the globe. As legal cannabis and CBD spreads around the world, and marijuana stocks are going gangbusters, it’s no wonder established players in competing industries like tobacco and alcohol are jumping on the budding bandwagon.

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That’s the spirit! Whippet scoops top design prize at the Australian Gin Awards.

From a field of 63 entries, the judges distilled their picks down until they’d chosen their favourite. Our design for Nosferatu was the only Gold awarded in its category, taking out the top prize for ‘Best Australian Gin Bottle Design’. 

But it doesn’t just look good, it tastes good, too. The judges clearly thought the same, awarding Nosferatu a Bronze in the ‘Best Dry Gin’ category. 

Congratulations to the team at Nosferatu who have had a scarily successful 9-months since launch, with their delicious blood-orange gin creeping into over 200 bars, restaurants and bottle shops around Australia, and over 3,000 bottles sold.

Here’s what the judges had to say about our design:
Great brand story, really fun and clear. The judges loved the contrast of the ‘penny dreadful’ silhouette with the traditional style castle, and the tie-in between the product and the brand. Most importantly we all wanted to try the gin.

“Everyone loves the brand identity and bottle design Whippet created for us. It stands out on the shelf, it’s fun, bold, original and just a bit spooky. And we couldn’t have asked for a better agency to work with.

– Rory Smith, Owner and Founder, Nosferatu Blood Orange Gin

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London calling. Google’s Pixel 3 ‘Curiosity Rooms’ in London.

Whippet Australia ECD Tod O’Reilly was in London late last year, and couldn’t resist making a quick trip to Google’s popular ‘Curiosity Rooms’ pop-up experience at 55 Regent Street.

Designed to drive hype around the launch of Google’s flagship Pixel 3 smartphone, three floors of the stunning period building were transformed into an immersive experience to artistically demonstrate the Pixel 3’s cutting-edge features.

The ‘Google Lens Laundrette’, in all its striking pastel pink retro kitschiness highlighted the mind-blowingly sophisticated AR tool that is Google Lens.

Just focus the Pixel 3’s camera on pretty much anything, and you’re presented with information and options aplenty. For example, Google Lens was able to identify a pair of Nikes spinning around in the faux washing machine, explain what they were, and give suggestions on where they could be purchased. Super cool.

Venture upstairs to the seriously Instagrammable, abstract room created by L.A-based artist Darel Carey. Using just electrical tape, Darel had created a mind-bending masterpiece to change the viewer’s perception of space – which made for a perfect backdrop to demonstrate the Pixel 3’s Group Selfie feature in action.

Heading, or rather sliding, back downstairs allowed for the Pixel 3’s Top Shot feature to shine, where the phone automatically analyses a photo you’ve taken, then recommends alternative shots you could have taken based on a bunch of different factors like lighting, exposure time and even whether everyone’s eyes were open. Genius.   

As the saying goes, nothing lasts forever, with the doors to Google’s ‘Curiosity Rooms’ closing after 5 busy weeks. We did note, though, that the Curiosity Rooms were just a few tube stops from Google’s first ever pop-up store on Tottenham Court Road in 2015. Fast forward almost four years, and the world’s second biggest internet company still has no permanent retail locations, although it’s building a strong reputation for cool and creative pop-ups.

It seems that when it comes to getting consumers to experience a new brand or product, nothing beats a real-world store – even if it’s fleeting.

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All they wanted for Christmas was a bargain.

Photo by John Henderson.

How the pre-Christmas sales are affecting retail.

It’s a cliché that the Christmas sales seem to begin earlier every year, but this was particularly noticeable last year. Now that most of the stats from Q2 are in, let’s take a look at how Black Friday and Cyber Monday are affecting the rest of the retail year.

From the numbers we can find, there appears to be a trend for stronger Novembers and weaker Decembers, followed by even weaker Januaries – both in-store and online – and this seems to be fairly consistent across the US, the UK and Australia.

For example, last year was the biggest Black Friday ever in the US, with USD$6.2 billion spent online, a growth of 23.6% on 2017. (Complete official statistics covering both online and in-store are still yet to be released due to the US government shutdown).

Australia followed suit with a record AUD$400 million spent on Black Friday, before a subtle dip in December.  

Things were a bit different in the UK, with a 1.3% rise across November in total, but decreased year on year spending on Black Friday, before a fall of 0.9% throughout December – although experts are putting that down to Brexit uncertainty. Taking a broader view, sales were up overall across November and December, albeit by a subdued 0.3%.     

So, all in all, stronger Novembers and weaker Decembers. Put this together with the slow but steady shift of sales moving online, and it can be summarised that, at least in the US, UK and Australia, people are spending more money earlier in the year, and increasingly online.

If this is simply a case of November stealing from December and online stealing from in-store, then this is hardly anything surprising. But is there something more that can be learned? Maybe.

Weaker Decembers mean more pressure on the post-Christmas and January sales, and greater temptation to bring the new season sales even further forward. If this pattern continues, we could soon be seeing heavily promoted non-stop sales events well into the new year. The temptation to chase targets with continual sales events is never ending.

The consequence of sales events becoming more and more frequent is customers becoming ever more accustomed to buying at a discount – so they instinctively learn not to buy anything (within reason, of course) unless it’s on sale. This creates a feedback loop where retailers rely upon discounts to drive sales because the numbers appear to support it, even though many of these customers were going to buy anyway. The opportunity to sell at a higher margin is lost.

Of course, this applies to both bricks-and-mortar retailers and online retailers, but it’s more dangerous for the former. Here’s why. It’s well known that customers who shop online are more likely to shop purely on price, and they expect things to almost always be cheaper online. So if a bricks-and-mortar store is having a big sale, it’s simply expected that the prices will be the same or even better online.

The huge overheads of running a bricks-and-mortar store make it impossible to compete on price alone, and therein lies the problem. Heavy discounting can only ever be a short-term fix for slow sales numbers. Long term, it’s a losing battle that will see more and more sales lost to online, and more retailers lost to the ether.

Does this mean real-world stores are destined to be relegated to history? Not quite.

In-store sales still far outweigh online sales the world over. In the US, online sales make up only 10% of total sales. In the UK it’s roughly 18%, and in Australia it’s 8.9%.  Although these are all trending upwards, the numbers are still heavily stacked in favour of bricks-and-mortar stores. So instead of just discounting, what value can real-world stores offer customers that online simply cannot?

As we wrote in October last year, a more immersive and interactive shopping experience, salespeople with expertise, immediate receipt of goods, and the ability for customers to try before they buy are a good start.

The next time a new sales event emerges, bricks-and-mortar retailers should consider whether joining in the hype is really in their best interests. In the meantime, perhaps tax reform will help level the playing field? Time will tell.

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