Will retailers give away the store this Christmas?
Retailers are acting a little too much like Santa Claus when it comes to Christmas promotions, according to researchers from Oxford University's Saïd Business School.
The researchers examined 215 studies with a total of 23,690 participants reported in 104 articles, journals and other sources from 1998-2013. According to study's authors, "Retailers often do not need to offer price promotions, multi-buys or discounts, and in fact they can actually undermine the celebratory mind set of target consumers. By tapping into a more 'prevention' mentality, such campaigns send mixed messages and could actually reduce sales."
The authors discuss the idea of "regulatory fit" which they define as "the match between people's regulatory focus — either promotional (pleasure seeking) or preventative (risk avoiding) — and their purchasing habits." The research indicated that matching those inclinations with marketing and sales materials could "strengthen positive attitudes and behaviors towards brands."
But aren't price reductions necessary to drive volume particularly when so many retailers are engaged in Christmas creep, moving up their holiday advertising and merchandising sometimes in advance of Halloween? An article on the Adweek site referenced a Google study, which found 26 percent of customers start shopping for Christmas in October.
Professor Pucinelli doesn't think discounts are always necessary. "Our research indicates that advertisers can create the desirable orientation within just one advert ... an appreciation of the importance of 'fit' for consumer decision-making means that small, typically low-cost changes to messaging, packaging and communications can have a profound impact on consumer choice," she said.
If messages focus on indulgence, consumers with a "promotion" mind set will want to maximize pleasure by switching to premium brands and spending more to get the most out of their purchasing.