Keep cherry pickers happy with the right offer
Cherry picking is marketing term to define customers who are price sensitive and they go from store to store to pick up best priced bargains. Mr. Eitel invented the cherry picker, a hydraulic crane originally designed to lift and lower people to pick cherries high off trees. It lets the fruit picker pick fruit high in a tree with relative ease. He invented the telescoping crane after enduring a tough summer harvesting cherries on a farm and founded Telsta Corp. The marketing term ‘cherry pickers’ has been originated from there. The price sensitive customers don’t mind spending their time and energy while going from store to store to pick up the best priced products and services. A substantial number of shoppers exist who are very practical, shrewd and diligent enough to make cherry picking pay off.
A research by Stephen Hoch and Edward J. Fox marketing professors at the Cox School of Business at Southern Methodist University confirm that when customers visit two super markets let’s say in ten categories and buy product at lower or higher price, the customers save up to 8%. Hoch says that more than a few marketing experts and consumers consider cherry picking a “perverse” kind of shopping behavior and doubt that all the effort required to be a complete cherry picker is economically worthwhile. Hoch & Fox further comment that their research findings hold inferences for retailers who are the targets of cherry pickers. They do not fight cherry-picking and risk alienating customers; instead, try to entice cherry pickers into buying higher-margin items.
Cherry picking is worth its efforts because of a combination of factors when people go cherry picking, two things happen: They double the number of discount opportunities that will be available to them because they go to two stores. And, because stores have deals on more than one item, that increases the opportunities for cherry pickers to save money. The second thing that really makes cherry picking worth it, is that these shoppers buy more items than other shoppers. To make cherry picking pay off, you have to buy a lot of stuff. Cherry pickers perceive that they need to increase economies of scale to take advantage of the discounts available. It works great when customers shop till they drop. They save a lot not only in percentage terms but in money terms, which is what really counts.
Demographically, cherry pickers come in from all ages, monetary status, professions, educational qualifications – they are not much different than most people, except that they are single-minded about sniffing out low prices and pouncing on them. Cherry pickers usually have more time on their hands and have the endurance, most importantly they are aware of facts because of their research. According to Hoch’s research, they are usually older people with years of experience and seasoned. Older people are often price-sensitive because they are on fixed incomes. Cherry pickers have slightly larger families than most people. However, some cherry pickers are rich. They are always on lookout of news items in newspapers, magazines, on TV etc. They plan their day accordingly prior to their shopping; they pick some cherries here and different cherries there.
Cherry picking results into increased channel blurring; especially in Consumer Packaged Goods (CPG) category. CPG marketers understand that consumers are seeking low-cost solutions to everyday needs, and they are acting to capitalize on that opportunity. The key takeaways for people who have been tempted to try their hand at cherry-picking is detailed research; where, when, why, how, what, how much, discounts etc, etc. Researched shopping can really pay big-time dividends if shoppers buy a lot of the item or items that their research has shown to be offered with discounts. For dirt cheap rates, they should buy the biggest box, bottle or carton available, buy as many as they can afford, and find a way to make room for all the stuff in their basement or garage.
Channel blurring: One effect of cherry picking is blurring of marketing channels. Faced with budget constraints and higher food and fuel prices, many shoppers are tend to trim their basket size to save money while making more frequent trips to nearby grocery stores, vegetable store or drug store. In turn, drug and grocery stores have boosted their food and beverage offerings, while many grocers are rounding out their personal care product lines. With 55 percent of consumers eating out less often than prior to the recession, grocery retailers have stepped up their merchandising of convenient prepared foods while updating store formats to attract more consumers. Across channels, two-thirds of CPG (consumer packaged goods) categories have enjoyed increased merchandising support during the past few years. Aviation industry is also on packaging spree to attract more and more cherry pickers. Most corporations have tied up with a travel portal for offering travel packages at inclusive rates which also includes visa fees, airport transfer, apart from five star hotel stay, sight-seeing etc. The airlines are also offering installment facilities in which one has to pay a part of payment at the time of booking and paying the rest in two installments. This is how marketing channels are really blurring. And cherry pickers in their quest for value, consumers increasingly are willing to shop at a variety of channels to find the products they want at prices they can afford.
Cherry-picking varies depending on whether the store is the shopper’s primary grocery outlet or a secondary preference. The reasoning for this analysis is that shoppers are habituated to pick certain items from there and visit the secondary store to look out for sale and other bargains. In the secondary store shoppers spend as much in the primary store, and when they do patronize it, they opportunistically buy more sale items. According to Hoch and Fox secondary stores are hurt more by cherry-picking than primary stores because the pickers go there to buy low-cost items and virtually nothing else. Not only do secondary stores sell less per shopper, they also earn lower margins on what they sell to cherry pickers.
Message to Retailers: Hoch and Fox tell the retailers especially those in the grocery business and other household items types of retailing that they should simply accept that cherry picking happens and to do what they can to encourage shoppers to buy other goods. The fact is that in today’s economy, shoppers will continue to be careful about how they spend, and old channels will keep on blurring. E commerce as it is has redefined marketing channels. Retailers must learn to embrace complexity. While their brand might have been founded on certain attributes, but customers look out for many other attributes such as added value, convenience and newness. Carving their own niche can add strength. Retailers who try too hard to be all things to all people can overreach, just as those who focus too much on an ideal “core customer” can miss valuable opportunities. Awareness of channel-blurring also will be more important for some retailers than others. Cross merchandizing can be of great help, so when people come in to buy that one item (that is on sale), they can increase the customer’s basket size. However, the cross merchandizing needs serious thinking and practical approach.
