Counter Intelligence: Emotional Intelligence and the Private Brand Industry
If you’re in the retail business, chances are you’ve been hearing a lot lately about emotional intelligence, which leading researchers Peter Salovey and John D. Mayer define as the ability to perceive, reason with, understand and manage emotions. Marketers, long convinced that people make purchasing decisions solely based on rational processes like price and features, have been increasingly recognizing the role emotional intelligence plays in the shopping experience. Apple and Nike, for example, are among the many retail titans utilizing emotional branding to forge an emotional bond with consumers and boost their bottom lines.
So does emotional intelligence come into play in the growing private brands industry, where price has traditionally been believed to be the deciding factor in purchasing decisions? Turns out it does, and in a very significant way, according to recent research published in the Harvard Business Review. The study uncovered a group of private brand “superconsumers,” individuals who buy a lot of private label and have strong emotions about it—namely an overall affection for that specific retailer as well as a deep level of pride about being a private label superconsumer. These superconsumers were found to be split into two core groups driven by emotion rather than only price when making purchasing choices: purpose driven shoppers who want good quality at a great price and treasure hunters who seek great quality at a good price. The report stated that this powerful group of shoppers—the top 15 percent of private label shoppers across all food, drug, club and mass channels—account for 50–65 percent of private label sales for that particular retailer, and account for 40–55 percent of total sales for the retailer.
What these findings mean for companies in the private brand industry, the report concluded, is that it’s no longer a good business decision to reduce benefits in favor of low prices; in order to spur further industry growth, companies should appeal to private label superconsumers with products that feature an innovative mix of price and benefits.
Want to learn more about how emotional intelligence is making an impact in the retail industry? Check out these books: Emotionomics: Winning Hearts and Minds (Adams Business & Professional, 2007) by Dan Hill and Buyology: Truth and Lies About Why We Buy by Martin Lindstrom and Paco Underhill
Stay tuned for the next post in our Counter Intelligence blog series exploring the next generation of consumer intelligence methods, which will delve into how companies are utilizing neuromarketing to better understand consumers’ subconscious desires.