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Featured Posts, Supply Chain Goobledygook

Retail Gyan: What can we learn from fruit-trees about marketing

Are trees good salesmen? Do they know something that a lot of experts on retail don’t?

I guess yes. Innocuous little fruits hanging from the trees and waiting for somebody to pick them-  a bird, animal or a man. Lets see how they put in practice one of the modern retail management practice and do it better.

I’m sure you’d have often come across end of season sales (EOS Sales) when you get goods at discounted prices. EOS sales attract a lot of shoppers. Retail chains carry out EOS sales to flush out all the unsold items and clear their inventories. Often after the season a retailer is left with goods that didn’t cut ice with the customers. So the Idea of EOS sales is simple- if the goods haven’t attracted shopper yet, then lets increase the attractiveness of the goods. There are two ways of doing this- One is increase the value proposition of the goods i.e. may be club a few free accessories with the goods. Or the second method, if the benefit of goods is constant then lets decrease the price, effectively increasing the value proposition vis-a-vis their price. This is the common concept of EOS sales.

Now lets see how fruits-trees have been doing this since the time immemorial. We generally do not tend to favor overripe fruits sometimes because they are too soft and sometime they might just be on the verge of spoiling. Yes but that is really not reason enough to disfavor them. Research has shown that overripe fruits actually have the maximum amount of anti-oxidants, a nutrient that is a big reason why fruits are considered healthy (Research Link). And this happens because a lot of chlorophyll in the fruits keeps getting converted into anti-oxidants all the time during its ripening. This process keeps making the fruit more and more nutritious all the time. Now lets see how this is a business concept similar to the EOS sales.

Fruits serve a biological purpose for the plants- that of spreading the plant species and hence its survival. When a fruit is eaten by animal- Birds, Monkeys or Humans, the seeds in the fruit are not digested and are refused from the body. These seeds then find their way to the ground and germinate into a new tree. So the trees multiply. Therefore trees are a kind of salesmen trying to sell the fruits away to the animals,doing which helps them multiply. In order to do so they produce fruits that are juicy, tasty and full of nutrients so as to attract eaters. But not all fruits get sold away instantly. Some keep hanging to the branch longer than others (Read inventory that is kept on the tree longer). So to do away the inventory the fruits tend to get more nutritious and also sweet smelling as they ripe. More nutrition must attract more eaters. This effectively increases their attractiveness and hence must help trees find more customers before the season of fruits passes away.

However in doing so the process trees adopt is even better than the ones many retailers adopt. In 2002 a research was published that the EOS sales pricing model many retailers adopt is not the most optimum (Link). They found that most retail chains marked down the price once during the end of season and then persisted with the price. According to them the customer intent of buying these goods keeps decreasing all through the end of season and hence a single mark down doesn’t matches the price to the benefit customer may see in buying the good all throughout the season. Therefore they argued that a pricing model must keep matching the price more often throughout the EOS sales so as to better match the price with the benefit customer sees in buying the good.

The process of gradual markdown is similar to what trees adopt. They keep on increasing the attractiveness of the fruits continuously throughout their ripening stage and therefore keep trying to chase the customer (Animals) intent. Although even they can’t also totally avoid a fruit spoiling completely much like the retail chains who towards the end of season cannot entice customers to buy the goods with even large discounts.

So here is how how trees have been using a more optimized model of a modern retail practice!

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About yash saxena

In this nothing lies everything

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