WHAT DOES IT TAKE TO BREAK CUSTOMERS from their usual patterns and bring them to new places?
If you had the option of purchasing groceries from a store that is located in the next town but whose prices are 50% lower than your local grocer, would you make the trip? If the discounted store was not as organized and clean as the local grocer, yet provided the same quality products for a lot less money, would you still go there?
Offline, customers strongly value convenience, but they can be convinced to go out of their way for a deal. For example, if I (Ayat) am preparing dinner and I realize I need a small grocery item, it is unlikely that I will purchase the item from my local Wal-Mart, which is approximately 15 minutes away from my home. I’ll rush to my local grocery store, which is two minutes away, even though the prices there are substantially higher than at Wal-Mart. However, I will pencil in a day to do my weekly or monthly shopping at Wal-Mart or Costco to take advantage of the savings these stores offer.
Customers are also willing to drive some distance to outlet stores, which are often located on the outskirts of large cities, to get good deals on the brands they love. Customers who may never otherwise shop at Macy’s fill the store during its semiannual “One-Day Sale.” Again, although convenience is big offline, incentives will drive customers to go the extra mile (no pun intended).
Incentives can change customer behavior. Incentives not only ...