A Sustainable Design Blog
Why Making Seasonal Products is Worth the Risk
Many companies pour considerable funds into R&D, design, packaging, and promotion of products that they only intend to sell for 2-3 months because it’s unlikely to sell at all outside that window. It’s a high risk business, so why do so many companies take the chance? Because of a little psychological phenomenon called Loss Aversion.
The theory of loss aversion states that people are much more aggressive about avoiding losses than they are about acquiring gains. This is why your child may not ever play with their toy car, but the moment you want to give it to their younger sibling, it becomes something they can’t part with. It’s also why you have a closet full of unused items that have no value to you until your spouse suggests donating them.
The funny thing about loss aversion, though, is that it can also be invoked for those things that you don’t even own. Companies use this phenomena when they advertise a sale or limited-time offer. You attend the sale or buy the product so as not to lose out. However many people think this trick doesn’t work, and they are partially right. It doesn’t take long to realize that there are at least 12 'One-Day Only' sales at Macy’s every year or that 'limited-time' is a very relative term.
Seasonal products are different, though. They put a definitive date on that limited-time offer that is evident to all with eyes and a calendar. Consumers know that you won’t be making that special peppermint hot chocolate cappuccino past Christmas when they see the package dappled with snow flakes and reindeer.
What this means is that even the normally conservative consumer will buy multiple of a seasonal product that they like because they don’t want to lose out. On the sales side, this translates to 2-4 products per buyer rather than the normal single purchase, making your loyal buyers turn temporarily into super buyers. The increase in sales volume these super buyers provide is usually all the encouragement that most companies need to invest in seasonal products.
One word of caution, though…the key to the magic of seasonal product sales is that they are temporary. There are many sad stories of companies seeing a spike in sales of their pumpkin spice products and hearing the loud requests from their customers to keep that product going year round, only to find that sales drop precipitously once the product is in regular production. Your customers will cry and curse, but cut off those seasonal products when the season passes. As many a successful entertainer has preached, always leave them wanting more.
Jennifer Stewart is the Office Manager and wanna-be organizational psychologist at Modern Species. For more posts from her, click here.