Back-to-School Marketing Games

Tempting Bargain Hunters with Fun, Pricey Products

Aug 16, 2018
Marketing

SMITH BRAIN TRUST – Back-to-school shoppers want discounts. Manufacturers want high profit margins. The tension feeds a paradox of sorts at retail outlets where buyers and sellers meet: Stores increasingly emphasize pricey, innovative and fun products in a bargain-shopping season.

“It’s not only a way to stand out, but it also allows companies to charge premium prices in a traditionally deal-loaded shopping season,” says  Jie Zhang, professor of marketing and the Harvey Sanders Fellow of Retail Management at the University of Maryland’s Robert H. Smith School of Business. “The strong economy and high consumer confidence this year has certainly contributed to this trend, as more consumers are willing to pay higher prices for premium and innovative products.”  

Walmart executive Scott Bayles confirms the strategy. “An explosion of innovation and fun in school supplies (is appealing to) people looking for ways to relieve stress through creative expression, and that’s trickling down to kids,” he tells the Associated Press.

For example, shoppers can choose, for example, between a 10-pack of “Scentco Colored Smencils” — with scents from bubble gum to kiwi for $14.99 — or a basic 12-pack of Crayola colored pencils for just $1.

Spiral notebooks, meanwhile, start for less than $2. But shoppers can opt for the Rocketbook Wave for $27. The product looks like old-school pen and paper, but students can use an app to scan and store anything they write on the pages.

Zhang says the opportunity to appeal to creative-minded consumers is especially high during the back-to-school season, the retail industry’s second-most important event behind the winter holidays. “School supplies contribute to about 20 percent of the total spending,” she says. “And children are particularly prone to the appeal of innovative and fun products.”

Zhang says the strategy works particularly well in brick-and-mortar stores, the destination for about 90 percent of back-to-school shoppers.

“Consumers can try out and experience products firsthand,  and retailers can utilize a variety of sensual stimuli to influence purchase decisions,” she says. “In a broader context, as more consumers switch to online shopping and more shops — especially mall-based — close, retailers are putting more emphasis on utilizing their physical stores to create exciting shopping experiences and to build and maintain deeper relationships with their customers.”

Ultimately, Zhang says, the trend is more like “the icing on the cake” than a revolution. “The cake continues to be competitive prices for most retailers and product categories,” she says. “Retailers have offered widespread deals in recent years to attract shoppers, and consumers have become accustomed to getting good values during this shopping season.”

Retailers have been cashing in, too. Sources estimate about 29 million U.S. households will spend an average of $510 in back-to-school shopping in 2018 — up from $501 the previous year. The projected $28 billion haul for retailers would represent a 2.2 percent increase from 2017.

GET SMITH BRAIN TRUST DELIVERED
TO YOUR INBOX EVERY WEEK

SUBSCRIBE NOW

Tags: 

About the Expert(s)

Jie Zhang

Jie Zhang is a Professor of Marketing and the Harvey Sanders Fellow of Retail Management at the Robert H. Smith School of Business at the University of Maryland. She received her Ph.D. in marketing from the Kellogg School of Management at NorthwesternUniversity. She was a faculty member at the Ross School of Business at the University of Michigan prior to joining the Smith School. Her general research interest is to apply advanced econometric and statistical models to study consumer purchase behaviors and retail strategies.

More In

Accounting

What To Binge Watch Over Winter Break

Ready to get cozy and catch up on some of the movies and TV shows you've missed? Maryland Smith faculty have some recommendations.

Dec 13, 2019
The Super Bowl Is Officially Hot Again

Brands still on the fence about whether to buy Super Bowl air time may just have to hope for better luck next year. For the first time in five years, commercial spots have sold out, well ahead of the big game.

Dec 12, 2019
Xiaomi and China’s Smartphone Market

There was a lot of excitement in China this week about Xiomi Corp., as the world’s fourth-largest smartphone maker launched its very affordable 5G smartphone “for the masses.” Our expert shares some insights.

Dec 12, 2019