Name-Your-Own Price Strategy

First came mass customization- products made to your specifications. Now, we are being handed the keys to another element of the marketing mix: price. Some businesses are experimenting with name-your-own price, an approach in which the customer decides how much he or she wants to pay for the product. Name-your-own price gained noteriety recently when the British band Radiohead sold downloads of its latest CD “In Rainbows” on the Internet for a price to be determined by the customer. This decision could be to pay nothing at all for the download. A similar approach is being used by Paste Magazine for annual subscriptions to its music and entertainment publication, with a minimum price of $1 accepted.

Is name-your-own pricing the next big thing in marketing, or is it a risky, if not foolish, decision that allows people to walk away with your products for free? It is not an approach that would work in all industries, especially for products that have high variable costs. Giving away products and incurring materials costs with no assurance of recouping them does not seem to be a recipe for profitability. In the case of Radiohead and Paste, costs are less of an issue, so it could be argued that some revenues are better than none at all. The brand exposure received from the media attention and making it easier for consumers to experience their products could lead to the strategy being successful for Radiohead and Paste. Link

Meeting Expectations of the Cyber Customer

Today is Cyber Monday, the date in the Christmas shopping season that shoppers flock to e-commerce sites to continue the shopping many people began on Black Friday. An estimated 72 million people will be Cyber Monday shoppers, up from 61 million in 2006. The growth in consumers willing to do their holiday shopping online presents tremendous opportunities for e-tailers. Unlike their brick-and-mortar counterparts, e-tailers can draw customers from all over the world.

Being presented an opportunity to profit from a growing number of online holiday shoppers is one thing, being prepared to take advantage of the opportunity is another. E-tailers have been known to frustrate shoppers and miss sales due to web sites that crash under increased customer traffic. More experienced e-tailers likely have prepared for this possibility, but a newer business may have to experience that growing pain first-hand to learn the lesson. Also, are order processing procedures well designed and executed? This aspect of the e-commerce transaction is as critical as the salesperson-customer interaction is for brick-and-mortar retailers. An order that is delivered on time and mistake free is the customer expectation that must be met. Anything less can lead to dissatisfied customers who might take their business to other e-commerce sites on Cyber Monday 2008. Link

Putting Customers in the Christmas Spirit

Today is Black Friday, traditionally the official start of the Christmas season for retailers across the U.S. In the coming weeks, shoppers’ nerves will be put to the test as they fight heavy traffic, congested stores, and anxieities about getting their loved ones the perfect Christmas gift. It’s enough to make people lose sight of the reasons why Christmas is celebrated!

If you are a retailer, it stands to reason that you would adjust your marketing tactics to meet customers’ needs during this season. Extended hours, additional sales and customer service employees, and special promotions are standard fare. But, what if you are not a retailer or Christmas isn’t the boom period that it is for retailers? Do you dismiss the month of December as a slow period and go shopping with the masses? You don’t have to, and you should not take a holiday from marketing.

Some brands that are not top-of-mind with consumers during the holidays have taken steps to provide comfort and convenience to shoppers. Whether it be Bank of America’s cardmember lounges that provide resting places and free gift wrapping or Charmin tissue providing high-end portable toilets (is that an oxymoron?), there are ways you can help your customers get in the Christmas spirit. And, while they may not want to buy your products or services to give as Christmas gifts, any way that you can keep your brand on their mind and even add value to their hectic lives is a plus worth exploring. Link

Advertising: Marketing Strategy of Last Resort?

When a company announces a TV ad campaign, it is rarely noteworthy because the appearance of new TV ads is an everyday occurrence. It’s not an everyday occurrence for Starbucks. The iconic coffee house chain is airing its first ever TV commercials to coincide with the holiday shopping season. Declining store transactions and competition from lower priced Dunkin Donuts and McDonald’s are factors behind the decision to move into TV advertising.

Is advertising the answer to overcome stagnant sales? In some cases, maybe, but not for a brand that became legendary through every conceivable means but advertising! Starbucks created its point of difference around the experience of enjoying coffee in a Starbucks coffee house. It’s not about price, convenience, or anything else. If store visits are down, Starbucks has to take the proverbial look in the mirror to ask why.

Are there aspects of the Starbucks experience that have lost their appeal to consumers? Many people suggest that if Starbucks wants people to visit its stores it could start by offering free Wi-Fi Internet access, as most of its competitors offer. Starbucks’ ad campaign may be noteworthy because it is the first ever for the company, but don’t look for it to be noteworthy for raking in sales increases this holiday season. Link

Keeping a Lid on Black Friday Sales Information

Black Friday is near. The day after Thanksgiving is very critical for retailers as the Christmas selling season moves into high gear. It is called Black Friday because historically it marks the time of year that retailers move into the “black” of profitability for the year. A major part of a retailer’s Black Friday success is tied to its sales and other promotions designed to generate store traffic. Wal-Mart, like other retailers, spends heavily to promote Black Friday. The retail giant differs from other retailers in its policing of information about its Black Friday promotions.

Web sites such as bfads.net, BlackFriday.info, and Black Friday 2007 give consumers information about retailers’ sales on Black Friday. These web sites post information sometimes about sales that have not been released to the public. The informaiton is obtained from a retailer’s employees or an employee of a printer producing the promotional materials, or some other unauthorized source that has access to information about a promotion. Wal-Mart has communicated with some of the more prominent Black Friday web sites that it should cease and desist from posting information about Wal-Mart ads before they are released.

Wal-Mart is trying to protect its confidential marketing decisions for as long as possible. While the company will not score any points for its brand image by unleashing its legal department on Black Friday web sites, the efforts to suppress the information almost seem futile. Retailers can react and adapt to competitive actions faster than ever thanks to the availability of the Web as a communication channel and a platform for selling products. If competitors and consumers find out about Wal-Mart’s Black Friday promotion plans a few days early, little can be done to derail a competitor at that point. Product orders for the Christmas season are placed months ahead of time. The major marketing decisions for the holiday season are in place, and advance information about a short-term promotion is unlikely to be a determining factor in a retailer’s success for the Christmas season. Link

Dialing for Dollars Using Mobile Marketing

How many ways can your customers buy from you? The late 1990s saw the spread of the Internet as a commercial platform, and the late 2000s could be ushering in the next significant platform: mobile marketing. Papa John’s has launched a mobile marketing program that enables registered users to create order preferences and set payment options. Orders can be placed by texting Papa John’s.

Will text message ordering become the new standard for customers doing business with Papa John’s or any other retailer that adopts the platform? Probably not anytime soon. But, mobile marketing opens up possibilities beyond accepting customer orders such as being able to send coupons and other offers to customers without buying media time or space. Coming up with new ways for customers to make purchases represents potential incremental revenues that cannot be ignored. Link

Gift Cards not Consumer Reports Choice for Perfect Gift

I love gift cards- love to get them, love to give them. I like getting them because a gift card gives me a “kid in the candy store” feeling. I get to go to a store and pick out something for me! I like to give them for the same reason- I want the recipient to enjoying picking out something and not get stuck with a gift they may not want. Gift cards have become BIG business for U.S. retailers as we spent an estimated $80 billion on them in 2006.

So why is Consumer Reports going after retailers and the gift card business? They have released a report critical of gift cards. Among the negative points raised by Consumer Reports is that more than 25% of gift cards given are not completely redeemed. This behavior (or lack of behavior) by consumers results in retailers enjoying an estimated $8 billion windfall… all revenues, no expenses!

The argument that gift cards mainly benefit the retail industry is off base. The responsibility for consumers not redeeming gift cards rests solely with the people holding the cards, not the stores that sold them. Prime reasons that people don’t redeem gift cards are 1)they lose them and 2) they simply forget they have the gift card.

I would rather have a gift card than an ugly sweater any day. That reminds me, I have some gift cards from last Christmas floating around my sock drawer. I’d better use them so I won’t become part of the argument Consumer Reports uses against the gift card industry! CR does a lot of good for consumers; its efforts could better serve consumers in areas other than the giving and receiving of gift cards.

Can Re-branding Exorcise Devils?


New name, fresh start? This philosophy seems to be behind the re-branding campaign recently announced by the Tampa Bay Devil Rays of Major League Baseball. Uh, wait, that is the Tampa Bay Rays (hold the Devil). The team is changing its name to “Rays” and unveiled a new logo and color scheme that it will don next season. The makeover is part of an effort by team owner Stu Steinberg to invigorate the franchise after years of mediocrity under previous ownership.

The Rays have nothing to lose by re-branding the team. AirTran was formerly known as Valujet, but a wave of negative publicity (including a fatal crash) left the Valujet name “valueless,” so re-branding the airline in the late 1990s gave it a needed clean slate. Unfortunately, it takes more than renaming a product to enhance its value. If the Rays continue to be among the worst teams in MLB every season, then there is little marketing can do to influence the team’s image.

Perhaps the wisdom of NBA star Allen Iverson applies here. When the NBA implemented a dress code for players, Iverson said “Put a murderer in a suit, and he’s still a murderer.” Following that logic, changing the name and uniform colors will not lead to a World Series championship.

Facebook and Social Ads

Facebook introduced its much anticipated advertising model on Tuesday of this week. Facebook ads put a different twist on serving ads over the Internet. Ad messages from marketers appearing on Facebook will be delivered by Facebook members as a type of referral to their friends. The concept has been branded “Social Ads” by the company. Also, businesses can create Facebook pages, and Facebook users can sign up to become “fans” of the business. Fans will be the transmitters of ad messages to friends they believe would be interested in learning about a particular advertiser.

The potential benefits to advertisers are two-fold. First, companies that use Facebook ads can obtain an extensive amount of information on audience characteristics, both demographic and psychographic data. Second, credibility of ad messages could be enhanced because of the implicit (or explicit) endorsement of one’s friend rather than an ad coming directly from the marketer. Word-of-mouth is powerful; there are no better messengers for a brand than users who are convinced that the brand delivers value! Link

Surviving in a World of $4 Gasoline

Here we go again. Gas prices are on the way up once more as crude oil prices are rising toward $100 a barrel (currently around $95). Average price for a gallon of gas in the U.S. has eclipsed the $3.00 mark again. A combination of high demand worldwide and tightening supplies is cited as the cause for the surge in crude oil prices.

While the effects of higher gas prices will range from an irritation to great hardship for consumers, how does this affect businesses? An obvious effect is higher transportation costs to move products to the point of sale. Often, consumers will foot the bill for this indirectly through higher prices for products or directly in the form of fuel surcharges.

A more important question to ask is how will higher gas prices affect customer buying behavior? Will they pass on buying certain items because they’re now spending more of their budget on gasoline? If your business requires consumers come to you (e.g., retail, some services, entertainment), will they still come? For several years, I have made the 4-hour trek to Talladega, AL, to take in a NASCAR race. As much as I enjoy the experience, I can easily see myself sitting on the sofa next year watching the race! Unfortunately, it would not be just the money on gas I would not be spending, but the race track would not sell a ticket, a hotel would not rent a room, and restaurants would not sell meals.

While the possible change in consumer behavior is a major threat for some businesses, a business can seize this trend as an opportunity. Can you save customers money by delivering the product to them? One reason why a company like Netflix has thrived is because it is easy for customers to acquire DVDs. Online businesses and even catalog retailers seem poised to meet customers’ needs in a world of $4 a gallon gasoline, which is a price many experts predict we will see in the not too distant future. Link