Pricing Games and Perceptions

What is the price of this bottle of wine?

This post is part marketing education and part consumer reports alert. Do any of us know the price of things in reality? For big ticket items it is really easy to compare online or with your phone. But what about Supermarket Items? Amazon Price Check won't help. Do you have time to check 50 items to see if thy are cheaper down the road?

1] Discounts and Club Cards

I often wonder when a club card special says On Sales for $3.59 regularly $4.19 if maybe it is always $3.59 but goes on sale and they change the regular price to make it look like a savings. This wine is an example. I originally was going to blog about this bottle always being on sale for $5.99 and thus Pepperwood would be viewed as $5.99 to me going forward. But I checked online it is a $5.99 bottle of wine. The Market has it priced at $9.99 on their own. No idea why! But my future Mother-in-Law was drinking it as her go to wine. It had a yellow On Sale tag at $4.00 off. It sure seemed like a total deal until I started to write this post.

2] Partnership Steals and Deals

In the Albany, NY area Sunoco Gas and Price Chopper Markets have a long running special. For every $50 you spend at Price Chopper you get $0.10/gallon up to 20 gallons off at Sunoco. Which really means if you buy 20 gallons represents a 4% discount/rebate on your Price Chopper sending per $100.

How easy is it for Sunoco to mark up their gas by 2% and Price Chopper their goods by 2% and have it a wash? Will anyone know? But when you see people check out at Price Chopper and are told they have $1.20/gallon built up they go ballistic like lottery winners. They forget that to earn that they had to send $600 at Price Chopper! And the discount is actually more valuable on a per mile basis when gas is cheaper vs $4.00/gallon. So as gas goes up your gas savings actually goes down.

Perception is everything:

If you can create an outsized value perception with your pricing or cross promotions it will be a positive on your bottom line. Most people sadly don't know if you do this. But a savvy marketer will work to find such scenarios. This should be your goal with every promotion and discounting campaign if your products or business aren't in the upper end of the price/value matrix.

But these can backfire. Beware you might be eroding margins not just today but future pricing power. In example 1 with the wine if it really was a $9.99 bottle I would view it as $5.99 because the store discounted it so long. It is possible as a brand that you can be crippled by a reseller or distribution channel without your permission. If you use such channels you can prevent this if you have some sort of contractual relationship with your partner.

People spent ONLY 12 minutes per day on Social Networks?

My friend Shelly Kramer blogged about a recent ComScore report. (btw follow her on the Twitter she needs more friends)

While it highlights an increase in usage for Social Networks it reinforces the fact you can not really market via social media to any scale. For those that wonder how I arrived at the 12 minutes the report states people now spend 6 hours a month on Social Media 360 minutes divided by 30 days....anyone who reads this blog knows I hate how marketers aggregate numbers to make them look big.

We have blogged that use of Facebook is now under 20 minutes per day per user. We have blogged that most if not all of human communication takes place off of Social Networks in private.

Meanwhile people still spend 4hrs per day watching TV. They still work, eat, play. They still drive around and shop. They still spend hours on the internet. But only 12 minutes on Social is just 0.8% of a day. 

So how should a business reach their current customers and find new ones?

First most powerful will be word of mouth. If you have a great product or service at the right price point and give customer support that will be your biggest sales driver. Remember advertising is like shooting with a shotgun. You spray it and hope you hit some folks. But people will talk about your product, service or brand if they have a great experience! And I don't mean on Social Networks! I mean Live! Email! Phone! Etc!

Next is your location, storefront, street sign or if you are on the internet your website and great SEO. Make sure people can see you easily whether when walking, while driving, or searching on the internet.

Third is traditional marketing works! Look at TV and Cable ad rates. Digital ads, yes even Facebook ads which are traditional advertising if you were unaware. Publicity/Public Relations efforts. Even print ads depending on your business, product, service.

Lastly use social in ways that fit your business size. For a small business you can talk to and groom customers to become brand advocates. For a big business you can get them talking about your brand.

You should talk to people with similar businesses, or observe your competition and find out what works for them best. I have a client who wanted to be included in a Best of Their City publication for 2012 and the publication wants them to buy advertising in order to really be supported. So we asked a business that is similar that ran an ad last year and the response was  not positive so I advised them to look at other options and weigh where to invest their limited budget. 

For a bigger business that can afford many things try what looks best and then after 6 months evaluate how your choices performed. And then the ones that did well pay for again, And the ones that didn't reinvest in some of your options you decided to pass on. Often you can't tell how well a marketing/advertising channel or platform works until you try them.

The Big Subway Battleship Game Fail

I admit sometimes on my drive from NY to Vermont I stop at Subway because there is a choice between them and McDonald's for a quick bite. Vermont lacks quick eat places like they lack Billboards. They don't exist! So I stopped in only to be first swindled by the worker there. She said twenty cents more for a large drink with your sandwich? I thought wow only twenty cents sure. Well turns out she meant an up size from medium which I wasn't planning on getting. Teach me right.

Now to the new Battleship game. The fail here is it allows me to play from my phone or computer. It takes you to the Subway site and it was not very phone friendly. The screen shots are from my laptop. The biggest fail though is I have a code to enter to see if I win. Great. Well why do they need all my information to play? McDonald's does not require this for their Monopoly game. In fact I can turn in an instant win piece and they don't ask me for anything.

So in the end I felt swindled over a drink and I refuse to give Subway more than my email to play so obviously they don't care about giving away all the prizes because if I had a winning code I will never know because I refuse to play under these terms. Never mind all these steps when I am on the road stopped at the Vermont Visitors center under time constraints hoping to check the code and toss my soda cup.

So big fail and disingenuous to make it so many steps JUST TO CHECK A CODE!

Setting Realistic Expectations

The hardest thing for a brand or business to do is to filter through the BS and set realistic expectations for your marketing investment and efforts. Obviously when you have a limited budget you can't afford to do everything you could if say you were a massive brand with unlimited dollars.

I wrote previously to start with your goal and work backwards. Net you can look at your labor and capital resources and choose where you think will match your goals best. I then suggest you 'Sandbag' your expectations and work up some numbers below a homerun. Sandbagging is used by direct sales people when they have to give their forecasts to management, they under forecast so the blow away expectations vs underachieve. 

Why should you 'Sandbag'? Marketers hype. That is their nature. Whether it be your Agency or a Media Channel they are going to inflate things in their pitch. You will be told how many people they can reach for you, but often be unrealistic. Especially since most can not prove results due to the type of platforms. A TV station can't prove I was watching your commercial vs getting up to pee. A Magazine can not prove I read your ad on page 33. Facebook can't prove I saw the little ad to the side but they can tell you if I clicked. 

I like a 30% discount for anything that is unmeasurable and has to be estimated. So make your own adjustments. If the local cable station says for $500 you can reach 100,000 people with a 30 sec spot which is 0.5 cents per viewer cut that by 30% to 70,000 and use a higher cost. Do this for all your media spend. I would rather reach more people than I expect than reach less than I expect.

Use math as well. I have seen Facebook with 850mil accounts and Twitter with over 400million accounts. But when I crunch the activity numbers happening each day they tell a different story. That in the US only 15million people are actively tweeting and only 27mil to 35mil are active on Facebook. Many more log in and just read. So this means you can reach more with 'Paid' advertising like Facebook Ads, but lower your expectations for sharing of any content or reaching them with tweets and posts. That $500 for a Cable TV 30 sec spot might turn out less expensive than Facebook ads or the labor/time to reach them with posts on your Brand page or Tweets.

Only you can decide how much a new customer is worth paying for. Advertising and Marketing can get a new customer to try your product or service, but after that most of their work is done. You now are responsible for ensuring they come back by having a great product or service at the right price point with the right customer service and customer experience.

Managing Polarization

Most brands try to be plain vanilla and not upset anyone. These tend to be the brands that can technically sell to everyone. I remember my first job interview out of college in 1991 was to sell copy machines. I went on a ride along with the Sales Manager who wore a polyester suit (I knew I wasn't taking any job offer because I don't work for Polyester people) and we went to a road with businesses and knocked on every door. Because every business could use a copy machine.

But some brands are willing to risk being polarizing. Walmart, FRS, Jockey, Chick-a-Fila, Nike have either made choices or decisions that risk alienating a portion of potential customers. Sometimes it is damage control like for Nike do they drop Tiger Woods after his womanizing scandal and risk losing him to a competitor when he regains grace. Others like Jockey and FRS decided to use Tim Tebow prominently in their advertising. To Walmart with their questionable employment practices. To Chick-a-Fila who refuses to be open Sundays and supports anti-gay groups. I know I chose brands I have issues with being myself secular and progressive. Plenty of Brands have to deal with environmental issues, animal cruelty, conservative or progressive positions that alienate portions of the population.

Most of us have no idea if most brands do things that upset us or not. But we do vote with our wallet when we do know these things. And if you make a decision to be polarizing you have to plan properly.

1] First analyze the choice. Can you afford to alienate a portion of your potential customer base? Will the loss of sales be made up for by the sales you gain? If the answer is yes the rules of Finance - Net Present Value (NPV) say yes make that decision because it will maximize your return.

2] Social Media - the elephant in the room. You also have to deal with attacks on Twitter, Facebook and Blogs as well as private emails and word of mouth. In the past Brands could put their head in the sand and make believe no on cares. Now it is possible there can be a landslide of chatter beating down on your social media team. What do you do?

• Don't respond to the negative chatter individually. You will lose this battle.
• Do think about posting a statement supporting your decision on your website.
• Focus on your products and why they benefit me. Maybe your case can be  so compelling I have to stay or become a customer.
• Create a listening program to monitor positive vs negative chatter and be prepared to change course if your sales dip. The key is as long as your sales growth is larger than your loss stay the course. But you must have a plan to manage this decision if it goes wrong.
• Lastly do you need to be polarizing? Why did you make this decision? Could choosing to not be have been a better choice?

So What is Twitter and Facebook Good For?

Yesterday I claimed marketing using a Twitter account or Facebook Brand Page is Dead.

This is true. But this doesn't mean to not have a Twitter account or Facebook page and be active with them. They have value. And while they won't drive your sales growth, they will impact your business. A Fan and a Follower is not someone who is anything more than a passive customer. Don't count everyone as a champion of your brand. But the people who talk with you can become brand champions.

So here are some reasons to not only have these accounts but to actively manage them.

1] Customer Service - people know phone calls and emails for simple things are dead. They won't go to your site and fill out a form. They are just going to tweet or post on your page that you blew it, or suck or they are pissed. This is a chance to fix things and make them feel you care. Twitter should be fairly quick response. Facebook people will give you some time.

2] Community Building - don't give this short thrift here. You can create a brand army by actively engaging and grooming customers. These people will have your back. They will eagerly promote your brand to friends. Our Chief Alien is part of Chobani Yogurt's Army. He regularly converts people in the supermarket dairy section without pay (well there has been a few free cups of Cho but no cash!).

3] Sharing happens - Who cares if only 1% of your fans see your posts or tweets and only 0.1% respond in some way. Every time a fan or follower does respond people in their networks have a chance of seeing this person identified with your brand. This will help you slowly gain more fans and followers. While sharing per person is very low with most twitter accounts barely used and Facebook users barely clicking Like or Commenting. Why not take what you do get and view it with value.

4] Fun Fun Fun - the networks really are fun platforms for consumer brands. So give them a reason to talk with you or talk about you or visit your page. While many surveys say people only care about deals, if that is what you use these channels for you are just degrading you pricing power and wasting your resources. Use these as value added channels. Run contests. Share interesting content about your brand. Tell your story. Highlight your employees. Showcase your customers.

5] Focus Groups and Listening - View your fan base as a large focus group. Gain insights. Learn about what you do right and wrong. Shorten the development cycle for new products. You can learn about quality issues really fast.

As you can see there is value to being present on Twitter and Facebook. They help give your brand a human face. And yes you can still pitch and promote things, you just can't reach most of your customers that way,

Social Media Marketing is Dead. Marketing Lives.

Get over it. Social Media for marketing is dead. It doesn't work anymore. I have clients asking if Twitter and Facebook are worth it. Not because they don't see results. But why focus on 1% of your sales.

Why? They are not seeing a return on the effort.

Why? Because getting seen in anyone's Twitter or Facebook feed is impossible.

Why? Because as we slowly add connections it creates more volume in our feeds.

I can not remember the last time I was reached via Social Media by a brand via my feed.

The number of people my clients reach and have react are low. Oh it is due to poor content you say? What about massive bribes? They don't work either. When clients can't give away high end products and goodies just for responding via Social Media that means no one is seeing our promotions. 

So what to do? 

Traditional Marketing and Advertising still works. TV. Billboards. Digital Marketing. SEO. Google Ad Words. Great product or customer service. Your street sign. Your location. Your inviting store or website.

Just think. 99% of your customers do not follow you on Twitter or like you on Facebook. So you can't reach them. Of the 1% most will not see your posts or tweets. At last with Twitter you can call people out directly one or four at a time.

As I last blogged you should focus on being talked about. And some customer service via Social Media. But Marketing or Selling? Dead. get over it. Toss out the book by the Guru. Stop reading the Guru's blog. You need to market. But Social Media will not work for you. Prove me wrong. You can't. But I can show you how to market. Just ask.

Social for Brands is Being Talked About not Talking To

Last Monday there was an epic Beancast Podcast hosted by Bob Knorpp. I suggest you subscribe on ITunes. It is one of the best Marketing Podcasts out there and he always has 4 incredible thought leaders each week to discuss the topics of the week.

One thing that was discussed was the role of Brands in Social Media. Jonathan Salem Baskin said 'I don't wake up wanting to talk to my toothpaste'. I wrote about this 21 months ago. I know the world is always slow to catch up to me. We can not talk with customers on any scale. This blog has many posts discussing this. Yet the 'Big Social Media' people rant on and on about talking with your customers and fans and engaging with them. Yes do this, but your reach and scale are so small it will never move product or drive your revenues.

I have told people to spend a day counting every brand in their life that day. The hundreds of them. Each has a twitter account and a facebook page now. They all demand you talk with them right now. How many will you talk with? How many do you want to? 1? 3? 5 at most? The rest never will get to talk with you.

But as discussed in the Beancast Social Media isn't about talking with customers and fans but to have them talk about you. Especially big Brands with millions of customers. You can't talk to all of your customers and potential customers if you tried. Even if you hijacked the US Army and had every person manning Twitter and Facebook a global brand can not talk with 100 million, 500 million or 1 billion people.

But they can talk about you. And isn't that what is important? Word of mouth? People discussing your brand? In private and public?

So what does this mean for Brands?

1] Set up listening programs to gather data and insights.

2] Do have Twitter and Facebook presences and do talk with the fans you are capable of engaging with

3] Integrate Social Media with your overall Marketing Plan and Campaigns and enable the conversation about you where you can. 

• Make content easily sharable.
• Focus on a great experience for your customer. They will talk about this.
• Claim your location with Google Places, Yelp, FourSquare
• Use Publicity/PR to advance your message and Brand

The Case For and Against GeoFences and Push Advertising on Mobile

I saw this new product being offered by Urban Airship in Portland.  I think why would I want brands to contact me when I am nearby? Do I want this? What does this mean for the brand? If I did want it what would be the way I would want to have this? 

The first issue is alerts. I don't want my phone buzzing. I downloaded the ShopKick App because if I focus on Mobile I should check these things out. I went to the mall and out of the blue my phone started buzzing like it was going to explode. I immediately uninstalled the app. I don't want that!

But if I have to manually look for specials doesn't that defeat the 'alert' system? Doesn't that mean it is no different than getting an email offer or going manually to their website?

What about the brand? Does these offers improve their image or just erode their margins because I view you as a discounting brand?

Will this benefit me? How often am I cruising in my car or biking and open to buying something on impulse? For me very rarely.

What about clutter? Even if I sign up only for the brands I like, doesn't over time this do the same as for email where it all becomes white noise?

How will a brand make these alerts relevant? If 99% are ones I won't go for why should I sign up for what is then a valueless service?

These are questions you must ask yourself. How will you stand out? If every business can contact me with push marketing as I drive by you are just one in the crowd. 

I see way to many negatives vs positives here. And just because a technology like check-ins, which are already dead,  is neat or different doesn't mean we want it, need it, or will use it.  Why would you even need this if you built a solid loyal relationship with me. One where you already knew when I made a future purchase you would at least have an opportunity to win my business.

Yahoo knows more about you than Facebook

Did you know that both Yahoo and Facebook are really just Giant Paid Advertising Websites? Doesn't matter that you do different things on each site. They both make their money selling advertising. Funny little thing though. Ads placed on websites besides Facebook are twice as effective as those placed on Facebook.  Why is this?

We all think that Facebook knows so much about us based on our sharing and liking and posting. But why don't you sit back and think of what percent of your daily activity is shared on Facebook. I would guarantee less than 0.01% . Think of all the actions today you will do. People you will talk with, things you will eat, websites you will visit, things you will look at and do.. How much will go on Facebook? Maybe 2 or 3 out of 1000 actions. There you go. 

Yahoo has been around longer. I bet you all have Yahoo accounts and at one time used or still use their email. You read news and sports on Yahoo but not on Facebook. You might of used their once powerful yellow pages or other services like checking out TV and Movie listings. If you go to the OMG! section and see the People magazine style articles you will find hundreds and thousands of comments on each article. More search happens on Yahoo than does on Facebook.

So Yahoo knows more about what you like, what you do, where you live and your life in general than Facebook. Thus Yahoo knows you. And that is why Facebook now tracks you off site because they realized...they really know nothing about you but if they admit that....there goes their $100billion IPO.

And if Yahoo knows more about you than Facebook, Google knows even more about you because of Google Maps, Shopping, GPS, News, Android, Email, Search, Goggles, Documents, G+, they even know what countries you check out the most on Google Earth.

There is a silver lining. Facebook has been improving their Click Through Rate. But from such a low base rate and the fact they supposedly know so much about you this shows poor execution or bad business model. In fact Forbes has a concern a large chunk of ad clicks come from social gaming which could be a red flag.

So when you read of brands or agencies increasing ad spending on Facebook the question I ask is this because 'everyone is doing it' or will we see actual results. Because personally brands should spend where they get the best results. And so far Facebook is lagging.