Tag Archives: Marketing

Black Friday

One of my favorite days of the year is the day after Thanksgiving here in the US.  Why?  The madness that we know as Black Friday, is why.  A few years ago, I went out to partake as a relative wanted me to join them.  Up till then, Friday morning after Thanksgiving was for sleeping, not shopping.  But once I showed up and saw the craziness of the morning deal dashing, I was hooked as a marketer.  The psychological motives that drive otherwise normal people to get a look of premeditative murder in their eye over some heavily discounted item, draws my curiosity.  What combination of factors drives people to act this way?  That’s been my once a year quest to learn about.

 

This year I got up at 4:30am to hit the stores.  It was pretty cold at 15F and the morning schedule had been mapped out.  To really get the full impact you need to check the ads, I do it the old fashion way and just read the Thanksgiving day paper to see who has what.  Now I was actually starting late, some stores had opened at midnight but I was not interested in those this year, this year, I was off to see the electronics.

 

I hit the highway and quickly made my way to Circuit City which had a line going around the store already.  People had camped out all night and others were trying to cut in line to get in with the few deals available.  As my theory was, the electronics stock even less of the hot deals than other types of stores and that theory seemed to hold true, I was in the store in the first 5 minutes and they had sold out of the on sale items already; and they certainly had way more people than the fire marshal would have liked, in the store.

 

From Circuit City I head to WalMart where security was standing guard quite nervously.  It was a mad house!  I headed to the electronics area and a fight had already broken out, which may account for the nervous security guards at the front.  The crowd was a bit to lively for my taste, more likely to brawl at any moment, so I left to take a breakfast break. 

 

Next was to OfficeMax which had about 50 people in line when I showed up 20 minutes before the official open time.  As I walked to the door, they opened up early and I quickly got in line and went with the wave of people who were pouring into the store.  I was carried on to the discounted sales table and grabbed a nicely priced 500 gig hard drive.  It was like a feeding frenzy and arms went diving in for the deal like piranha going in for the kill.  There was a kind of rush getting in there and grabbing a deal before the others could, I admit there was a kind of buzz one can feel to it as you actually get something you wanted.

 

Next I took a detour to World Market and won some free chocolate, Intense Dark 85% cacao, a bit harsh but it is suppose to be good for you.  Then I headed to Target where it was pretty much the same, a mad rush for items, but by then it was 8am and the buzz was gone, so I headed home.

 

The stores do a great job on getting the word out but I have to say their strategy is way off, it doesn’t work anymore.  Here is what they do, they put in the paper a great deal, like a $300 laptop that is actually decent, and then they only have 10 in stock or something really low like that.  They expect those who don’t get the laptop will just buy something else, that’s not happening.  There were more people out this year looking for deals, this is because the dollar is weak and things cost more so people want a good deal or they won’t play.  So if they can’t get the deal they will just wait.  This means, stores are going to have to offer more deals. 

 

Most people I know are waiting for the deals, they expect deals and good deals and will wait instead of paying retail or 10% off, they want a really good deal, 50% or such.  I suspect retailers are going to find people are not fooled by their Black Friday tricks and will wait for better deals.

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Cost of Ownership

We live in a time with a race to the bottom in a lot of sectors.  The product with the lowest price, so goes conventional wisdom, wins.  As a marketer, I don’t like this approach, for obvious reasons, if price is king, you don’t need me.  But as a consumer I also don’t like this for many reasons of which I will focus on just a few for simplicity.  I can get a box of pens for 10 cents now, note books for the same price and a number of other products for equally low up front cost.  However, I’ve learned from experience that price is not king, but at best a usurper of what is truly important.  As a marketer and a consumer, I always focus on the cost of ownership for that is where you find the real gems.

 

I wrote many years ago in an article I once did on this very subject about the difference between US and China made bicycles.  The American bikes cost more up front yet they lasted longer and had fewer break downs, so over the 5 year life of the bike, they ended up actually costing less than the China made bike which had to be replaced entirely.  This as a marketer and a consumer is highly important!  If you are buying or selling a durable good, you want to focus on the cost of ownership as a key factor in the buying process.

 

The reason for cost of ownership focus for the marketer, are many.  For starters, it gets away from this ridiculous idea that price is king.  Now, quality is king and people will pay for good quality.  Those 10 cent pens I bought, they don’t work so great, but the $6.99 pens I bought the year before, I still have and use because they work!  When I need more pens, I’m skipping the cheaply made and cheaply sold pens and going for the ones that work.  As a marketer you have a great angle to use with that, quality means reliability.  It means you can be sure the product will last.  It also gives you more room other than price to work on and anyone who has tried to brand knows that price is a bad option to use as a selling point.  Someone can always under cut you, so find something that works better and is harder to counter by competitors.

 

As a consumer, cost of ownership is a far better measure than price to really determine the true value of a product.  We have a lot of cheap products flooding into the US these days.  We also see a lot of these cheap products being recalled.  The fact is, most people who are impacted by the recalls, will not get a refund, that’s just how the system works, we get busy and just throw away the product.  So you lost money, and now may have to go replace it or do without it, all because you went on price.  Price is a very easy way to look at a product, which is cheaper, that’s pretty much it.  Cost of ownership forces you to ask questions to learn about what you are buying and the value it will give you over the expected life of use.  Now we are talking!  Those questions help you learn, is that cheap product from China full of lead and going to go be thrown out in 6 months on a recall?  Sure, it is half of the domestically made product but if the cost of replacing the recall means spending more in the long run, it’s a waste.  Not to mention the time and indirect costs put into finding the replacement.

 

So you can see, cost of ownership is a far better way of looking at the world than price.  Unless you sell bad products cheaply, then price is what you want people to focus on.

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SWOT

SWOT stands for Strengths, Weaknesses, Opportunities and Threats.  It is one of the most popular tools in marketing used today.  For good reason, it is a simple tool, easy to use and gives a nice general heads up on what is going on in a given market.  Like all tools, it has its positives and negatives.

 

The plus about the SWOT is in its simplicity.  You don’t need to be an expert in marketing to do this; it is very qualitative so it is easy to use.  The strength of this tool is really in the skill of the person doing the analysis and that is the weakness.  A SWOT is only as good as the person who is doing the analysis.  The SWOT can be a very subjective tool, which is why the strength of it is in the ability to really understand what it is they are analyzing.  Without the strength of a good analyzer, the SWOT’s ability to really inform loses a lot of what it can offer. 

 

Often large companies hire an consultant to do this or a junior person, I do not recommend this as part of a good analysis program.  If you get a junior person, ensure the more experienced executive is around to answer all the detailed questions to fill in the knowledge gap.  The SWOT can and often is very subjective when used; I highly recommend you have someone who can detach themselves from the results.  Often on the threats and weaknesses, people can over look certain things based on their own biases.  For example, you may not see a new technology or competitor as a real threat because of your own view of them.  This can weaken the tools ability to really tell you what you should be looking at. 

 

To really help counter the weaknesses of the SWOT, it is best to use it with quantitative tools along side it.  These tools can help shore up some, not all of the weaknesses in SWOT.  If you don’t use these tools with SWOT, you really need someone who understands the market and the tool really well!  Otherwise, use caution with this tool, it’s easy but sometimes too easy if not used right.

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