Marketing In An Economic Downturn (Continued)

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If you have not read Marketing In An Economic Downturn Read it first!
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In my last post on marketing in an economic downturn I left you with a try it at home test. The test was to demonstrate how consumers find value by comparing.

Here it is again.

Try this! (Without cheating)

Without looking on wikipedia, answer the following questions.

a) The African continent has more or less than 18 countries?
b)How many countries does the African continent have?

Now here is the purpose.

Most people will answer the a) question as being more, now when answering b) most people answer in 20's. This is due to the fact that your reference point is 18, you would never consider the answer as being 47 because that's far too high compared to your reference point. *The correct answer is 47.

Now here is the fun part. Ask your friend this question.

a) The African continent has more or less than 60 countries?
b)How many countries does the African continent have?

Hopefully your friend's answer will prove my point.
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How can I use this to increase revenue for my business?

As I mentioned in my previous post, allow your customer to compare.

Another great strategy, especially for luxury brands, is to make your customer work for it. This again plays on the fact that your customer can find value in comparison. Run a promotion that is only valid on certain days. Example "Sunday Special, 25% off services." Offer discounts or free gifts when customers give you their email address, as mentioned in the big red button post.

By doing this you create value in 3 different ways.
-Value in comparison of price
-Value in the effort that had to be done by the customer
-The big one. Value in the fact that not everyone received this offer.
*If everyone had a diamond, how valuable would they be?

Remember the economic downturn can be a threat, but if you are creative and spend your money wisely it can be a huge opportunity.

Good luck and you know who to call if you get stuck.

Marketing In An Economic Downturn

It pains me when I see so many brands destroying their brand equity in just a few weeks.

Walking down Robson Street I am bombarded with signs that say 80% OFF, 3 for 1 or even Everything Must Go - 75% Off

What this tells the consumer is, We Really Need To Shift This Stuff, Take As Much As You Can Because We Don't Want It

Retailers have to understand that people find value by comparison. We compare our clothes with what others are wearing, we compare our car with what others are driving and we compare our prices with what others are paying.

A good example of how we compare is that a year ago 80 cents/litre for gas was expensive, now 80cents/litre for gas is cheap. How did this happen? Did 80cents just become less valuable? What changed is our reference point. A year ago we were comparing 80cents to 65cents. Now we are comparing 80cents to $1.30.

Try it! Think of how you can find value without comparing. If you think you are buying because of function, you are mistaken. Your buying because what you had before did not have that function, you are comparing in order to give that function value.

If your whole store is 50% off, how is your customer going to find value? They now have no base to compare. How can a sweater be a great deal if a similar sweater next to it is reduced by the same amount.

I saw this happen in Macy's. Macy's reduced almost all of their stock, cutting prices by up to 75% off. Now to consumers the sale price was the regular price because they had nothing to compare it to. Barneys however did a better job, discounting select items and placing them around regular priced items. Now a sweater that is marked down by 50% is a good deal because the one next to it sells for regular price.

Allow your customers to compare. But don't expect to sell the item selling at regular price, therefore stock a minimal amount. Do expect to sell the item on sale!

(Look for part 2 of this post coming soon)

Try this! (Without cheating)

Without looking on wikipedia, answer the following questions.

a) The African continent has more or less than 18 countries?
b)How many countries does the African continent have?

The answer and purpose will be revealed in part 2 of this post.