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Trang chính  News & Articles Retailers Make Same Marketing Mistake as Airlines
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Retailers Make Same Marketing Mistake as Airlines |
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Người viết: Webmaster
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11/12/2006 |
 This year's Black Friday saw more and deeper discounts than ever
before. But are the big retail chains making the same mistake as the
airlines industry? Black Friday was its normal orgy of shopping this year, but many
retailers seemed to go to new lengths to offer the deepest discounts. The Sports Authority had "6-hour doorbusters," with 25% off its entire
stock. Toys "R" Us offered "Lowest prices ever" with 50% off and more.
Sears featured "Insanely early Friday Specials."
The first 200
customers in each store got a free $10 reward card. The advertising orgy was Thursday. In Atlanta, for example, the local newspaper (The Atlanta Journal-Constitution)
carried 385 display ads (not including house ads) in addition to 40
inserts with 358 pages of advertising. America's retailers paid
handsomely for the privilege of offering consumers these deep
discounts.
Perceptions of high prices
Newton's third law states: "For every action, these is an equal and
opposite reaction." What is the opposite reaction when a chain offers
to sell its wares at deep discounts? Unfortunately for retailers, the
opposite reaction, as far as consumers are concerned, is that "your
regular prices are too high."
Is that what most retailers want to communicate? I think not.
Most retailers want to communicate the fact that their retail outlets
feature great merchandise at reasonable prices. Or as Macy's used to
say: "It's smart to be thrifty."
Coupons, sales, special discounts for customers using membership cards
and a host of price promotions have steadily undermined the idea that
any particular chain is a good place to shop -- unless there is a sale.
Store sales are like crack cocaine. You get a short-term high
followed by a long-term low. The only way to get high again is to have
another sale.
The Circuit City customer who bought a 32-inch HD LCD TV set
for $499.99 on Friday isn't going to buy another one on Monday at the
full price of $899.99. Furthermore, he or she is going to be leery of
buying any major appliance at Circuit City unless there's a sale going
on.
Like the airlines' discount derby
Where is the discount derby
headed? If history is any guide, it's headed in the same direction as
the airline industry. It was the airline industry that perfected the
high-low approach to marketing. High prices for consumers who have no
other choice. Low prices for consumers who could find cheap fares on
other airlines.
What happened in the airline industry can also happen in retail
generally. As the Syms slogan says, "An educated consumer is our best
customer." As consumers get educated about retailers' high-low
strategies, they tend to move to chains that feature "everyday low
prices."
In the airline industry, it was the "no-frills" airlines with
their everyday low prices that undermined the high-low strategies of
the major carriers. Last year every major airline (American, United,
Delta, Northwest and U.S. Airways) lost prodigious amounts of money
while Southwest made $548 million in net profit.
As a matter of fact, last year Southwest's 7.2% net profit margin was
higher than the 6.7% net profit margin of the average Fortune 500
company and last year was a great year for a Fortune 500 company.
'Sale' mentality
What's tragic about the retail industry's "sale" mentality is the
almost complete absence of branding in their advertising efforts. I
leafed through the 358 pages of insert advertising in the Thanksgiving
issue of The Atlanta Journal-Constitution and it was hard to find any mention of what any individual store stood for. Nothing but sale, sale, sale.
Many chains today do almost no advertising except sale advertising. The
furniture industry is famous for its "all-sale, all-the-time"
advertising. Another heavy advertiser that does nothing but sale
advertising is Jos. A. Bank. Its website sets the pattern:
- "Entire stock of top coats. 60% off."
- "All pinpoint dress shirts. Now $29. Reg. $59.50."
- "Entire stock of pattern sport coats. 60% off."
You can bet on it. The day a chain starts down the continuous sale path is the day the chain is headed for trouble.
Strong brands, little advertising
Strong brands do little
sale advertising. I have never seen a Starbucks' ad offering two
cappuccinos for the price of one. Nor have I seen an Apple ad offering
half off on an iPod. Or have I seen a Rolex ad offering two watches for
the price of one.
On Thanksgiving Day when all the other retailers were running their
sale, sale, sale advertisements, Whole Foods ran an ad in the Atlanta
newspaper with the headline: "Today we give thanks to all our local
growers."
That's class. And that's a powerful brand.
(Source: Advertising age)
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