The Danger of Discounts


Think back to your teen years, when few things in life mattered more than your favorite band. When a new album would come out, you rushed out to buy it, sometimes waiting in line to get your hands on a copy. When they came to town in concert, it was the same routine.

Did price really matter? Of course not. You simply saved your pennies so you could experience the music you loved.

Even today, when tickets to see a top-tier band can run in the hundreds of dollars, those top-tier bands sell out every show. U2′s recently-completed 360 Tour was the most successful tour of all-time… with an average ticket price of $108 US. Even at that price, every date on the tour sold out. Completely. Every. Single. night.

When you are a top-tier brand, price doesn’t really matter much.

That’s why the iPad can thrive despite an onslaught of $400 tablet computers.

It is why a bottle of Glenfiddich 18 year-old ancient malt is $100 and still outsells the $50 bottles.

It explains how Starbucks can charge $4 for a coffee while Dunkin charges $1.50.

Rock star brands have it made. They never have to discount prices or bicker over nickels and dimes. Because rock star brands are all about creating value, as long as the price they charge reflects that value, customers will line up to pay it.

Unfortunately, most businesses get sucked into the price vortex.  It is sad, really. They advertise their sales and discounts, they make the terrible mistake of using Groupon, and fight to the eventual death against competitors like Walmart that can out-discount them all day long.  Customers who choose you on price alone aren’t loyal to you, they are loyal to the price tag. They’ll be gone as soon as a lower price appears, and you won’t get them back until you discount some more, cutting into your profits and margins. The price vortex sucks.

Don’t go there. If you do, your business might not escape alive.

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Glenfiddich, Groupon, ipad, Starbucks, U2 208 Comments

Does Your Brand Lead Or Follow?

Are you a leader or a follower?

It is a great question to ask yourself. And there is nothing wrong with either answer.

Many brands have been built on improving someone else’s idea. Following the leader isn’t always a negative thing. Many brands have been built on innovation. There is nothing wrong with leading.

RIM, The Leader

RIM, the makers of the Blackberry, were leaders. They refined and marketed the world’s first reliable and secure mobile email device. For years, each new Blackberry was an innovation. I remember my first clunky grey-scale monochromatic one in 2001. Then came color. Then phone. Then web browsing. Then touch screen. And so on. RIM was built on leading.

RIM, The Follower

With the release of their tablet computer, the Playbook, they have become followers. They are following market leader Apple, and a handful of others, into the tablet computer market. Many experts think that the headstart Apple got with the iPad puts them so far in the lead in this category that it is almost game over for everyone else.

Maybe the Playbook will be a hit. I have no idea. I haven’t even held one. My comment isn’t about whether or not the Playbook is great or not. My only comment is this:

When you willingly go from leader to follower, what happens to your brand?

- Posted using BlogPress from my iPad

Apple, ipad, Playbook, RIM 1,420 Comments

Why Your Marketing Doesn’t Work – Part Five: Unsubstantiated Hype

This is it… the fifth of a five-part Brand Like a Rock Star look at why your marketing doesn’t work.  Part one, part two, part three, and part four are all archived to read and share with other entrepreneurs or marketers.

Far too much marketing today is filled with cliches, boasts, and unsubstantiated claims. Hype is dead, but marketers cling to it every day.

Axl Rose learned the hard way. Guns ’N Roses started working on Chinese Democracy nearly 20 years ago. As production went on year after year, Axl defended the delays by bragging about just how incredible this album was going to be. As the budget went up and up, and it turned into the most expensive album ever made, Axl continued to boast about the legendary record he was making.

When Chinese Democracy finally came out in 2008, it was destined to fail. Expectations had been raised so high that the world saw through it, and decided en masse long in advance that the album sucked.

In reality, it got decent reviews. It wasn’t an awful album at all. But it will be remembered as a failure because at was backed with hype and BS.

Do you advertise that you have ”the highest quality at the lowest prices”?

Your customer thinks you are lying. And you are, because it is impossible to have both the very best quality and the very lowest prices. Everyone knows it. Fact of life. We are actually willing to pay more for good quality, but you are too caught up in your phony claims to realize it, so you stick to spewing out unsubstantiated hype… because that’s the advertising method you know.

If you are going to make wild claims in your ads, back the claims up with evidence. Lowest prices? Prove it. Highest quality? Show me.

Better yet, stop worrying about hype and focus on the customer experience. How does my life change when I use your product? What do I feel?  Apple aggressively marketed the iPad without hype. This video has been seen nearly 300,000 times in the week since it was first released, and it contains no hype at all… just valid claims.

These powerful ads for the iPhone4′s Facetime program don’t hype a thing. They sell an experience and an emotional connection between the customer and the product. Simple.

It takes guts to recognize that much of what you are saying in your advertising is being ignored, but the sooner you realize it the sooner you can move on and start to make your marketing really work.

When marketing works, it is magical. People really do react to smart marketing. The results rock. You’ll love it.

Finally, to drive home the anti-hype message here is an open letter to noisy advertisers from potential customers. This was an earlier post on Brand Like A Rock Star that received plenty of interest:

Dear advertiser:

I saw/heard/read your ad on the TV/radio/paper, and would like to remind you of a few things.

1. Stop bragging. You don’t have the best staff. Sure, you might have great people, and if you do please tell me why it matters to me and how it will benefit my customer experience. But don’t just tell me “our people make the difference”. I are pretty sure there are some bozos that work at your place, just like the ones that work with me.

2. If you have “lots of free parking”, it only matters if you are located in an area with no parking. Otherwise, it is just noise and hype and nobody cares. If your product is that amazing, I won’t get all worked up about dropping a few quarters in a meter.  I once paid $40 to park at Fenway because the Red Sox are THAT amazing.  Really, if “free parking” is going to make the difference, you aren’t that amazing.

3. Telling me that you “need to move 100 cars by the end of the month” means nothing. I don’t care about the pressure you might be under to sell cars. I don’t even believe you are actually under any real pressure, because every car dealer says the same BS every month. Noise. Ignored. Besides, I don’t walk into your dealership and scream “I need to make nine mortgage payments and put braces on my kid by December” and expect you to give a sh*t.

4. Yelling in your ads is stupid. I either turn the channel, change radio stations, or hit “forward” on the PVR. The only people who yell at me in real life are angry. Yelling doesn’t convey urgency, it conveys idiocy. Or intoxication.

5. The more you hype something up, the less likely I am to believe you. People who have to brag about how cool they are, usually aren’t. I’ve known that since high school, so why haven’t you figured it out yet?

The strangest part is that when you do take the time to connect with me on an emotional level, I stop avoiding your advertising and start to seek it out. Your marketing message stops being marketing and becomes valuable information. Isn’t that cool?

Your customer

PS – part of the inspiration for this series came from Roy H. Williams piece “12 Causes of Advertising Failure”, which is included in his book “The Wizard of Ads: Turning Words Into Magic and Dreamers Into Millionaires”. Smart marketers are into Roy’s stuff.

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Apple, Axl Rose, Chinese Democracy, Guns N' Roses, ipad, iPhone, Roy Williams 167 Comments