Thursday, January 05, 2012

The Coming Deal Storm

What can we learn from a nursery rhyme?

One of my favorite stories to read to my son was about storms.

“The storm starts when the drops start dropping. When the drops stop dropping then the storm starts stopping.” ― Dr. Seuss

In this day and age where deals are chic, a variation comes to mind.

People shop when the price starts dropping. When the price stops dropping then people stop shopping.  

Unless we're careful, we will be fueling a behavior and reinforce deal hopping, a practice very familiar to the consumer goods world where retailers were notorious for buying on deal to sell at full margin (just compare warehouse data with POS data) or today's NYT article on margin erosion during the holiday sales.   Add to that recent research from MarketTools that suggests that nearly a third of customers don't return because of a bad experience.  If we don't solve the experience side then the demand side will be for naught and given away at a discount. 

In yesterday's post, Seth Godin talked about a variation of this in terms of the inherent dangers of a measurement first attitude thru the example of direct response marketing where it is about the numbers.   The media planning argument seems to be going like this: because we can measure, we will spend.

In this storm brands become products.

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