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Designer coffee doesn’t have to costs big bucks. Well at least that’s the message Starbucks is sending by offering $1 cups of coffee as a “test” in Seattle. Oh, and don’t forget the free refills. This may be in response to McDonlald’s baristas. Or is the highly trendy cappuccino, latte maker losing its designer edge?
According to Starbucks the test “is not indicative of any new business strategy.” Well,whether they want to admit it or not, Starbucks is certainly feeling the steam from their latest coffee competitor. They are losing ground and had better find a way to stay in the game otherwise it might spell the end of the road for coffee giant. In my last blog about the coffee wars, I asked for taste testers to try the new McDonald’s offerings and share their thoughts…the offer still stands. If you’re out there, give us a yell.
There’s a science to pricing your product. No question about that. But most people join the race to the bottom, lowering their prices and competing on cost, when many should be considering raising their prices.
“If we believe the wine cost more, we truly believe it tastes better.”
Here’s what the researchers did. They gave 20 volunteers 5 sips of wine each. They told the volunteers the “price” of the wine and then measured the response of the pleasure centers in the brain.
The brain responded more favorably to the “higher priced” wine, even though each sip of the wine was the exact same Cabernet Sauvignon.
There are many anecdotal stories of increased prices correlating with increased perception of the value of the product. But this is the first study I’ve ever seen that shows the brain actually responding more favorable to the perceived luxury. Asyoucanimagine, it’sgettinglotsofcoverage.
This study is the latest (and perhaps most compelling) reason I’ve seen to re-evaluate how you sell, and what perception you trigger in someone’s brain when you’re willing to discount your services.
I was listening to NPR on my way home last night. The story started with a statistic that grabbed my attention. Fully 66% of Americans are considered overweight. Humm, interesting. The market for big and tall men’s clothing is a $5billion dollar market. OK, that’s attention getting. The story went on to profile a company that is addressing this market. Trendy fashion designer Colossal Clothing has partnered with America Apparel to manufacture, in Los Angeles, a stylish, high quality, well priced line of clothing for the big and tall market. Ahhh, a classic recipe for marketing success.
Now it gets interesting. The company is targeting the “Bear” market. A sports team? No, Bears are a subset of the gay community, known for their large waistlines, masculine physiques and “scruffy” appearance. Whoa! Now we’ve got us a marketing story! The estimated 1.4 million Bears in the U.S. have an average household income of $90,000. With gays, in general, known to be interested in men’s fashion and fiercely loyal to brands that understand and appeal to them, I have to conclude that Colossal Clothing is on to something.
A sure sign that times have changed is the day we hear, McDonald’s is pushing aside its burger competitors to start a coffee war. Well, that day has come. Soon ordering a grande McCarmelmacchiatoupsidedown will be as easy as ordering your morning McGriddle.
That’s right, McDonald’s hopes to increase sales by $1 billion annually by offering customers a Starbucks-like experience in over 14,000 locations. The Golden Archs plans to hire trained baristas (fancy word for graduates from coffee school) to up the ante on Starbucks.
Innovative idea? Or another poor marketing decision by McDonald’s…Mickey D’s…McPizza…McFlurry, or whatever it calls itself these days?
You be the judge. If you live in one of the test markets, comment and let me know what you think of the new McLate.
I had an epiphany the other day while watching TV. I came to conclude that there must be only one guy who is paying too much for his car insurance. Because consider this:
o State Farm can save you up to 40% on your car insurance.
o Geico can save you up to 40% on your car insurance.
o AARP members save hundreds on car insurance.
o Progressive can save you money on your car insurance.
o Allstate can save you money on your car insurance.
Seeing a theme here? When everyone says they can save you money on car insurance, can anyone really?
State Farms newest ads have left the “good neighbor” theme and are going on price (with some service undertones).
I recognize that auto insurance is a competitive marketplace, and I recognize that it’s price sensitive. Nevertheless it is dangerous to position your brand as cheaper than the next guy, regardless of what industry you’re in.
Here’s why:
Positioning on price creates a race to the bottom. Your margins will be increasingly sacrificed in the name of revenue.
Innovation (which is fueled by profit) suffers.
Branding on price encourages the customer to think of your product as the same as everyone elses. In essence, you commoditize your product.
Like any brand positioning, only one company can really own “price.”
In auto insurance, I would argue that price is owned by either Geico (who started as discount insurance for government employees with really good driving records) or Progressive (who invented the online comparison shopping model, which was brilliant).
But now Allstate (which owns the word security, as in “you’re in good hands with…”) and State Farm (which owns the phrase personal service, as in “good neighbor”) are now joining this race to the bottom. The ads (with the exception of Geico’s) all run together and the distinctions are blurred.
Whatever you sell, do everything you can to avoid positioning on price. It’s not a stable place to plant your flag…
Employee retention is a key issue for all companies. It is important to plan for turnover pressures and consider implementing a formal employee retention program.
Why is employee retention a hot topic for 2008?
- Gen-X, Gen-Y and Millennials are a mobile group. According to a survey by Manpower subsidiary Right Management in 2007, 61 % of college students and recent grads plan to stay no more than three years in their first job.
- Boomers are starting to retire. The huge loss of knowledge workers forcasts a potential shortfall in 2010 of 10 million workers by the Labor Bureau.
The Bureau of Labor Statistics estimates the cost to replace a worker in private industry to be $13,996. Add on the that the value of lost knowledge and we’re talking real money.
Finally, consider this issue from a MARKETING point of view. Employee retention should be a critically important issue for any company’s marketing plan. Simply stated, employees are (or at least, should be) any company’s number one brand ambassadors. Every single employee of a company is an invaluable marketing asset, growing in value each year they are with a company. Employee turnover is MORE than an administrative cost. Employee turnover literally drains a company’s marketing budget. Now, that’s an attention-getting concept.
So, plan to deal with the factors affecting turnover in the near future. Talk with Boomers who may be considering retirement soon. Develop plans to allow these valuable workers to move into new roles, where their knowledge, ambassadorship and mentoring skills can be utilized in flexible and mutually satisfying arrangements. Recognize what is important to Gen-X, Gen-Y and Millennials; develop a culture of recognition and appreciation, offer work-life balance, involve workers in decision-making and be sure to schedule and budget just plain FUN. Check out www.EmployeeRetentionStrategies.com for more information. Forward this to your Marketing Director and tell her/him that you want part of the company’s marketing budget to go towards employee retention! It all about marketing!
Competition has gotten unusually fierce in the last decade. It seems like we’re all working harder. I know that price pressures have never been stronger, as Wal-mart chases Mom and Pop’s out of business because they can’t compete on price. But it seems to me that the focus on price has left a casualty and a marketing opportunity.
This came to me the other day as I struggled for the 40th time to fix the picture on my TV. When I built my house, I paid extra for a subcontractor to pre-wire it so I could easily hang an LCD TV on the wall. (I thought that was pretty smart of me, considering I didn’t own one and couldn’t afford one at the time.) The builder, Toll Brothers, subcontracted to a company called LifeStyle Technologies. They were growing really quickly at the time, and had the contract to wire all 1,400 houses in my rapidly growing subdivision. What a deal, right?
Now, three years later, I’m crawling under my house trying to find the reason my picture is all wavy. As I follow the wiring, I notice this written on it: “Low voltage computer cable.” Low voltage computer cable? It was supposed to be component video cable, the stuff in the picture above. That’s all I needed.
LifeStyle Technologies used cheap stuff to save a couple of bucks. Now that I have to replace it, I see that 100 feet of what I need is only $73.00. I paid exactly 10 times that for the wiring. So what could they have saved by ripping me off with cheap cable, $20? 2.7% of what I paid them for the TV wiring alone?
Guess what? LifeStyle Technologies went from one of the hottest companies around 4 years ago to being out of business today. I guess that’s because the cut corners.
The BEST marketing strategy is word of mouth. Apparently, enough people spoke badly about LifeStyle’s practices to chase them out of business. I’ll be crawling under my house this weekend to wall-fish replacement cables.
2 days post-Christmas and I’m still enjoying holiday greeting cards. E-cards that is. Because I tried really hard to stay away from my email for a couple of days to just focus on my kids and “enjoy the holiday” (finish wrapping, buying stocking stuffers, picking up the ham…then, throwing away mounds of wrapping, cleaning melted chocolate from stockings, making hambone soup, etc…) So today, the dreaded email catch-up day, was brightened with some much appreciated holiday e-cards.
A procractinator’s best friend, the e-card can be sent on Christmas Eve and still be “on time”. A recent USA Today article says that while traditional greeting cards are still the preferred way to send holiday cheer, e-cards are definitely gaining momentum. American Greetings has seen its e-card volume rise 9% to 41 million cards this year. Why? They’re instant, free, funny and interactive. No surprise that e-cards are more popular among young people. Also, no surprise that every single e-card I received was from a marketing/creative type. (Yes, I work in an ad agency, but I have lots of non-marketing/creative types in my life!)
The U. S. Postal Service contends, “When it matters, it’s mailed. You don’t put an e-mail on your refrigerator.” The average American household mailed 26 holiday cards in 2006, up from 21 in 2004. I gotta say while I enjoyed my e-cards, I did not take the time to print out any of them, so only the ham made it to the fridge this year.
Speaking of ham, my all-time fav holiday e-card is the one we put together for our client, HoneyBaked Ham. It pretty much sums up the way we all feel as we’re “enjoying the holiday!” Check it out via the link below.
There’s a science to pricing your product. No question about that. But most people join the race to the bottom, lowering their prices and 
s right, McDonald’s hopes to increase sales by $1 billion annually by offering customers a Starbucks-like experience in over 14,000 locations. The Golden Archs plans to hire trained baristas (fancy word for graduates from coffee school) to up the ante on Starbucks.
I had an epiphany the other day while watching TV. I came to conclude that there must be only one guy who is paying too much for his car insurance. Because consider this:
This came to me the other day as I struggled for the 40th time to fix the picture on my TV. When I built my house, I paid extra for a subcontractor to pre-wire it so I could easily hang an LCD TV on the wall. (I thought that was pretty smart of me, considering I didn’t own one and couldn’t afford one at the time.) The builder, Toll Brothers, subcontracted to a company called LifeStyle Technologies. They were 