Grudge Purchases – Value, Discount, and Experience

It’s hard to get consumers fired up about products that are grudge purchases. There may well be a momentary flash of enthusiasm around buying a gym membership or an exercise machine but that vanishes once the cold reality of the situation sets in.

Things like power and water, insurance, petrol, tyres, bus tickets and the like generate no enthusiasm whatsoever, which means they generate zero brand loyalty and the cheapest option on the day will usually be the one chosen. There are websites specifically designed to tell consumers which power company will give them the best rates, and any real cost reduction is enough to promote a switch because electricity is electricity. Petrol also happens to be petrol, no matter who sells it, and the price is the driver, not the brand.

A tyre company may well be the choice of the Formula One world champion, or might even supply the only tyre in the entire field but only fans of the sport will notice or care, the rest will phone around and put on the cheapest tyre in the specific product segment they need for their car. A twenty-five-year-old runabout may well get off-brand Chinese rubber but the driver of a five-year-old Audi will likely be happy with whatever he gets from the name brands, after all, can anyone really pick the differences between a Bridgestone, Pirelli, Dunlop or Yokohama tyre at similar price points?

This buyer apathy makes it tough to market grudge purchases or to get them to stand out from the competition in any meaningful way but it can be done. Discounting isn’t really the answer because having the lowest price is only a matter of willpower – if a competitor is willing to haemorrhage more margin than you are, well then you’ll be hard-pressed to sustain a price war. Adding value is one key concept, improving the shopper experience is another, and if these approaches work in the grudge world, they’ll work in the ‘normal’ world too. 

Take five tyre brands, each with family car offerings at a similar price point. The tyres are all much of a muchness and they’re priced within $20 of each other. However one offers a warranty that replaces the tyre in the event of damage – hitting a pothole, smacking the pavement, or a rogue bit of metal on the motorway are all covered. I know which one I’m grabbing, even if it is at the higher end of that narrow price band because I’m buying peace of mind that might just make future dealings with this grudge purchase less onerous. Yes, I'm getting a free grudge (insurance) with my grudge (tyres) but it's better than the poke in the eye with a sharp stick that I'm getting from the rest of the usual suspects.

Consider five car insurance policies. Anyone who’s called around to get quotes on car insurance knows that the rates are often pretty darn close to each other and the call centre experience is exactly the same regardless of which company you call. However, let’s say one insurer offers free roadside rescue to policyholders. That’s compelling. Or a ten percent cash-back offer at the end of the year if you don’t make a claim – not as compelling perhaps, but still a step up from the three-eighths of nothing you get from the others. 

There are problems with value-added solutions though – first, they cost money, which has to come from somewhere and second, they’re easily copied by the competition. As soon as one insurer offers a cash-back scheme, the rest follow with a similar deal. Offer a free 20-liter chilly bin with your product or service and your opposition might well up the ante with a 36-litre model. This is where improving the customer’s experience makes more sense. 

For example, an insurer who guarantees to answer all inbound calls about claims in under three rings would stand out more than either of the two previous examples because they’re promising to reduce the pain their customers feel when dealing with the stress of a claim. No more “your call matters to us so please continue to hold while we show you how little it actually matters to us” on-hold marathons. That would definitely work for me and even though this option would be pricey and hard to implement, it would be both effective and tough for the competition to replicate in a hurry.

How about a tyre store that offers a premium service with a classy lounge, tasty coffee, piles of good magazines and even a plate of fresh pastries? That would attract a snobby Audi or Volvo driver’s attention in the same way that friends of mine won’t shop at “Pak and Scrap” because it’s just not as good an experience for them compared to their nearby local flash New World. Again, this type of premium service wouldn’t come cheap but it would be perfect for a select market, especially if the high-end tyres they were after cost the same as they do at the opposition down the road.

I find buying casual clothes to be something of a grudge purchase – it’s tough to find stuff that fits well and I’m not a brand junky at all. So why do I shop for casual gear at Farmers? It’s not because of the wide range of products, or the sale prices (although the latter surely has a lot to do with it). It’s because Farmers behaves more like an American company than any other in NZ when it comes to returns. Swapping items, exchanging gifts or getting credit notes is as easy as pie and this enhanced part of the customer experience makes me inclined to keep shopping there because it reduces my potential stress (again, I’m buying peace of mind).

Take any product that doesn’t genuinely have the marketing built into it. Picture it as a grudge purchase and imagine that you have to sell it to people who don’t want to buy it. Then find ways to sell it that don’t rely on the lowest price or the biggest advertising budget – ramp up the value in an innovative way or even better, improve the customer experience and you’ll sell more than the competition who’re just doing the same things they always did. 

That’s bloody obvious I hear you say, surely everyone in marketing looks beyond the basics? Well no, because this approach relies on an awareness of the big picture starting from the time the product and packaging are designed, and running right through to the way the consumer buys and uses the product. Many agencies can’t see the wood for the trees in this regard.

In the next post in this series, I’ll go back to the gym example and look at how that game has changed over the years, and what we as marketers can learn from it.

When will advertising lead by example?

Part one in a series of four blogs, written by Miriam Indries, a young, upcoming Auckland writer with a Bachelor’s Degree in Psychology. In this series, Miriam will give her frank opinion about the sometimes cynical world of advertising and its treatment of the fairer sex.

I am no expert in the world of advertising and I will not even attempt to educate you about it, because I don’t have the skills required for that - I will leave that to the professionals. But I am a woman, therefore a self-confessed shopaholic (we may have not invented money, but we sure know how to use it).  And why is this relevant? Well, because the advertising world needs women, you see, us ladies make an awful lot of money for the clients of advertising agencies. Why? Because we buy stuff all the time. We buy things that we want, things that we need…we even buy things we don’t need! The biggest problem, however, is that advertising targets us based on the high standards of “the expected image” portrayed by the media. These standards are of course unreachable. Therefore advertisers hit us where it hurts the most… our physical appearance. When we see an ad, it’s like it is speaking to us, inviting us into a new world of fabulousness, a world we want to live in, where we’ll be recognized as beautiful. How can this be? Why are we susceptible to all of this?

Well, for me personally, a good advertisement is one that speaks the truth. Take the Dove real women campaign for example. This I can honestly say is a well-done campaign. They used real women! Curvy, short, tall, big busted, small busted, cellulite, the whole lot. 

This is reality, the thing many of us women are oh so afraid of. This ad made headlines in many countries, because, sadly, it was thought to be “an unusual ad”. “To use women who are not size zero? Wow this must be a joke!” But of course this is no joke, the ad actually highlights today’s average woman, who has body imperfections and eats normal food.  I would seriously love to see more of these ads. 
But unfortunately, most ads these days are full of lies, lies, and more lies, but somehow they still make us believe in the product. We fall for it because we are self-conscious human beings who like to spend money on our physical appearance. Women from all over the world look in the mirror disappointed, wanting to change everything about the way they look so they can match the beauty of the models used in ad campaigns. And those clever advertisers know this and so does their loyal Photoshop program, without which, many companies and products would suffer. We always buy new things, things that prove to be useless half of the time, so we end up buying more things. We always want to look better and better. Most advertising agencies are über smart, and they target us this way, knowing we’ll fall for it. The famous psychologist Abraham Maslow believed that a person achieves self-confidence and self-esteem based on their opinion of themselves. Sadly these days, Maslow’s years of hard work have been pushed aside by beauty products and “getting thin” machines. Seriously, all we see in magazines, TV commercials, infomercials (yes I do watch them), bus stops, toilet cubicles etc. is stuff about how to perfect our look, how to lose weight, how to get great skin, how to use fake tan (sadly natural porcelain skin “is so Marie Antoinette”). This literarily makes us feel like we are not good enough, and like lions jumping at a piece of meat, there we are, jumping to reach the phone and order the product, or rushing to a shop.
Take those hair ads for example. All the models in them have amazing, shiny, beautiful, to-die-for hair, all thanks to the shampoo advertised. Or is it? We see the model shake her head from side to side, her hair flowing perfectly from one direction to another. It looks too good to be true… that’s because it probably is. What most of us fail to see is that at the bottom of the ad, there is usually something written in very small writing (this is the trap ladies, that’s how they get us!) What does it say? It says something about the model wearing hair extensions. So the gorgeous hair advertised is not in fact so gorgeous, it’s fake! I suppose one would not be able to call this “false advertisement” because they do reveal their secret, available for the viewers to see – except for it is hardly noticeable, of course. But that doesn’t matter, we will still buy that shampoo, and we will not only do this, but we will tell our neighbours, our friends, our families etc. etc.

Another great example is the make-up campaign, especially the mascara ones. It’s bad enough they use Hollywood’s most gifted women, who are pretty much perfect looking. (Thanks to Dr So and So for the lipo, botox etc). These mascara ads really annoy me – you see Eva Longoria or whoever, holding her new mascara, blinking her eyes at the screen. Her eyelashes look immaculately perfect, long, strong, everything we could ever want. Again, read what is at the bottom of the screen. “Eva's eyes styled with lash inserts”. Well duhhhhh, of course women won’t read that. They will focus on Eva’s eyelashes and visualize themselves looking the same, desperately searching the Internet for the nearest shop selling this product. And voila, millions of mascaras sold!

Some advertisers love to fool us and unfortunately, they know how to do it. In today’s society, physical appearance is considered to be very important, and it can also help people get the jobs they love, and become so-called “role models”. Brains are a thing of the past, beauty rules! Sad but true! Ladies, we are taken as a product of society, an experiment almost, for many ad campaigns. As if it’s not enough that we watch infomercials and buy all these different gym machines that are supposed to make us look skinny in a week (they leave our wallets looking pretty flat too), they do it with beauty products too. They know how to target us through “the promise” we most want to hear about any kind of self-improvement – "In just a few days" and this isn’t really the truth at all.

How Hard is it to be a Brave Marketer?

It doesn’t take long for us to know if we like or dislike something. I imagine that this is closely linked to the “fight or flight” instinct hardwired into all of us. The problem is that people often don’t agree on what they like and dislike. Mass murderers such as Charles Manson, somehow become very desirable to a small group of women, while they remain figures of loathing to the rest of us. Entire households get divided during the elections, when one member says Labour while the others say National.

Even superb products don’t reach everyone. For example, regardless of how many iPads Apple sells, or how good the product is, there’s always someone who’s not interested and chooses a competing tablet. The problem with marketing is that we all want to believe that the product we're selling is the absolute best in the world when it most likely isn’t. If it was, everyone would have one, but not even Apple has created this perfect product.

No one, and no product or brand, ever gets unanimous approval - it just doesn't happen, not even for Jesus or Mohammed. The sooner we understand this the better. Moving away from the centre is becoming more important than ever before. In fact, clever marketers should be striving to find a way to move their brands to the juicy edges and in turn find ways to get the centre to move towards them. Lady Gaga did this very well, so did Marilyn Manson. Britney Spears tried but failed and ended up looking rather daft, proving that being edgy isn’t as easy as it seems. But what they all shared in common was one thing: bravery.

It takes a really remarkable person to commit an act of bravery, simply because by its very definition, brave is something that not everyone is prepared to be. Standing up to a bully, asking for a raise, immigrating to a new country, getting married, starting your own business, coming out, saying "no" when everyone else is saying "yes" - these are all hard to do, some more so than others. But once done, they’re over and we move on to the next challenge.

Being brave in marketing has become absolutely essential, because there’s just no real scope for anything else these days. Five years ago, alternative approaches to marketing were a novelty but now they’re all that we have left if we’re to have more of an impact than the competition. So how can the element of bravery become second nature to marketers? After all, many of you are in paid positions that look after your mortgages, childcare, credit cards, mortgages, and a need to feed a family three times a day. Bravery isn’t as easy when there’s so much at stake – logic says that no one wants to lose everything they’ve worked so hard for by making a brave decision, which ends up being the wrong decision, that costs you a career.

Bravery needs to be seen as an “up moment” with more to gain than to lose because that is the very nature of bravery. I don’t classify myself as fearless, so you may well be sceptical as to what gives me the right to talk about bravery at length, but you don’t have to be brave to know what bravery is. I can’t see myself standing up to a tank in Tiananmen Square but I know that it’s been successfully done before and that fills me with hope that my inferior attempts at bravery can succeed. So in my next blog, I’ll take a closer look at how bravery and marketing can go hand in hand and what it takes to be a brave marketer.

Product Placement King of the Year

Following up on my previous blog regarding the culture of the “celebthletes”, I thought it would be worthwhile to take a closer look at product placement and advertising.

If you’ve ever watched a movie or anything on TV, you would have seen product placement at work. It is a very lucrative business and was well explored in Morgan Spurlock’s fantastic documentary “POM Wonderful Presents: The Greatest Movie Ever Sold” (to give it its full title).

I can remember watching Top Gun way back in 1986 and thinking that Tom Cruise’s Aviator sunglasses were the third coolest thing in the movie, just behind his F14 Tomcat and Kelly McGillis.

I wanted, no, make that needed, a set of those sunnies! And so did a lot of other people - according to Time Magazine, sales of RayBan Aviators rose by 40% due to their appearance in Top Gun. Mr. Cruise has always been a big promoter of sunglasses, with such iconic placements as his Wayfarers in Risky Business and his Oakleys in Mission Impossible 2.

In 2011, Apple was featured twice as often as the next most conspicuous brand. In fact, Apple has appeared in over one third of all the number one movies in the US box office since 2011, an enviable position considering that the fruity logo and associated products appear more than McDonalds, Pepsi and Sony Vaio combined. Apple even goes as far as saying it doesn’t pay for product placement and furthermore, refuses to respond to any questions on the subject. If Apple doesn’t pay, then this seems to be a phenomenal publicity coup when you imagine what all this exposure does for the company.

An American company called Front Row Marketing Services has figured it out. Using their “proprietary product placement valuation metric” (a fancy way of saying “cunning software”), they calculated the total product placement value Apple received from just seven movies in 2011: US$48,9 million! Apple spent more than five minutes on the screen during Mission Impossible 4, which according to Front Row was worth US$23,5 million! That excludes exposure on DVD, video-on-demand, downloads and so forth. Wow.
In the month following Mercedes' role in Transformers: Dark of the Moon, sales of the star model SLS AMG were up 14 percent. By the end of 2011, sales of the Dodge Charger, the star of Fast Five, were up 227 percent! Double wow!

Even here in New Zealand, product placement is starting to go through the roof, with a number of companies specializing in this theme. Auckland-based product placement company Exposure seems to be making quite a living from it with brands such as Ford, LG, Telecom, Bell Tea, Vodafone, Lexus, Mini, Suzuki and dozens more featured on their client list. They’ve hooked their clients up with spots in The Cult, Shortland Street, Outrageous Fortune and The Strip to name but a few.

Then there are the other shows which are just sold outright to brands: Hyundai Country Calendar, Chelsea New Zealand's Hottest Home Baker, TradeZone Gone Fishin' and The ITM Fishing Show.

What I like about product placement in the New Zealand market is that it isn’t totally over the top (just yet). By that I mean we can at least be thankful that it isn’t as bad as some of our local advertising. But things could change and who knows - maybe in the next season of The Almighty Johnsons, one of the lads will go to Harvey Norman, buy a new Samsung TV and take it home to his new missus, the Briscoes’ lady? The entire scene could even have the sponsor’s jingles in the background for good measure.