K2C Marketing Blog

Price Wars: Should You or Shouldn’t You?

k2cmarketing — Fri, 22 Jan 2010 00:32:52 +0000

The ability for consumers to collect information on products and services is becoming more and more crucial to the way marketers think and act toward price wars. First off, a price war is when two or more companies use price as a tactic to gain a competitive advantage. The price cuts on these products may go back and forth between competitors until someone losses. There are several reasons why price wars are the right answer, but we will discuss three.

1.) They can lower the brand reputation.
Many companies make the mistake of drastically cutting prices during a price war. Consumers may feel that maybe the quality of the product is low or that you could have been selling this product for a lower price all along and taking advantage of consumers.

2.) Expectations.
After a price war, consumers will start to expect lower pricing. It will be difficult to raise you prices after the price war and maintain your current customer base. Once you lower these prices to beat out competition, make sure you can uphold you promises.

3.) They can cause suppliers to have trust issues.
Remember, some suppliers are your consumers and competitors. Be aware of who all these price wars will affect your company in the all departments. It is possible to run your suppliers out of business while enduring these price wars; where will this lead you?

A Real-Life Example:

To better explain a price war, there is the headlining example of Walmart vs.
Amazon. The online price war included product areas such as hardback books,DVDs, and electronics. The public battle began as a back and forth tossle occured over which company had the lowest prices on new books and DVDs. Black Friday only made the battle worse, as Walmart dropped their prices only to have Amazon quickly cut theirs the same day on the same items. So why would a huge company like Walmart pick on the little guy (Amazon)? Most likely due to the recession, Walmart is trying to increase their E-commerce sales due to the fact that they have recovered faster than storefront. Furthermore, online shopping has increased rapidly and poses an opportunity for market share gain and increased profitability.

Walmart has done everything to secure their place in the war, even taking
public stabs at Amazon in the press. It all began when both companies dropped their book prices to $9. Then they dropped DVD prices. Furthermore, Walmart offered a $15 giftcard with the purchase of Call of Duty- Modern Warfare 2 which Amazon matched as well. These were only to name a few of the price matches the war brought. Amazon spokespeople pin the matches to the mere competitiveness of the marketplace and consumers availability of information. Consumers can potentially, “click-a-mouse” and find an overbundance of information on any product they desire.

Happy Holidays!

k2cmarketing — Sat, 02 Jan 2010 02:03:11 +0000

Holidays..oh how we love them! Especially in hard economic times. Have you ever noticed you get bombarded with personalized direct marketing tactics? I’ve noticed a ton, as my e-mail becomes full of coupons from Beauty Brands and coupon offerings from luxury brands such as Coach and Dooney and Bourke. So why are the holidays so great for marketers? It’s a great way to gain consumers’ interest and spark a potential purchase. Marketers do this by attempting to gain awareness and fulfill a desire for a good or service. This can be by offering a sales promotion, direct marketing, or advertising. I am sure you have all noticed Target’s advertisements with the lady running on the treadmill to get ready for Black Friday. It was interesting, humorous and differentiated, hence the fact I still remember it. Personalization and offering consumers “select offerings” are also effective. For instance, I went to Dillard’s after hours holiday “party” where all guests were offered 10% off all purchases. They had appetizers, holiday music, free holiday wrapping and attentive sales associates available. This was only for a select amount of Dillard’s customers and this is why it’s effective–it makes customers feel special and that they DO matter. Personalization also happens as we receive offerings through e-mail and mail addressed to us (first and last name) thus sparking, “Wow! they know me on a first name basis…I must be important to them!!” Even more effectively, companies send reminder e-mails as to when your coupon will expire, or when the sale ends. These repetitious reminders act as a catalyst to make sure you at least get to the trial base of a purchase.

Online sales were also booming this holiday season. Companies did a great job making Black Friday deals simultaneously available with their in-store sales. For some of my big electronic purchases I did not even have to wait in a line wrapping around the store, I just got online at 3 am! More importantly, the stores price match with competitors. For example, I found a DVD on sale at Target for 12.99 and went to Wal-Mart and they matched the price. How convenient and most importantly proves that the customer is king.

It may be difficult to stick out in the ocean of holiday sales. Each year there are more and more sales that large retailers put on for their “Biggest Holiday Sale Ever.” How do you know if you are reaching your customers? For one, you will see them in your stores. But what are the best tactics to use when you are trying to make your sale stand out from the rest. We have put together some marketing tactics that we feel are the best to use, especially in the Holiday seasons.

• Personalized mailing WITH coupons: Post cards and small mailings with information about the sale and what they could be saving. If you have the ability to know what they have purchased in the past (lets say they are they are a store credit card holder) they send a coupon for $X amount off on those cardigans I love or maybe that newly released movie or video game.

• Exclusive savings for your golden customers: Let you valued customers know that you are thinking of them this holiday season. Send customers who are golden or loyal an extra percentage off of their purchase. Let them know this is only for exclusive customers like them. They will feel special and want to purchase gifts and personal items from your store just that much more.

• Old Fashion Marketing – Remember TV, Radio, and Newspapers: I know this one goes with out saying but sometimes people forget that these mediums are still very important. However, TV, newspapers, and radio are not reliable by themselves any more. People need little reminders.

• Holiday Hours: Having longer Holiday hours is good for both your employees and customers. People buy a lot of gifts during the Holidays. Many people are shopping during this crazy time, and your customers will appreciate them not all coming at one time. Giving more hours will leave more time for shoppers to purchase. They will also be happy they can get to all the stores they need to before Santa comes.

• Online only Sales: This is for those customers who just can’t get away to shop in stores (or just don’t want to get out of their PJs on their days off). Give your online customers the ability to save as well. There were several stores this holiday season giving exclusive sales online, this was creating a lot of online traffic to these stores and will facilitate the customers return to the site more often. This is what you want right?

• E-mail blasts to your special offers: One of my pet peeves are emails with special offers and after click on the link, I am routed to their home page. I have to do the work to find the deal or special offer. Give me a link to a page with the offer. This is less of a hassle for your customers and keeps them Happy.

Happy New Year!

KCKC

Marketing Nightmare

k2cmarketing — Wed, 23 Dec 2009 21:39:23 +0000

With the current Tiger Woods scandal hitting the press, one can only imagine, what was he thinking?! It is every marketers nightmare–spending millions on a celebrity endorser just to have them tarnish your brand image. It is so remarkable how consumers minds can be altered in a matter of minutes. While
some of Tiger’s biggest sponsors have minimized their marketing under Tiger’s endorsement, Nike is still remaining behind him. The question is why? Yes, he is the greatest golfer in the world, but consumer’s moral values and ethics play a major role in the quick switch of unpredictability. For instance, my dad’s friend is an avid golfer and adored Tiger Woods. Now everytime I mention his name, he merely says “ugh, I can’t stand him!”

It is even worse when female consumers hear his name. It is an instant put-off, a rolling of the eyes, and a slight unconscious feeling of “BLAH!” So what do marketers do? They alter their efforts in an attempt to show the public some social responsibility, that they do care about their feelings towards risky subjects (such as cheating on your wife with around 13+ women). Gillette is the
perfect example. They immediately quit airing Tiger’s commercials, and have decided to minimize his endorsement efforts. Furthermore, Pepsi Co. has discontinued Tiger’s Gatorade line, and major sporting goods stores such as Sports Authority, have put his collectibles and attire on sale.

Marketers shape to the wants, needs, and desires of consumers. If a scandal break, it doesn’t matter how good the person is at what they do, it will most likely affect brand image. Family-oriented brands such as Disney, would have kicked Tiger to the curb immediately. Nike is definately standing behind him with the mindset–well if everyone drops him we will still have a great
endorser (differentiation) while this all blows over. Tiger will most likely publicly say how great Nike is, wear more of their gear, etc.

Happy Holidays!

KCKC