Stay Tuned/Some Marketing Myths Exploded

From Eccentric Flower

 



stay tuned
 



Some Marketing Myths Exploded
28 June 1998


Since I take it on faith that we Americans are now more over-pitched, over-marketed, and over-advertised than at any other time in our history, it's nice to see some evidence that we're getting smarter about our purchasing habits. The bad news is that the marketers are getting smarter too.

I mentioned in last week's column that the advent of the checkout scanner has enabled marketers to track purchasing habits more closely than ever before. There have also been a number of recent studies conducted by various universities - it's all in the name of science - concerning consumer psychology. Together, these sources of new data indicate that several of the established beliefs about how to market consumer goods may be wrong.

For example, it's still something of an article of faith among marketers that price cuts are a sure bet. But new data shows that, first off, consumers prefer incentives other than price, and that consumers exposed to repeated price cuts learn to ignore the"normal" price - they wait for the next discount to come along, and stockpile the product. Hooray for the consumers!

It seems pretty evident to me that making price your primary selling point will also reduce brand loyalty, unless your brand is always the cheapest one - and that's never a sure bet, is it? If you encourage consumers to shop for price, then they will learn to pick the cheapest, regardless of brand. Please note that, as a consumer, I think this is usually a pretty good idea - there are very few brands with true superiority, save perhaps Heinz ketchup - but as a marketer it's a miserable state of affairs.

The other myth which may fall any day now is the idea that line extension - adding new products based on your existing products, like a new flavor or a low-fat version or whatever - is always a good risk. Aside from the known dangers of "cannibalizing" your own sales, new studies have shown that consumers don't actually like choices much: ongoing research at Harvard Business School may indicate that consumers prefer to be offered only one set of choices at a time, like which size of a given product to buy. If they have to compare several different variables at once, or assess trade-offs, they get anxious or irritated and are unlikely to buy any of the choices at all.

The article I pulled this statistic from (see Backstory) does not make the following point, but I feel I should: This doesn't necessarily mean the consumers like their choices stupid. The article notes that "the average supermarket in America devotes twenty feet of shelving to medicine for coughs and colds. Most of this choice is trumpery." I believe the consumers are learning to see through the trumpery. It is irritating when we have to comparison-shop between goods which are marketed so as to make intelligent choosing as difficult as possible. It is also irritating to be offered thirty kinds of almost-identical cough syrup.

At any rate, line extension is expensive - introducing a new product is one of the most expensive things a consumer goods company can do - and in the face of this data, and a stream of disastrous product rollouts, many manufacturers are cutting back on the new products. Line extension is not dead, nor should it be, but it's been given a serious blow.

The new ability to track data will only result in better and better marketing. I spoke of the new dawn of the national grocery chain last week; if that hypothetical chain managed to actually use the data it would be capable of gathering, it would be formidable enough, but if it decided to share that data with manufacturers, it would be truly scary. Fortunately, at present, suppliers and retailers tend to remain in something of an adversary position towards each other, making the consumer vs. supplier vs. retailer battle a three-cornered fight; if anything, retailers have tended to ally with the consumers more than the suppliers, since their low margins hinge on keeping the consumers happy.

But if that balance ever changes - if the suppliers and retailers decide to band together in an effort to target the consumer more efficiently - it will be a Bad Thing for us buyers.

Unfortunately, sharing information makes perfect sense from the point of view of the suppliers and the retailers - they neither manufacture, ship, nor shelve products they will not be able to sell - but from the consumer point of view, it means fewer brands and even more of that nasty targeting-by-demographic that drives me crazy. You'll get ads for things you neither want nor need, just because the new, superaccurate statistics say that people like you do want and need it.

I corresponded with someone recently who defended marketing-by-demographic. It's true that in some cases, it's less irritating to be targeted than to not be targeted - it's the difference in getting pitched something you might buy and something you will never, never in a million years buy. I grant that.

There are two groups of people who object to targeted marketing. The first group is the people who hate all advertising with a passsion. They would just as soon not have any products pitched to them at all, period. They don't care that the telemarketer has studied their demographics and concluded that they're in exactly the right age group and income group to be interested in aluminum siding - they don't want any telemarketers on their phone, and wouldn't buy the product from them even if they were interested.

The second group are the people who like advertising and would like to see more products than just the ones which are "meant" for them. These are the people who hate to check a "musical preference" box when they start a membership from Columbia House, for example, because they don't want to just get the catalog of rock CD's or classical CD's every month - they want the whole enchilada available to them at all times.

I tend to be in one of these two groups at any given time, depending on mood. I hang up on telemarketers no matter what they're selling - I won't wait for them to start talking. If they use my true first name, then that's it. Click. On the other hand, I get mail-order catalogs compulsively, even for products I have no intention of buying, and obviously I have some love of ads or I wouldn't write this beast every week.

But I digress. Anyway, given the revolution in data collection, and the national consolidation of grocery stores, it seems only a matter of time before the tide turns against the consumer. The buyer's market I referred to last week may not last for long.

The only bright spot is that consumers are growing increasingly wary of the ways in which new technology can be abused by marketers. Everyone knows what spam is by now, for example, and that backlash is well under way. Everyone also knows at least one direct-marketing story which is good to tell at parties or for sending to the back page of Consumer Reports. My source article ends with an anecdote about a woman who cancelled her supermarket frequent-customer card, after she received a personalized mailing reminding her that it was time she bought more tampons.

One can always hope that the marketers will turn out to be their own worst enemies.



Backstory

My primary source article, in addition to information I collected for the two grocery columns, appeared in the 14 March 98 edition of The Economist, under the title "Market Makers." Just in case you decide you want to find it and read it.


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