Decoy pricing

doughDon’t put your prices down, use a decoy.

Let me explain the idea with a case study from Williams-Sonoma, an American publicly traded consumer retail company that sells kitchenwares and home furnishings.

Williams-Sonoma introduced a home bread making machine for $275. Sales were significantly lower than expected. One option was to discontinue the product, another was to reduce the price. But before either of those options were taken Williams-Sonoma retained a marketing research company who suggested the decoy strategy. This was to introduce a slightly better bread making machine that was priced 50% higher than the $275 model. In other words, they would have a product that was only marginally better but at a price of $415.

Once the new $415 machine was introduced, the sales of the original $275 model began to grow. What was going on? Simply, the consumer spotted the $415 product and used that as a price anchor in their minds. Then, the $275 bread maker, which was almost as good, was identified as being a bargain.

Posted in Consumer marketing Tagged with: , ,

Barclaycard terms and conditions, a sign of the times

Barclaycard terms and conditions, multiple copiesThis a poor sign of the times…multiple copies of Barclaycard terms and conditions. Let me share the story of their arrival.

I upgraded my iPhone. As a big fan of Apple Pay, I needed to add a few cards onto my new phone and a couple of Apple Watches. I duly did this and accepted Apple’s terms online and I think Barclaycards as well (I expect so as I could used it to make a payment).

Then three separate 14 page printed sets of terms and conditions arrived in my postbox.

My question is, why three? And then why any in analogue format? Isn’t it disappointing how some businesses purport to be digital and continue to chop down trees to hang on to legacy processes?

I also wonder how many people ever read terms and conditions presented in this way.

Posted in Consumer marketing, Payments Tagged with: , , , , ,

Purpose in a Venn diagram

purpose in life

Most Venn diagrams seem to have two or three overlapping circles. This one has four and it makes sense.

It has helped me validate a couple of decisions this month. I’m sharing it with you now, save it for your own use.

Posted in Odds and ends Tagged with: , , , ,

The importance of note taking

note takingThe human memory is a wonderful thing. We can experience, hear or learn something and then almost immediately corrupt our memory. Many people in business make this a special feature of their lives by rarely writing things down.

No notes. That’s the problem.

Why is this? Well, I suspect it is because they don’t feel the need to explain themselves or to be accountable. Or perhaps they believe they have an excellent memory.

The human memory is predictably fallible and we really do need to help it. Note taking doesn’t need to be an arduous task; they can be single sheets, mind maps, key facts. They can be on paper, be transferred to digital or be digital from the start using Evernote, Apple Note, One Note, or your programme of choice.

I have to work at note taking but the good news is that, with the use of a technology, I could pick up any smartphone or laptop and access my notes. Indeed the draft of what you are reading was accessible to me from pretty much anywhere.

I guess the point is, you want a competitive advantage in business. Having notes, facts, figures and information to call on puts you in that position. Notes make you stronger not weaker.

Remember, another benefit of the act of taking notes, you will remember more of the details by writing notes even if you don’t refer to them.

A by-product of this is that I now tend to doubt how seriously someone is taking a meeting or an interview if they arrive empty handed and have no ability to jot notes.

Posted in Management Tagged with: , , , , , , , ,

The corporate boat race

An American automobile company and a Japanese auto company decided to have a competitive boat race on the Detroit River. Both teams practiced hard and long to reach their peak performance. On the big day, they were as ready as they could be. The Japanese team won by a mile.

Afterwards, the American team became discouraged by the loss and their morale sagged. Corporate management decided that the reason for the crushing defeat had to be found. A Continuous Measurable Improvement Team of “Executives” was set up to investigate the problem and to recommend appropriate corrective action. Their conclusion: The problem was that the Japanese team had 8 people rowing and 1 person steering, whereas the American team had 1 person rowing and 8 people steering.

The American Corporate Steering Committee immediately hired a consulting firm to do a study on the management structure. After some time and billions of dollars, the consulting firm concluded that “too many people were steering and not enough rowing.”

To prevent losing to the Japanese again next year, the management structure was changed to “4 Steering Managers, 3 Area Steering Managers, and 1 Staff Steering Manager” and a new performance system for the person rowing the boat to give more incentive to work harder and become a six sigma performer. “We must give him empowerment and enrichment.” That ought to do it.

The next year the Japanese team won by two miles. The American Corporation laid off the rower for poor performance, sold all of the paddles, cancelled all capital investments for new equipment, halted development of a new canoe, awarded high performance awards to the consulting firm, and distributedthe money saved as bonuses to the senior executives.

Posted in humour, Management Tagged with: ,

I told you it was viable

business planningOne of the funniest things I’ve witnessed in an owner managed business (OMB) is the Managing Director being presented an idea that had been worked up into a plan. All the hard work that went into it proved the plan shouldn’t go ahead. This was evident from the Excel spreadsheet that showed the estimated businesses would deliver a whopping loss.

This was rapidly fixed by the MD who just increased the sales line in the spreadsheet, in an unrealistic manner, and then announced, “Look, I told you it was viable.”

The approval process became, “I’m right and you will confirm it.” The history of not planning, shooting from the hip and gut intuition continued. How does the owner transition into something with a little more science?

Posted in Management Tagged with: , , , , , , ,

The first press release

press release being created on a typewriterThe first press release was written in 1906 by Ivy Lee. 

After the 1906 Atlantic City train wreck, Lee issued what is often considered to be the very first press release, convincing the company to openly disclose information to journalists, before they could hear information from elsewhere.

Source: http://en.wikipedia.org/wiki/Ivy_Lee

Posted in Marketing Tagged with: , , , , , ,