Loss Leader Pricing Strategy

A loss leader is an item priced beneath or at market value but potentially gets customers in the door to then purchase other items which are priced to make a profit. Printers for example, are sold for a bargain but are a one time purchase. The ink used by the printer is usually less of a bargain and generally new ink cartridges have to be purchased periodically to replace the previous one which eventually runs out of ink if the printer is being used regularly. Thus, although the printer company might lose money (or simple break even or not make much) in the beginning selling the printer, in the long run they will come out ahead due to the profitability of the ink. There are many other examples of using loss leaders as a pricing strategy and it has been a success in many cases.

Creating An Effective Slogan

If you make a list of well known companies, you can probably think of some, if not many of the slogans used over the years by these companies. In fact, I can think of some companies that I don't know that much about other than a slogan.

Some slogans work, others don't and some are very successful and long lasting. For example, I was not even born when Wendy's originally starting using the slogan "Where's the beef?" and yet I know about it because it is became so well known.

Most slogans are short and easy to remember but also distinct enough to remember. Sometimes slogans are heard on television, radio, youtube and so on. Other times a slogan can seen visually and read on packaging, billboards, internet ads, ect. Some companies , use both techniques, even in the same ad, as in the case of a voice-over on a commercial saying the slogan while the words can be read on the screen.

Sometimes a lot of money is spent coming up with a slogan. But just because a ton of money is spent coming up with one doesn't mean it will work. The city I live in spent a sizable amount of money for a firm to come up with a slogan--a slogan they did not end up using (an article about that can be found here: http://www.scntx.com/articles/2013/04/07/plano_star-courier/news/7693.txt).

Other times, it just takes a notebook and some patience as one or more people come up with a list of possible slogans. All it takes is for one of them to be just right.

Even though a slogan is usually only a few words, get it right and it can be one of the most effective marketing tools.

When Should The Price Of An Item Be Lowered By A Cent?

Research shows that lowering the price of something by one cent, as in $9.99 instead of $10.00, can be an effective way to make it look cheaper. According to the research of Robert Schindler, who studies the topic of pricing, whether or not is a good strategy to lower the price of an item or service by a cent, comes down to what is being purchased. For everyday goods and services, lowering the price by a cent appeals to the consumer as being a better deal. However, for things that the consumer values quality above cost, lowering the price by a penny is not a good idea because it makes the good or service look too cheap and not as quality. 

A summary of Schindler's research can be found here at:

http://www.sciencedaily.com/releases/2011/09/110906144036.htm

Keeping Marketing Simple

Personally, I like simplicity. Some of my favorite movies have few special effects, quite music and minimal action but a great plot, in contrast with some films with dazzling special effects, loud music and over the top action but a thin plot. The same is often true when it comes to marketing. Whether it be the way a product looks, the usability of the product, the buying process or other aspects, simplicity is often the best approach. It turns out some research backs up this concept, especially when it comes to the ability for the consumer to easily make a decision on what to buy based on information they can understand and trust.

This according to a Corporate Executive Board study published in the Harvard Business Review. Consumers value the ability to quickly gather accurate information about a product and make a purchase with ease. It is not about giving customers large amounts of information, it is the helpfulness of the information given that matters. Simple often is best. You can read more about this study here:

http://hbr.org/2012/05/to-keep-your-customers-keep-it-simple/

Products That Advertise Themselves

Around the early 2000's and maybe earlier, I began seeing the occasional person walking around with a white paper cup (or a clear plastic one) with a green logo on it. Some of these people were parents of friends or acquaintances of mine and thinking back, the personality type of these people was often outgoing, successful and entrepreneurial. The product which they were carrying was a cup of Starbucks coffee, clearly marked with the Starbucks logo, which is now ubiquitous. Starbucks products advertise themselves once purchased. They go from the counter of the store with whoever buys them to wherever these people are going, potentially being seen by many people along the way. Even the paper sleeve that comes with hot beverages at Starbucks, which covers the logo on the cup, also has the Starbucks logo on it (in fact, it looks a little larger to me than the logo on a 12 ounce Starbucks cup).

Many clothing brands are great at doing this as well. There is no real reason a piece of clothing needs a prominent logo on it. In fact, in many cases (especially I imagine when it was a new concept), a consumer might not like to have a logo prominently located on their clothing. But if a company can get consumers to buy clothing with a logo on it, that person then becomes a walking advertisement, wherever they go, whenever they wear that piece of clothing. In contrast with a consumer who doesn't want a prominent logo on their clothes, some consumers even prefer to purchase an article of clothing from a store that had the logo clearly visible on it, especially if it is perceived as a trendy or popular brand.

Of course, there are many other products which do this besides coffee cups and clothing as well. I think this method of advertising has several benefits. It can be a very subtle way to advertise, it is virtually free and there are creative ways to make a product advertise itself. Products which advertise themselves may not be new anymore but I think this method of advertising will continue to be used by many companies in the future.    

Consumer Identity In Marketing

One of the important concepts in marketing is consumer identity and how it effects decision making. This is because one way people make a statement about their lifestyle and identity is through the decisions about what products they buy.

Take pancake mix for example. Recently, I was at a store and saw pancake mix in a rustic looking box with a grizzly bear on it. It was clearly a rugged outdoors themed box for a seemingly hearty pancake mix (or flapjacks as the box said).  I will admit, I am a fan of a lot of the Discovery Channel style programming about wilderness survival and people who work in the far north and I like to think of myself as someone who could go up north and live like they did in the old gold mining days. Because the ingredients did seem natural and hearty (100% whole grain for one thing) and I was interested in the overall theme, I got them.

Now, this product image appealed to me. But what about someone who likes to think of themselves as something of an amateur French chef? A product with French themes on the packaging, highlighting that it can be used to make crepes would probably catch the eye of this consumer more than one which conjures up images of a mountain man making pancakes at dawn over a campfire.

In the case of the mix I bought, I might not have ever noticed the very same pancake mix had it not appealed to me through its packaging. I would not say the packaging alone made the sale but it caught my attention. I was made aware of the product for the first time and liked the ingredients, so I bought it. That is just one example of why appealing to different consumer identities through effective marketing is important and in this case ended in a sale.