Apr 14, 2009
Free Can Come Back to Buy You
In the 1983 movie “Mr. Mom”, an ad exec suggests the agency’s biggest client, Schooner Tuna, drop its prices by 50 cents a can during the current economic recession. The idea was surprisingly embraced by the client, who developed an image of “like all Americans, we’re affected by these trying times, and we’re doing our part to help you get through it.” The campaign worked. Sales volume increased, inventory moved, and most importantly, Schooner’s branding was positively reinforced as was customer loyalty.
In 2009, Americans are experiencing a very real economic downturn. What can companies, especially small businesses, do to reinforce their brand during bad times so customers will positively reward them during the recovery? Ideas include 2-for-1 dinner entrees, temporary commission reductions, waivers of first-time consulting fees, upfront product cost with minimal cost for re-purchases, baker’s dozen products for a dozen orders, rebates, and one of the most enticing: Hyundai’s one-year return policy on all new car purchases.
Debbie Fox of Fox Fine Jewelry recently gave free sterling necklaces (up to a $99 value) for Valentine’s Day to gift givers as long as they had proof of job termination or home foreclosure. She partnered with other jewelers, and the end result was nearly 5,000 donated necklaces. “This was all about touching people in a way that inspired them to consider how they might give in their own way,” says Fox. “The result was very rewarding with heartfelt thanks, great press and fierce customer loyalty.” I bet that every day the gift givers see that necklace, they think of Fox Fine Jewelry. Now that’s branding done well.
Tough times call for creativity – can’t put a price on customer loyalty.
I’m on the fence on this one, because I think there are exceptions to the rationale of discounting and special deal-making as a strategic-social-responsibility-slash-marketing endeavor. The catch here is to be sure that a discounting strategy aligns with the nature of the product / service and its key audiences and will serve in the long-term to enhance the brand reputation. It’s important that it not be a one-shot flash in the pan that generates short-term media coverage or positive fanfare, but not much else (or worse, damages profit margins to the point that it’s difficult to recover from good intentions, particularly when the economy recovers and an attempt to bounce back to “normal” pricing is greeted with contempt).
It comes down to the value proposition of the brand. Using the jewelry industry in another example, Tiffany could be damaged in the long-term by a discounting or free giveaway strategy, since so much of the mystique of the brand is concentrated on the exclusiveness (i.e. price) of the product. To diminish the price is to diminish that mystique, and hence the brand.
The point about this approach being important for small business consideration is a good one, though. I think that for any small, largely unknown business that is struggling to differentiate itself from the pack in this economy and in a way that can be readily embraced, this approach can make excellent sense. It’s just critical to weigh all the factors before making a decision on what form that approach takes.
Debbie Fox will be rewarded in business and in her personal life for this outstanding demonstration of compassion.
Target is doing a variation on this theme with their “This is a brand new day” series of commercials. They show a visual that appears to involve an expensive activity, like a trip to the spa, and then cut to a different angle that shows you how to use an inexpensive Target product to get a different version of the same experience in these tougher times. (The second visual in this case being a husband painting his wife’s toenails in their home.)
This reinforces Target’s brand of being hip, but affordable. It also presents them as being on the side of the hardpressed consumer by showing creative ways to have fun without spending a lot of money.
I think these commercials are very effective.
I love this story, and that video is awesome!
I’m a Gospel music artist, and I’ve been working with a similar pattern over the last few months. We only have 2 CDs on my product table, but we’ve gotten very creative with offering discounts for multiple purchases. Our audiences have appreciated the discounts, and it’s definitely resulted in more sales for us.
We’re also offering a free mp3 to everyone who emails me to sign up for my newsletter. Everyone is just suffering so much right now, and if we can give away a little encouraging music, why not?
Great blog
[...] how’s that free thing going for businesses in today’s economic downturn? Since the original blog was posted, here are some updates: Singer Allison Lynn offers CD discounts to multiple [...]