Automotive Training & Consulting

Price-Only Marketing Damages Premium Businesses

Several years ago when working with a manufacturer I was asked for my thoughts and advice on their latest ‘marketing’ promotion.

The company was advertising their cars at $5,000 off RRP (that was the marketing message).  They had print ads, a direct mail program and an electronic mail program.

I told them that my first impression was that it was an imbecilic campaign, but I was happy for them to prove me wrong with the results it had generated.

We checked with their agency, who kept talking about reach and sets of eyeballs and other smokescreen nonsense.  We insisted that the agency show us the click-throughs and the enquiries generated from the e-mail program.  Ignoring the issues of target market for the moment (their e-mail list was of reasonable quality), from over 20,000 e-mails, they had received four enquiries with no sales to date.

One of the marketing team enthused: “And we have another 20,000 going out later this month!”

I asked why they would want to double their efforts on such an ineffective exercise.

The marketing person replied “Well it doesn’t cost us much.”

I asked “What about the cost of the damage to your brand?”

She looked a bit bewildered so I elaborated: “Your target market are reasonably intelligent consumers.  They see your sole marketing message as: $5,000 off.  They think:  ‘You can’t sell these cars.'”

The marketing person jumped in enthusiastically: “Yes, but they’re last year’s compliance plate cars!”

I replied “So they now see the message as ‘You haven’t been able to sell these cars for a year!'”

One of Robert Cialdini’s six proven principles of influence is social proof.  People are powerfully affected by what they see other people do, especially groups of people.  This marketing ‘strategy’ was plainly demonstrating to prospective customers that other people aren’t buying these cars (but why don’t you?).

Very early on my career I saw a quote in an essay in BRW that read ‘discounting is a sign of commercial idiocy’.  That idiocy takes on phenomenal proportions when it is conducted by a manufacturer, let alone a prestige manufacturer.

In 25 years in sales and marketing, I have seen mountains of research showing that the customers who pay the least are least satisfied with their purchase and have unsurprisingly low brand loyalty.

At a time when some of the established automotive distributors are complaining about the onslaught from the Korean brands (and soon, the Chinese brands), they are in a way preparing their customers for the Koreans and Chinese brands with tailor-made marketing.

They are refusing to promote their unique selling propositions (and market strengths) and positioning themselves closer to ‘competitors’ in way that gives strength to the competitors.

They are focusing on price (which the high quality of their products ensures that they will never be market leaders on).

They are ‘dumbing down’ the market place.

In doing so, they are gift wrapping the market and presenting it to the market newcomers.

To remain premium, they should keep their message, their marketing and their pricing premium.


Price-Only Marketing

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