Mills on Marketing

Are we really persuaded when retailers price something at $19.95, rather than $20?

Yes we are!

University of Florida marketing professors Chris Janisewky and Dan Uly investigated the way the human brain thinks about value and shapes bidding.

Their research is reported in Scientific American Mind (April/May 2008). When people judge an opening price they create mental measuring sticks. If they see a $20 Kettle they wonder why it is worth $19 or $18. That is rounded numbers.

But why the starting point is $19.95 our mental measuring sticks change. When we think about what it is worth, we start thinking about nickels and dimes instead of dollars, so a fair price for a toaster might be envisioned as $19.75 or $19.50.

The psychologists also looked at five years of real estate sales in Alachua County, Florida comparing list prices and actual sales prices of homes. They discovered that sellers who listed their homes more precisely at say $495,000 as opposed to $500,000 - consistently got closer to their asking price.

In other words, buyers are less likely to negotiate a price when they encounter a precise opening price.

So, the lesson is, if you are in a buyers’ market you should start with an exact list price.

Popularity: 12% [?]

When you discover a compelling difference that sets you apart from your competitors leverage it for all you are worth.

Commerce Bank, from New Jersey, offers its customers extended opening hours - which typically run from 7:30am to 8pm, 7 days a week. These operating hours mean Commerce Bank is open for more hours than any other bank.

To drive its difference home, the branches follow the ten-minute rule. Branches open 10 minutes early in the morning and stat open ten minutes later than the official closing time. Can you remember the times when you ran towards your bank to see the staff close the doors at 4:59pm?

The 10 minutes dramatizes Commerce Bank’s key differentiator by adding an additional burst of creative magic.

Popularity: 100% [?]

One of the things that I admire about Disney World is the way it transforms its low paid workforce into a cast of brand evangelists.

Walt Disney understood that the words we use frame the way we think and often behavior. Disney created his own language to support the Disney mission of delivering happiness through entertainment.

In Disney Speak:

• Rides or shows are always called ATTRACTIONS
• Employees are always CAST MEMBERS
• Customers are always called GUESTS
• Jobs are always called ROLES

On the surface, language can seem superficial or trite. But words create images that reinforce assumptions. Take the word GUEST. A disgruntled customer evoked a different image to an unhappy guest. Guests always deserve special treatment, while customers often evoke images of indifference.

If you want to create a service culture where staff stay in role or on-brand, start by changing the vocabulary you use to label staff, roles and customers. The right words really can mobilize your culture.

Popularity: 22% [?]

Back in 1999, Joseph Pine and James Gilmore wrote a paradigm-busting book called The Experience Economy: Work is Theatre and Every Business a Stage.

Pine and Gilmore argued that the future of marketing would belong to companies who moved from pushing goods and services to delivering “sensational” value-adding experiences.

Since then, a barrage of books have appeared on customer experiences. But the best book I’ve found is Experience the Message, How Experiential Marketing is Changing the Branded World.

Max Lenderman is creative director of GMR Marketing, one of America’s top event marketing companies. Lenderman has written a must read book. My copy is marked heavily with annotations.

Pine and Gilmore remain the heavy-weight thinkers in this field. I call their book The Experience Economy, the “old testament.” Lenderman’s book deserves the title “new testament.”

Popularity: 17% [?]

I’ve had lots of fun recently visiting ZARA fashion stores in Barcelona and Paris.

Customers flock to their stores, literally grabbing the latest fashions which seemingly come into their stores in a never-ending stream.

Zara is not just cool for its modestly priced, affordable clothes. What makes Zara really cool is its ultra-competitive business model which allows it to design and deliver product to its stores within 15 days.

Competitors typically take 9 months.

Zara’s designers start by attending the fashion shows looking for cool designs. They then produce small batches of imitation cool product which is shipped to stores to test for demand.

Product runs for popular lines then are scaled up. Zara avoids the big mistakes its competitors regularly make. Plus it doesn’t have to spend much on advertising because its customers are always coming back looking for the latest cool wear.

Compare that to competitors, where you wait around for the end of season sales.

No wonder Zara is so cool. Or should I say hot?

If you haven’t already, make sure you check out my other blog, The Naked Negotiator - The Secrets of Big Deals, Big Sales and Big Pitches - laid bare.

Popularity: 19% [?]

Oren Harari, the New York Times best-selling author of The Leadership Secrets of Colin Powell, has authored a highly readable sequel, Break from the Pack: How to compete in a copy-cat economy.

Harari uses the EMBER model to test important marketing decisions.

1. (E) Does it make us extraordinary?
2. (M) Does it matter to customers?
3. (B) Does is break new ground?
4. (E) Does it encourage evolvement?
5. (R) Is it real?

The EMBER questions provide insightful and useful answers. Use it. And read Harari’s book.

Popularity: 11% [?]

I have always been fascinated by how experts make decisions.

Take chess.

After a quick glance at a chess board, chess masters (who have 50,000 patterns stored in their memory) can play fast “blitz chess” with minimal loss of performance.

Experts, it seems, can rely on intuition because years of experience has given them the abilities to read the “patterns” of whatever game they are playing.

As a result, when we teach negotiators, marketers or salespeople in our seminars we are always teaching to read the patterns. We’ve found showing learners how to “read the patterns” significantly accelerates their learning and mastery.

Popularity: 6% [?]

I can’t help quoting and raving about Kevin Clancy and Peter Krieg’s “Your Gut Is Still Not Smarter Than Your Head.”

Perhaps it’s because the authors agree with so many of my prejudices. They remind us the marketing plan is an essential document for all businesses of all sizes– from large corporates to start-ups.

“The marketing plan is to company success as a road map is to car travel.

It can act as a tracking mechanism, to determine the budget, and as a scale against which the company can measure marketing effectiveness.

And it is an internal communications tool that everyone understands where the business is going and how it plans to get there.”

Popularity: 6% [?]

This is the title of Kevin Clancy and Peter Krieg’s latest book.

The subtitle “How disciplined fact -based marketing can drive extraordinary growth and profits” says it all.

Clancy and Krieg paint a compelling case for treating marketing as a science. The authors show case-study after case-study that instinctive gut-based marketing more often than not leads to dumb decisions. No wonder most CMO’s hold onto their jobs for just 23 months.

All professional marketers should own this book.

My only reservation is most of the examples apply to consumer goods and brands rather than services.

Popularity: 5% [?]

What makes an entrepreneurial venture successful?

In a recent survey, fourteen venture capitalists picked marketing as the key business function - above technical superiority and product innovation.

The venture capitalists, who have backed over 200 ventures, ranked marketing 6.7 on a 7.0 scale.

These same venture capitalists said 60% of venture failures are caused by poor pre-venture marketing analysis.

Popularity: 5% [?]