Stories Are Hard Pricing Is Easy

In baseball a tie goes to the runner. In the mind of your customer a tie goes to price.

This is true 100 percent of the time. If your brand equals another with a lower price you have lost a customer. It's that simple and that immediate.

The most misunderstood question in marketing today is, "How much is it?" There are exactly two biases contained within that question. 'How much' - is the bias of price. 'Is it' - is the bias of the story in the mind of your customer.

It is not possible to change the bias of price. It exists equally in all of us.

Some years ago 60 Minutes asked Bill Gates why he did not fly first class on commercial airlines? He replied, "Because it doesn't get you there any faster." That's how marketing works when your customer (even one as rich as Bill Gates) can evaluate your brand through the bias of price. A commercial airplane exists in the mind of Bill Gates to go from A to B. In Bill's mind what goes on inside the plane matters less than what goes on inside the engines. That's Bill's bias when it comes to commercial air travel.

It is possible to change the bias of a story. It does not exist equally in all of us.

In May of 1985 a commercial entitled, Jordan Flight, wrapped the Michael Jordan story around our mind and feet. The ten year result was an increase in Nike sales from 18 percent of the sneaker market to 43 percent. Also, the price of sneakers went to triple digits. But that COULD NOT matter because a Michael Jordan sneaker existed in the mind of customers not on their feet. What went on in the minds of these customers mattered more than what went on inside their sneakers. Be like Mike - no problem just pony up $200 bucks.

In 2006 New York Knicks superstar Stephon (Starbury) Marbury introduced the Starbury line of sneaker. They cost nowhere near triple digits, in fact at $14.98 they're barely priced in the double digits. Here is the story Stephon tells about the relationship between the cost of sneakers and basketball.

"The shoe(s) ain't going to make you jump higher. It's definitely not going to make you run faster. It does nothing but say you got $150 pair of shoes on, that's it."

Stephon proves it by wearing his shoes when he plays. Stephon's story works. Starburys sell as fast as they show up on store shelves.

I've spent a lot of time in meetings arguing the evocative qualities of price. Here's the bottom line. Price only gets to play when the stories are equal.

Will Starburys win the sneaker race? You bet! After all, in their customers mind they only have to tie.

Technorati tags: Customer DNA, price, Stephon Marbury.

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By Matthew Manna on April 21, 2007 11:34 AM to the Customer DNA category.

Prediction VS. Projection

Prediction is about parlaying with customer behavior. Projection is about math. Math is easy. Prediction is hard. Difficulty does not mitigate the absolute requirement for prediction however; and it's surprising to see the number of times projection is allowed to substitute for prediction.

Suppose you are in control of an established luxury car company with steady but stagnant sales. Statistical research indicates that cars above a particular price point sell in quantity X. Below the price point X+ number of cars sell. You decide to go for the X+ price point. Because of your mathematical adroitness you "know" the increased number of cars sold will make enough real profit dollars to compensate for the projected decrease in profit margin. Perhaps your company builds a less expensive car, one that keeps costs in line with the current profit margin and provides the magical X+ units sold price point. Either way the math path seems clear - offer an inexpensive luxury car and you're on the road to good times. It won't happen. In fact it didn't happen - just ask Jaguar. Why? Because customers are motivated by stories not mathematics and a low price point is in direct conflict with the luxury car story.

That one was easy. What kind of remodeling needs to be done to keep up with changing environments? Hint: math won't provide an answer.

Suppose you are the owner of a specialty frame store. Statistical research confirms an exponential increase in the number of pictures taken due to the existence of disposable and digital cameras. Decreased costs in the making of prints and the ubiquity of self serve print making machines has [predictably] increased the number of prints made each year. Yea - it's good times ahead! After all if X specialty frames were sold before the digital self serve era then X+ will be sold after. Wrong! The stuff that tickles a customers "special" gene changes when pictures are taken as commonly as breathing and printed as plainly as pushing a button. Digital cameras and self serve print making has changed the environment. Disposable pictures require disposable frames, (frames that are readily available for use and re-use as required), specialty they ain't.

To be sure there are still pictures recognized as something distinct and permanent in comparison to others. So why should the number of specialty frames sold be affected by the proliferation of disposable pictures? The number of specialty frames sold is not affected. But the environment in which they are sold certainly is. If you limit your offering to specialty frames, customers will go elsewhere. And they will stay elsewhere if that elsewhere offers both disposable and specialty frames.

The key to prediction is to recognize that success is determined by customer behavior not mathematics. In the case of luxury cars that means a price that supports the story of luxury. In the case of picture frames that means frame stores that are in-line with the digital self serve era.

Authors note: Ron White is a funny and famous comedian that does a bit on the difference between an antidote and an anecdote. "If I knew the difference between an antidote and an anecdote my camping buddy would be alive today." The idea for this column came from White. Confusing similar sounding words with very different meanings is funny when presented in a comedic environment. In a marketing environment confusing similar sounding words is expensive and tragic.

Technorati tags: Broadcasting, Customer DNA, Marketing.

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By Matthew Manna on November 17, 2006 11:21 AM to the Customer DNA category.

Sigma Chi Customer DNA Audio

Wow! What a great time Bob and I had visiting with you guys at the August 8, 2006 DAC.

We get ourselves around to many luncheons; few of them match the spirit and cheerfulness expressed by your group.

Customer DNA communicates best as a live audio/visual presentation. This audio only representation is by definition something less.

Consider the Patton video clip. The first half is in German with English subtitles. For this clip to have the desired effect the listener must either speak German or have attended the live presentation.

To help mitigate the difference between a live presentation and a recorded representation we have created a DVD video of Customer DNA. This DVD combines the audio contained herein with the visual content of Customer DNA.

To get the DVD eMail us an appropriate mailing address and number of desired copies. There is no charge.

Thanks for your time.
-Matt Manna

Document Number: 005CC02D.
Media Link: Sigma Chi Customer DNA Audio.
Subscribe to Manna Nosh via: iTunes
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By Matthew Manna on August 8, 2006 06:29 PM to the Customer DNA category.

The Product Is The Easy Part

Today's practice marketing question is how to wrestle away Heinz's 70% U.S. share of the ketckup market?

There are two ways by which Heinz can be "knocked out" of first place.

The first way is to convince Heinz itself to disappoint its current customers. This would require such actions as product degradation, a failure to remain contemporary, a damaging pricing policy or making buying Heinz ketchup a difficult or unpleasant experience. It is unlikely Heinz has any such plans or could be persuaded to prepare them. But don't laugh at the possibility of this happening until you examine the U.S. automobile industry.

The second way is to create a story about a different product that causes current Heinz customers to switch. The second way is more appealing because it is something you can do immediately and is beyond the control of Heinz.

The product would have to be worthy and one that lived up to customer expectations - that's the easy part.

Creating the story that gets attention and proves itself deserving of that attention - that's the challenge.

Here's a suggestion or two.

Focus on folks that enjoy being trend setters. Introduce a condiment whose story conveys, "I am not ordinary tomato sauce with spices, I am piquant!" In fact lets make Piquant the name. This story implies, "putting tomato sauce on stylish, in vogue, chic food is like driving your BMW wearing mittens."

Begin in very selective groups and in geographically separated areas.

Give it away - but in measured quantities. Remember this product is for a sophisticated audience.

Apply your advertising budget to your introduction program - and fund it adequately! Stay away from public relations and advertising people. At this point you aren't newsworthy so PR won't work and all the advertising you need at this point is coming from the story Piquant users tell each other.

Assuming that Piquant is accepted, move on to additional selected groups and let nature and sound marketing take its course. Be patient! If your story proves it deserves the attention it is getting demand will follow. You won't have to spend a dime on advertising and media journalists will call be calling to discover how you did it.

Technorati tags: Customer DNA, Marketing.

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By Robert Manna on June 17, 2006 11:50 AM to the Customer DNA category.