Are marketers killing themselves?
I was driving last week when I heard a commercial for State Farm insurance. What got me to take notice is that the commercial focused on the value of having State Farm insurance and not just on price. As a marketer lots of advertising goes right in one ear and out the other so when I heard this ad focusing on value it got my attention.
There’s a ton of direct marketing testing that shows that focusing on a low price or discounts tends to get people to purchase. I myself have led with price numerous times during my career with varied levels of success. But I have wondered for some time now whether focusing on price and discounts is helping or hurting our long term efforts.
I will use the magazine industry as an example. Magazines used to be a valuable part of people’s lives, and they were willing to pay a fair price. It was not unusual to see some subscription prices in the $100+ range. But over time, smart marketers realized that you could bring in more subscribers by lowering your price, so prices went down and down and down.
In the short term that allowed subscriber numbers to go up, and publishers were able to garner additional advertising revenues based on increased circulation. That was all fine and good when the economy was rolling along, but over time, with the economic challenges and introduction of other advertising avenues, advertisers stopped spending as freely. Meanwhile, we recruited subscribers at such low prices that it will be almost impossible to maintain circulation levels if we try to recoup those ad-revenue losses by raising prices.
An even more important side effect of those low prices is that the perceived value of magazines has been reduced dramatically. When all you hear is that something is only $4.99 a year for a subscription, how can it have any actual value?
If you are a marketer you are under two incredibly large pressures. The first is making sure you market effectively in the short term and meet current goals. The second is to make sure that you don’t undercut your efforts in the long term (as magazines appear to have done). From what I heard the other day, State Farm appears to be taking steps to make sure that consumers know they offer great value, not just low prices. In some ways, this is a risk, because it may only attract a certain segment of the audience and may not attract the many individuals who right now are very focused on price. In other ways, this is incredibly smart, because it should have a much greater impact in the long run.
Are associations facing this conundrum? I am positive they are but would love to know how we are dealing with it.
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Comments
Scott -- Your post is dead-on! Too often we're so concerned that we'll price ourselves out of a "sale" that we offer a fee that can't be discounted any further. For example, we offered a stand-alone, 90-minute online course for $99/full year/pp. So when people ran out of their year and wanted an extension, I had nowhere lower to go -- $5 a month?!?
We were also concerned that with so many people getting access to free Webinars that they wouldn't pay a registration fee. In this case, selling the value -- as you say -- is absolutely the way we marketed the event. And we included a what could be called a transparency statement at the bottom in smaller print, that said charging a fee enabled us to use the Web conferencing system for other association business, saving committee travel costs and time. This let members know their investment wasn't just in the event itself, but in the association's broader way of doing business.
So I'd add -- tell them how their dues or other fees are advancing the association in ways that might be more hidden to them, but that give them value in the long run.
Posted by: Ellen | August 6, 2009 1:27 PM
Having just read Chris Anderson's book FREE, I think we're all going to have to think about different value points just as we have historically thought of different price points. We'll need to market the value associated with whatever prices is charged as opposed to the discounts as you've observed.
Posted by: Jeffrey Cufaude | August 6, 2009 2:37 PM
Hi Scott,
For some reason I don't see many association promotions heavily emphasizing price, but then again I don't see many association promotions, period. As we find through periodic benchmarking of association programs, most associations don't do heavy promotions of membership among non-members; a great deal of the internally driven marketing work comes in the form of selective/aggressive promotion of just a few key services (i.e. the major conference[s]). Most of the other marketing activity is focused on creating and maintaining a web presence but even that is often not well-fed by optimal search engine marketing/optimization. This inherently limits the degree to which one can emphasize anything in marketing, since pull is much more passive and less customizable than push messages can be.
However, in general I think you have a great point that goes to the deeper & broader definition of marketing. Where price bashfulness comes to bear more often is in the actual decisions that led to the determination of a price for dues, registration, or publication subscription costs. I have always felt in reviewing programs that the association should have a considerably higher list price, then use discounting as part of their normal process while using the majority of their copy to feed the value perception. Discounts are "just" a hook, but they certainly define the offer in a way that can make or break the success of campaigns.
Posted by: Kevin Whorton | August 6, 2009 2:50 PM