Word on the Street by Kevin Carty
Great Marketing Or a Sign of Desperation?
I’ve seen a lot of promotions this week that left me wondering if the ads are brilliant marketing or a desperate attempt to pay creditors.
In any marketing campaign, you want to create an offer that entices buyers to act, but your customers shouldn’t smell smoke — like there’s a fire sale in progress.
For example, I saw an ad for a local car dealer. The dealer was offering to take trade-ins for the high Kelley Blue Book Value — No Questions Asked. In return, you had to buy at least a $20,000 new car. Now, I won’t pretend to understand the car business, but if you do the math, this promotion doesn’t make sense, especially if their customer knows how to negotiate. Let’s say you decide to trade-in your car. The high book value is $12,000, but you know it would sell for $9000 on the used car market. You purchase the $20,000 car. The dealership is, in essence, getting $17,000. Unless I am wrong, the average markup on a new car is 6-7% (based on MSRP). So, based on that, the $20,000 car cost the dealership something like $18,600, yet they sold it essentially for $17,000 once they offload your trade-in, amounting to a $1600 loss. Even if they did make money on the deal, it couldn’t have been very much.
I don’t know about you, but I never feel comfortable in that situation. It may make sense at a yard sale where you’re buying knickknacks, exercise equipment, or a cheap bookcase, but when you’re making an investment, you want to make sure your supplier is committed to staying “in business.”
When the Math Doesn’t Add Up
In our industry, we’re seeing promotions for exhibits selling at prices we would have never thought possible . . . all under the guise of “saving you and your customer money during the down economy.” Yet the same math applies if you understand the costs involved in producing exhibits — whether imported or manufactured domestically.
Maybe it’s just me, but I’m seeing too many promotions where the math doesn’t add up. Frankly, when the “promotion” results in a head-scratching moment, I wonder whether it’s a top-line revenue ploy or whether the product is of less-than-acceptable quality.
Marketing and promotion during a bad economy can be tricky, but it’s important that it doesn’t come across as a last second Hail Mary pass before the clock clicks down to zero.
Have you seen promotions that left you questioning the motivation? I’d enjoy hearing from you about these. What message does it send? Does it matter if, in the end, you (and your customer) are getting a great deal?
Have a safe and restful weekend.
Be Well!
–Kevin Carty
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