In an earlier post, I had mentioned that 2012 will see the “Return of Simplicity” to marketing. The recent announcement by J.C. Penney is a great example -“Penney is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing.” Companies such as Walmart with “Everyday Low Prices” or Apple with no discounts and superior products are showing others how simpler pricing can be an asset for the company.
No matter how small – a pricing change, a sale, or a new discount scheme needs to be communicated to all. Even with great processes, the cost adds up in terms of man-hours and marketing dollars. Getting the message out in a consistent and timely manner across stores/websites/newspapers/radio/e-mail is by no means a trivial effort. Ask the tech team to add a new scheme to the payment page and they will invariably cringe and ask you to wait a few days till the testing catches up.
After a while, these schemes are just noise and customers stop keeping track. A simple and consistent approach to pricing works better. Numbers provide ample proof – In 2011, J.C. Penney offered 590 sales events and 75 % of revenue come from merchandise that was discounted by 50 percent or more. This shows that majority of customers already knew what they wanted to pay – 50% of the advertised price. With a simple and affordable pricing strategy, the company not only saves the cost of 590 sale events but more importantly, frees up its marketing brains to think of other variables that customers value.
For example, Cleartrip.com focused on a great user experience including the one-click cancel option. It’s been four years and I haven’t switched to another online ticket aggregator. Instead of a monthly sale, think about stuff that’s close to the customer’s heart. The Indian fast-food startup Mast Kalandar refreshes its menu periodically, and creatively names its recipes with words that are the flavor of the season. For example, it created a Rajasthan Royals menu during the IPL 2011 cricket series. Another example comes from the folks at Programr.com who launched an Anna Hazare game that became very popular.
I love companies that ‘Think outside the Price‘. It gives customers something else to think about too!