By Rebecca Mallory
Whoever invented the DVR deserves every dime they get. I hope they made millions because that is the greatest invention in years. I can’t even remember when I last watched a television commercial. Heavenly. I would even be so bold as to say that commercials do not influence me a bit. I do not buy products based on ads. Or do I? What influences you or me to buy a certain car, toothpaste, laundry detergent, gift card, fast food? Millions of dollars are spent each year on persuading you to buy a certain product. Money well spent? Do their claims ring true?
I just read a book called Start with Why by Simon Sinek. Totally fascinating. I highly recommend it. His premise is that what makes a company or business excel above the rest is that they understand “why” they do what they do. Not just the “what” and “how” they do business. American commerce is based on a free market or capitalistic system. That generally means that healthy competition in business results in best prices and customer service. But how do companies win your business? Are you loyal to a specific brand or are you more motivated by price and freebies? Let’s look at how the millions of dollars spent in advertising affects you, the consumer. It may surprise you. Or like me, you may feel duped to some extent. Sinek says that there are basically two ways to influence human behavior. Manipulation or inspiration. Which one is most effective? This article will focus on manipulation. (For further explanation, get Start with Why. You’ll learn a ton.)
How does it work?
According to Sinek, back in the ’70’s Colgate made two types of toothpaste. But as competition increased, sales began to slip. They panicked and developed all kinds of novel gimmicks like fluoride, tartar control, whitening, stripes, even sparkles! Now they have more than 32 types. Why? Because their competitors were doing the same thing at basically the same price. They needed an edge. There’s even a “Need help Deciding?” Link on their website. Really?? And studies show that Americans are not brushing their teeth any more than in the ’70’s, nor have consumers seen any marked improvement in their smile. Did Colgate care about teeth or making their shareholders rich? I wonder how many millions were spent on that little R&D project?
Sinek gives a stunning example of novelty versus innovation with the Apple company. Remember Motorola’s cool RAZR cell phone? It was easily replaced by the iPhone even though iPhone had nowhere near the cool RAZR features. He explains that in the mobile online industry, it’s the service provider that explains how a phone will work, not the other way around. But here comes Apple and basically told the providers that this is how our phone will work- take it or leave it. Period. AT&T was the only provider who initially bought in. Results? The entire industry changed. Because of their “why”. Apple sets out to be first in innovation and to provide everyone on the planet a better way of living. They just happen to make cool phones and electronics. Duh. It sounds so simple. But here’s what most companies do. You’ll cringe, like I did, when you realize how you just blindly followed.
Remember the market crash of 2008? Housing took a nose dive, and it looked as if the economy would hit the side of a mountain. It actually did! Millions of people lost their homes, jobs, cars, and lifestyle, including three of our four children with families of their own. The ripple affects permeated businesses and companies worldwide. No one had the money to buy their products. Especially those that were not an absolute necessity! Everyone panicked and held tight to what money they had. Scrambling companies had to change their mindset to lure customers. Boy did they! Enter the quick fix.
Change in Tactics
Shortly after the 2008 crash, you may have noticed how virtually everything went on sale. Up to 70% off almost anything you needed or wanted. You want to buy a phone? We’ll throw in a free car charger, or a camera lens? We’ll throw in a carrying case. A truck? How about free pin striping and tow package, etc. Results? Sales! Lots of them. Unfortunately sales did not equal brand loyalty. And as usual, freebies become consumer heroin and are almost impossible to stop. While sales are great, they cut into company profits, sometimes deeply.
“Addicted to the short-term results, business today has largely become a series of quick fixes added on one after another after another. The short-term tactics have become so sophisticated that an entire economy has developed to service the manipulations, equipped with statistics and quasi-science.” (Sinek pg. 28)
One super successful tactic used to manipulate customers? Mail-in rebates. Arghh! Ever tried to get a rebate? They purposely make it annoying and tedious because they are counting on you becoming too frustrated to actually complete the process. In fact, the higher the rebate, the more effective this manipulative tactic is. They know you’re not going to do it. Instructions become so cumbersome that most people say “forget it!” Those are their dream customers. They love you. You’re part of slippage. Yup. They’ve tagged you. You’re in that beloved group that suckers into buying the product because of the rebate, but not actually ever getting the rebate. They asked me to tell you “thanks!”
And get this. In the early 2000’s, Samsung offered up to $150 on a variety of electronics and a huge number of consumers took advantage. Unfortunately, the teeny weeny fine print stated that the offer was “limited one per address”. Sounds reasonable, right? Until many tenants of one apartment building were disqualified because they all technically had the same address! How crummy is that?? The New York attorney general had the sense in 2004 to order Samsung to award all those people their rebates. The mail in rebate business is still alive and well, however. Buyer beware! Companies who offer rebates do not do so out of their love for their customers because the customers they love never apply for the rebate!
Another common manipulation are product promotions. “Two for one” or a free toy or prize, etc. How many of you have a gazillion McDonald’s Happy Meal toys under your kid’s bed? Repeat after me… “junk-ola”. That’s what it is. Brilliant sales strategy though. They manipulate your poor deprived toddler who screams wide-eyed at the 2 cent plastic He-Man toy. So you pay an extra $2.00 for the happy meal. Junior is happy, Ronald McDonald is happy, mommy and daddy duped and out an extra $2.00. Not happy. Don’t feel so bad though. How about gift cards? Have any of those little babies laying around? I’ll bet you do, because the total amount of gift cards unused or unspent from 2005-2011?? Ready??
$41 billion. (WSJ “Real Time Economics Dec 24,2011) Think companies aren’t happy to sell you gift cards during the holidays or.. heck… anytime? This is called breakage. The percentage of consumers who lose or do not cash in their gift cards. Companies plan on a high percentage of breakage. They heart you! You know those convenient little pre-paid Visa cards you can pick up at Walgreens, etc? The teeny weeny fine print used to state that the total amount would shrink (Yup! Called shrinkage) each month that you don’t use it. My husband got a $50 Visa from his brother one Christmas. By the time he tried to use it a couple of months later, it had $35 left on it! He hadn’t touched it! Again, buyer beware.
Some companies play on our weaknesses. “Lose ten lbs by Friday drinking this grapefruit juice!” Or take “Zenodrine and be a size 2 by Monday!” Be sure to read the fine print which might just include, “…guaranteed results as long as you spend 4 hours a day on a Stairmaster and ingest only broccoli fumes while using this product.” Other companies use the fear-then-relief method. “Use Tanfastic to reduce your risk of skin cancer”, or “Take Lard-away to reduce your risk of heart attack and death”. They’ll say and/or do anything to get your money.
Your greatest friend may be your DVR to fast forward through all this nonsense. Use your brain and do your own homework before you buy anything. Hey America! You can thank me later by sending me all those pesky gift cards littering up your drawers!