Written by John Andrews
Spam, a tasty meat product and the scourge of email inboxes everywhere. But Spam lurks in many other media channels and seems to get a pass, yet the effects are much more insidious. The waste of resources and unsustainable business practices really call into question this marketing tactic. Additionally, the continual discounting and deal promotion of brands and services is destructive to brand value as consumers discount the actual value. Consider this, have you bought a full-price pizza lately? If you answered yes, Google (enter pizza company here) coupon and save yourself five bucks.
What’s your daily trip to the daily home delivery of fresh made spam, the mailbox? I don’t know about yours, but mine is full of credit card offers (10 this month so far), coupon books, mailers and the like and I occasionally get a letter from a person I know. I long stopped receiving bills as my bank, utilities, etc., realized there is a huge cost savings to not send me paper and it’s just more convenient for me, leaving me a few extra minutes of my life each month to play Angry Birds.
Here is the real problem with physical spam. “Good” conversion rates for coupons are in the .0025% range. This means a nationally distributed coupon and an FSI (free standing insert, a.k.a. all that stuff that falls out of your newspaper) of 40 million or so yields a redemption of 100,000. Good for a brand if those customers are new users switching from a competitive brand. In fact, heavy coupon users are frequently disloyal users and why wouldn’t they be? Unless your an Apple user, who wants to pay full price?
Each week hundreds of FSI’s hit newspapers across the country resulting in a huge use of newsprint, ink, transportation, etc. But the brands are paying the freight, right? Not quite, who pays for 99.75% of these that hit landfills? You do, you pay local taxes right? But there’s more, newspaper circulation is falling faster than Colts tickets without Peyton playing. Maybe you’ve heard, the US Post Office is now losing over $7 billion a year as the prices it charges its customers does not cover the expenses incurred.
Again, you and I will be the ultimate funding source for this shortfall, including the hidden costs of disposal.
Sam Walton had a big idea, simply take all the gimmicks (his word) out of the retailing process and buy the products that Walmart carries for an everyday low cost (EDLC).
Pass that along to consumers with an everyday low price (EDLP) that eschews High/Low pricing (a great deal on Corn Flakes one week supported by excess margin on other basket items). This means no Triple Coupons, Green Stamps, Reward Cards or anything else that requires the consumer to do part of the work. Simply come into the store, buy your basket of items and on the whole, pay the lowest price.
Considering the average wage in the country is around $17 an hour, time spent sorting, clipping and handling coupons found in FSI’s is often a break even prospect at best. It’s time to stop the spam and make the best products possible and sell them at a fair price every day. May the best products and services win!