Q3 09 is the real test of price over value


Most US businesses wrote off the first quarter of ’09. For some it was weak, for others it was horrible. By comparison Q2 for many was better. Not much better but better nevertheless. The real test will come in Q3. By Q3 they will have sold all the discounted inventory and will be trying to sell full priced products. For this to succeed we are going to have to see a shift in buyer behavior. Right now buyers have got used to discounts both at the consumer and B2B level, to the point where they struggle to make purchases of products they actually need unless there is some steep discount applied. This won’t be helped by the fact that there will still be businesses in Q3 who are making sales just to keep themselves alive and not necessarily to make a profit. These businesses will continue to offer discounts even though it is only a matter of time before they go bankrupt. In the process they will create the impression that prices remain low. It is only once buyers start looking beyond price that things will really change. Price is after all a horrible metric for a product or service. We all know there is an implied link between price and quality. If high quality products continue to be sold at low prices it does lasting damage to markets. I read earlier in the week how high price hotel operators such as Four Seasons are keeping prices high so they don’t do lasting damage to their brand, even though bookings are way down. This requires a great deal of nerve. They are also hoping that people don’t try another chain that is offering discounts and end up staying with them. If high price products are heavily discounted it is hard to get people to pay a full price again. This is one reason the likes of Tiffanys don’t want to see their products on places like eBay even in the good times. Right now consumers and business decision makers are being surrounded by price driven messaging rather than value driven messaging. Of course most companies don’t want to play on price but once one significant player does, they all have to and then it’s a fight to the bottom. This is where PR can play a big role in helping the economy. Getting buyers to appreciate the full value of a product or service and its brand are central to any turnaround. I know some will argue that there are other major factors such as consumer confidence. They’d be right but I’d argue that consumer confidence isn’t something that even large companies can do a great deal to affect. The government has a huge role to play here and is why Obama has made such a big bet with his stimulus package. So when you are advising clients, do remember that campaigns that address the entire value proposition of a product, or service, is what this economy needs. That’s true whether you are trying to help a client sell a system that costs millions, or a $500 net book.
*/ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1610611985 1073750139 0 0 159 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:””; margin-top:0in; margin-right:0in; margin-bottom:10.0pt; margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:”Calibri”,”sans-serif”; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:”Times New Roman”; mso-bidi-theme-font:minor-bidi;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:”Times New Roman”; mso-bidi-theme-font:minor-bidi;} .MsoPapDefault {mso-style-type:export-only; margin-bottom:10.0pt; line-height:115%;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –>


Where did all the homeless people go?


I was in New York last week for a series of meetings. On the Monday night I was walking back to my hotel after dinner and found a dollar bill on the sidewalk. There was no sign of anyone who may have lost the bill so I picked it up and vowed to give it to the next homeless person I saw. I was in New York for two more days. I figured that would give me plenty of time to part with my find. I was wrong. The dollar bill traveled back to California with me before finally being handed over to a guy in a wheel chair outside the Palo Alto Starbucks. Now I’m pretty sure that the person who lost that dollar never would have thought it would travel 3000 miles so quickly.


Can a scandal save a newspaper?

The MP expense scandal in the UK has given the normally stodgy Telegraph a new lease of life at a time when print media of almost every kind is suffering badly. I wonder whether the scandal will have any lasting impact, or if in six months when the scandal has blown over, the paper will again see its readership dwindle. The scandal is huge and it’s unlikely the paper, or any other for that matter, can match it any time soon. Plus the story doesn’t show that newspapers are better than any other form of media. It is simply that they got the story. If the BBC had got the scoop it wouldn’t have attracted any less interest. Indeed it may have had more. It could equally have been the story that could have made a blog a household name (if a blogger had been the person to expose the scandal). Sadly I can only come to one conclusion. This was a great piece of journalism but not one that will change the course of publishing history.


British MPs try their hand at crisis PR


The media in the UK has been full of stories about how British members of parliament have been making highly dubious expense claims. In response the leaders of the various parties have tried their best to seize the moral initiative and show a) how sorry they are and b) that they have a solution. What I find amusing about the solutions are that they all appear to end up costing the tax payer even more money (new committees providing oversight etc). I am puzzled that the media hasn’t pointed this out. Indeed a smart party leader may suggest that the solution is instead funded by the MPs that abused the system. When ordinary people underpay their taxes they have to pay a penalty. So far the MPs don’t appear to have offered a penny more than they took from the tax payers. Odd eh?


Murdoch plans to make online readers pay


On his quarterly call with analysts, News Corp chairman Rupert Murdoch said he intends to start charging people for access to their online content. He said the Wall Street Journal has proved it can be done. I wonder if he’s right. Right now you can access most of the WSJ for free. As an iPhone user I can access a good deal of WSJ content using the WSJ app on the iPhone. Also if you Google any WSJ news headline on your PC you can often see the entire article without a subscription.

Aside from the fact that the WSJ is free to many people, I also wonder what happens when he tries to take his publications behind a subscription wall. I suspect many of his readers will opt for a rival publication that doesn’t charge or for well written blogs. I also struggle to see the typical Sun reader paying a subscription. I know the news media business is struggling to find a profitable business model right now and that the subscrioptn model is an obvious place to look. I just don’t see it working for mainstream consumer publications. I can see people paying a blanket subscription in the same way they might do for cabel TV or satellite radio but for that thye need a broad range of titles to be the equivalent of channels on these properties. Murdoch is no fool and has made some shrewd moves in the media business. Launching his own media channel on the web that you can subscribe to but which contains news media from both his print AND broadcast properties. Now that I can see working if the price is right.


Will PR Week be better online?

Yesterday PR Week (US) did a short interview with me for their upcoming feature on digital. They’d already done a longer phone interview. This interview was done to camera (a digital video camera). I have to applaud them for immediately embracing the new format for the publication. That said, it got me thinking about whether the new format will make the publication better or worse. It certainly has the opportunity to make the publication better. A richer set of content and more community building tools could make the publication a lot better. But what will really make the publication better is the content. By that I mean the conversations they start and pursue; and the insight and perspective they share from their unique position. If they get this right the community will engage and the publication will grow in stature. I’m sure we all have views on what that content may be and I hope we all take time to share our ideas with PR Week. We will all benefit from a strong trade publication but if we leave it to Haymarket, the publication has a far tougher task than if we all make the effort to share our feedback and offer suggestions on ways to make the publication better. Julia Hood has a lot on her plate right now as she guides the publication through this transition AND searches for a new editor. The more constructive we can be in our help, the easier her task and the better the industry will be.


The birth of the new TV model?


Sean Garrett at 463 just blogged about justin.tv and its potential implications for live TV. I think he makes some good arguments and it’s clear that in the same way as print media has been steamrollered by the online world, live, and in particular pay per view TV, could get a complete remake via sites like justin.tv. Of course there are always drivers of change and in the case of TV, sport has often proved the catalyst. Take the emergence of satellite TV in the UK. This struggled to take off until SKY took control of the rights for premier league football and then a range of other top flight sports. Soon any serious sports fan had to have SKY if they wanted to watch their favorite team. Fast forward to today and we have a world where that content is starting to leak out live on the web. It started to appear in grainy format on YouTube but wasn’t live and was often quickly removed. Now it appears live through sites such as zomse.com that justin.tv will direct you to. Look out live TV, you are about to get a make0ver. If you embrace it you will survive and may even prosper. If you don’t you will go the way of the Seattle Post Intelligencier.


Follow

Get every new post delivered to your Inbox.

Join 1,685 other followers