SD#7: price promotions, how not to get fired, and seafood restaurants
February 27, 2022
Hi friends,
Welcome to the seventh edition of Seven Dawns, a weekly newsletter on marketing, psychology, copywriting, productivity and everything in between.
Our seven ideas this week:
1. (Business) In 2019 digital ad spending in the US for the first time surpassed traditional media (print, TV). In 2023, it is estimated to take up twp thirds of the advertising space. What surprises me every time I read about it is the share that the big three dominate in that pot. In 2018 I wrote how Google together with Facebook takes around 60% of all online advertising market share. With the addition of the new entrant Amazon in the mix, the three control the majority of ad money digitally. Not just paid search, but all of online paid advertising. Staggering! |
2. (Marketing) Price promotions as a strategy very often fail to achieve what they intended to do. Another learning from the brilliant work of Byron Sharp and his Ehrenberg-Bass Institute. A price promotion will often lead to an immediate peak in sales but will have little impact on long term sales & brand growth. The sales increase during promotions is often driven by brand loyalists anyway, instead of new users which should be your main goal. Promotions tend to pull sales forward so you may get a dip in sales post-promotion. It also re-educates consumers into expecting a promotion the next time they’re buying the brand. If your goal is to increase sales and penetration then price promotions do the opposite. However, they do serve a purpose if they’re there to please your retailer relationship and keep your product on the shelves. |
3. (Psychology) The best insurance to not get fired is to be conventionally logical in every decision you make. ‘No one got fired for buying IBM’ didn’t start as the official slogan of the company. But when it gained traction among corporate buyers of IT systems, it became what some consider the most valuable marketing slogan in existence. What it shows is that business decisions do not always come down to choosing the best product. It may very well be down to choosing the product that is least likely to be bad. Conventional logic ensures job security. |
4. (Social media) Everyone knows there is a considerable amount of fake profiles on social media. However, it always amazes me when I hear the sheer number of them. According to Statista, over 16% of all Facebook accounts are either fake or duplicates. That’s over 400 million user profiles that Facebook identified as ‘fake’ or ‘duplicate’. Can you imagine the real number including those that are not recognised by their detection methods? All of those accounts usually serve a purpose, whether to propagate lies or alternate statistics (number of likes, followers, ad views etc.). |
5. (Philosophy) ‘The heart has its reasons which reason knows nothing of’ – Blaise Pascal. The idea that thoughts and feelings are not working in harmony has many implications. Pascal, who was a physicist, philosopher, inventor and mathematician, looked at it from a mathematician’s point of view. But I also love it because it can reinforce what we discussed in previous newsletters – consumers post-rationalising their decisions. |
6. (Psychology) Seafood restaurants exist by the seaside not because it is easier to get a variety of fish for your restaurant there, but because fish tastes better by the seaside. If you had to buy a bulk of different fish for your seafood restaurant, you might think that seaside towns are a great source. But in reality, fish wholesalers might only specialise in certain types of fish, the quantities they want to sell might be larger than you need, or the sheer selection available in a single small fishing town simply might not be enough. However, if you went to a fish market in London, you might be able to find every fish you need and buy the quantities that you need for today. So why are there so many seafood restaurants by the sea? Because psychologists have shown that we enjoy fish eaten by the season more than if it was anywhere else. |
7. (Marketing) Brands are almost indifferent in the eyes of consumers. Based on long-term research, the much-quoted Ehrenberg-Bass Institute also showed that brand differentiation is not as important as originally thought. In the majority of categories, consumers do not see the differences that brands are trying to communicate via their USPs (unique selling points). Instead, marketers should focus on brand distinctiveness that will make the brand easily identifiable and memorable. Similarly, for brand measurement, brands should focus on measuring how unique and easily identifiable their brand assets are instead of differences in brand image. |
Fun things to click on:
Open Zone Map is the world’s first comprehensive attempt at mapping every single Special Economic Zone. Here’s a fun article how Paul Giamatti broke the California wine industry.
Thanks for reading! If you have any learnings you’d like to share with me, or disagree with any of the ones above then do drop me a message.
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Speak soon,
Tom