If you ever took a marketing class you probably heard of something called the 80/20 rule, or better yet the Pareto Principle, it states that 80% of your revenue will be purchased by 20% of your customers. More simply: it is likely that a core group of heavy users will form.
Advertising is expensive. If a company can afford advertising they are either trying to gain that 20% of customers or protect the amount of money they are currently spending on that product. With the advent of smart phones everyone can now know everything. You can’t fool people anymore.
Well…you can fool people, it’s just not as easy in 2011 as it was it the 50s, 60s, and 70s. Today’s consumers are better informed and are beginning to demand more of the products they consume than ever before.
McDonalds realized this. After the movie “Super Size Me” by Morgan Spurlock slammed them for being super unhealthy. To counter they did away with the phrase “Super Size Me” and began to offer healthy alternatives to the corn and soy swill they typically swindle. Result? They made more money.
Fast food is a great battle ground for television ads. They are national firms competing against other national firms. They are well funded and become part of the American Culture. Fast food isn’t always my first choice. But, I know exactly what I will be getting and sometimes that is nice.
John Zappa of Point Brewery put it best at a Gordy’s Brew Crew VIP Event. “Well known name, small brewery, big beer business…we have a rich history…the advent of television killed the small brewery…they all tasted different, they were all supposed to taste different…we survived that whole thing.” He’s talking about the Dark Ages of American Beer, where big companies out advertized small companies.
Consistency is the toughest thing about the service industry. Don’t confuse people. If the average customer doesn’t know what to expect they stay away.
I’m not the average customer. I’m a 1%er. I enjoy advertising. However, it is not changing my mind. Sure it gives me ideas of reference, but major beer companies spend A LOT of money on national ad campaigns. They offset this cost by charging more for their product than they should. Beer in Europe is WAY cheaper.
From a Service Industry standpoint: Would you rather deal 20 customer paying 5$ or 1 customer paying 100$? Pricing a product is no easy decision. The low price/high volume game will always be a part of commerce.
A quality experience is what everyone wants. In Eau Claire, Lame Beer is 3.50$(tip not included) a pint while Good Beer is typically 5$(tip included) a pint. If someone is looking for a cheap night, will they tip well?
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