Commercialising Cravings

Ever had a craving? They just come out of nowhere. You'll hear someone say "I feel for some KFC", "I want a Whopper", "I'm feeling for a Pepsi". I wonder how many a marketer rejoices when they hear such utterances.

While hunger is physiological, a craving is more psychology than physiology. Studies have suggested that food cravings start in the mind, with strong mental imagery being a key component. That's the reason the branded food photos look so darn good - that's going to produce a strong, vivid image when a craving comes around. Plaster the company logo all over it and voilà, instead of craving a burger, you're gonna crave a Whopper!

Spend enough money on advertising and you can get into the minds of people, and then their pockets. You'll keep them coming back, even though the food is never as good as in the ads, and the customer service rep never smiles half as much as on TV.

Competition Is Sweet - Per Minute Billing Isn't

Last night Digicel made it's move in response to LIME's onslaught against mobile rates. Digicel reduced it's on-net rate to $2.89, 10 cents lower than LIME's and matched LIME's cross-net rate of $6.99. The fierce competition between these two rivals is refreshing. In no other market do you see as much competition, and to such high levels of intensity, as you find in the telecommunication sector. Keep fighting guys! Each round is a win for the Jamaican consumer.
 

Now while these two giants duke it out, let's try not to get caught up in the marketing. At the end of the day, they are both companies which are out to get more money from our wallets. Ultimately, any move should have the end result of increasing revenues and stacking up profits for shareholders. This may mean giving something with one hand, and taking something back with the other hand, while you're distracted.

 

When LIME introduced their new rates, conspicuously absent were the 'XL' free minutes and free text promotions which predate the new package. Picking up on this exception, Digicel was keen to keep their 'Gimme 5' promotions in place with the introduction of their new package. However, the promotional goodies were significantly slashed. Both companies have reminded the public that nothing comes for free.
 
Something which is also significant about the new package from Digicel is the reversion to per minute billing. This is the most egregious of the recent changes with insidious consequences. A move from per second billing back to per minute billing will see an increase in the cost of the brief, and arguably most common types of calls. I can just imagine some business analyst spending the week crunching numbers, trying to find out how to reduce rates while keeping revenues the same. The solution - take away per second billing. There is no indication from LIME as to whether they have also reverted to per minute billing, but I wouldn't be surprised if they have.

 

Combine per minute billing with the recent emphasis on long calls - talk for X minutes and get the next XX free - and these phone companies are most likely pulling more out of the pockets of the public than their new rates belie. Competition is sweet, but let's not get lost in the tactics and fail to see the raw truths behind the marketing.
 

LIME Rises To The Challenge

A few months ago, Digicel launched a pre-emptive strike, slashing mobile rates by a whopping $1.01. Needless to say I wasn't impressed. But the marketing campaign surrounding it was very good - in an 'annoying get stuck in your head' kinda way. I thought to myself at the time, that even if LIME responded by lowering rates, that would seem like a 'follow fashin' move. But lo and behold, they have responded by lowering rates so drastically that the effect has been public amazement.
 

 
LIME has lowered rates to an unprecedented $1.99 and $2.99 for LIME to LIME calls, for postpaid and prepaid customers respectively. International calls are also $2.99. And here is the sweetest part: it is now cheaper for a LIME customer to call a Digicel customer, than it is for a Digicel customer to call a fellow Digicel customer! LIME to Digicel calls are now $6.99, a full $2 cheaper than Digicel's flop $8.99 rate. How ironic is that?
 
When I first discovered the new rates, I figured I'd wait for the catch. I went to LIME's website to read the fine print, only to discover that there is none. The rates are so unbelievably low, that some commenters on their Facebook page even joked that the LIME website had been hacked.
 
When Digicel made their move a few months ago, one could argue that it was more fanfare than substance. With this mad downward dash by a competitor who has very little to lose, how low can Digicel afford to go? In the rate wars, is this move by LIME a checkmate for Big Red? Regardless of your views on either mobile network, such aggressive competition can only benefit consumers. And when it comes to doing business, in the end I am loyal to one thing - my wallet.
 

Touché Digicel

Digicel took to the streets today setting off car alarms with their mobile sound system, causing congestion on the sidewalks with their numbers, and triggering epileptic seizures with their bright red attire.  And they got up early to set about on their campaign of terror.

While on my way to work this morning the Gleaner caught my eye with the following headline "Reduction in call rates". I immediately thought this was in reference to the proposed cut in network termination fees (the amount that each provider pays to the other for placing a call into their respective networks).

With that thought in mind I was then greeted by a ridiculous looking, large red mouth with it's tongue stuck out - I was terrified! Standing (or perhaps hiding) behind this monstrosity was a guy wearing a Digicel shirt advertising a flat calling rate of $8.99. He didn't seem particularly thrilled with his outfit.  But his partners in crime were distributing fliers in the traffic at the stop lights, and they were bubbling with excitement.  Maybe they were just happy they didn't have to wear the silly looking cardboard mouth.

My initial mental assessment of these two bits of information (the headline, and the Digicel campaign), was that the government legislated a change in termination rates, and Digicel was out of the blocks ahead of LIME in making it a great opportunity to shape the minds of the public on this new change.

Unfortunately this was wishful thinking, at least as far as the reduction in termination rate was concerned. The rate change headline and the Digicel campaign are one and the same. In a dastardly move, Digicel today announced a flat rate calling plan for calls to all networks, with pomp and fanfare.

It's worth noting that this new rate is a effectively a reduction of only $1.01 off current Digicel to Digicel rates, and an increase of $0.99 in off peak rates.  But psychologically $8.99 looks like a bigger reduction.  For out of network calls, consumers are seeing reductions in excess of $5 and $8 (for LIME and Flow call respectively).

While I'm no fan of Digicel, I have to grudgingly give them credit for this brilliant piece of strategy. One day, that headline will be about a forced reduction to the termination rate. Digicel, realizing the inevitable, has gone on the offensive. When the change comes, and LIME reduces its cross network rates (currently at $12 for prepaid customers) there shall be no opportunity for LIME to capitalize on this from a marketing perspective. Digicel will not be caught on the back foot when that ball comes their direction.

Digicel stands to lose some money in the process, but not a lot if they play their cards right. With the government gunning for lower rates, Digicel is in a fight it can't win. Lowering rates ahead of a government mandate wins them consumer favour, and disarms the competition. Any forthcoming rate changes by LIME will merely seem like a response.  The man on the street won't know the real reasons behind the rate change, and this is why this is such a good move.

Good job on this preemptive strike Digicel. Your move LIME.

Please Take My Money

A few months ago, the world lost a visionary.  He changed so much about the tech world, but more than that, he changed the way everyone uses technology.  I am currently reading his biography, and one thing that stands out is that Steve Jobs wasn't the greatest inventor, designer, or engineer of our time.  What made him such a valuable person was his ability to bring it all together, and to sell it.  And by sell it, I don't mean just the products that Apple made.

Long before Apple became the text book case for business students, Steve Jobs was pushing views that were different from the norm.  The second computer produced by Apple is a fitting example of this.  More than a good computer, it was a good idea - the idea that computers should be simple, un-intimidating, and ready for use by the masses, right out of the box.  This was a far cry from the convention of the day - computers were assembled by hobbyists who bought kits and parts at electronics stores.  It was Jobs' ability to sell this revolutionary idea that made the difference.  While Steve Wozniak was the brain behind the amazing chip design in those first Apple devices, it was Jobs who took them to the world.  Woziak would have given the great tech to the world in a ready to assemble kit.  And they would probably have went the way of the betamax.

Steve Jobs superb salesmanship and marketing prowess was a critical factor in the success of Apple.  He motivated an entire company to make products which had a unique appeal, and he singlehandedly took Apple from the verge of bankruptcy to being the second most valuable company in the world.  All of this underscores an important fact which is often missed by professionals - it's not enough to be good at what you do, you have to be able to convince others of this as well.  You need to be able to sell your skills, your product, your competitive differentiator, or whatever it is that your business is built on.  This applies equally to individuals as it does to companies.

A recent experience underscored the importance of this to me.  I was exploring some options for doing a course in massage therapy, and I narrowed my options down to two schools.  I visited each and got brochures and basic information.  I had a pretty good idea which one I would choose, but I was of two minds mainly because the one I preferred cost four times as much as the other!

Having decided to surrender my wallet and sign up for the one I preferred, I went there to register and pay the fee.  But I was still hesitant, and delayed a bit with the form.  Like any consumer, about to spend a wad of cash, I wanted them to make me feel good about my purchase.  So I started talking with the staff at this school, explaining to them that I was comparing two courses and wanted to know what made theirs better.  The person who was dealing with me said she knew little about the course and referred me to the instructor.  At this point I was certain that I'd get this excellent pitch about why they were a better option even though they were more expensive.  I expected to be told about how much more I would learn, and how superior their course was to the competition.  They would wax poetic about how the other school was like a Lada, and they were the Mercedes Benz of the massage world!  I got none of that.  The instructor simply said to me that she knew nothing about the other course, how it was taught, or what it covered.  Furthermore, she seemed surprised when I told her that her course cost four times as much.

At this point you'd think I'd walk out and go spend a quarter of my money at the other school.  But I had already been sold on the course by a friend who recommended it.  So I started probing.  I asked about the size of the class, and discovered that the classes there had a smaller student complement than the competition, so there is more opportunity for individual instruction.  I also probed a bit more and learned that they provide all the material needed for the course, as well as hands on training with actual clients.  The competing school required you to take your own material as well as subject to practice on.  These people had a compelling and superior product, but probably didn't even realize this!  In the words of Hugh Laurie: "idiots"!

That experience is quite the opposite of what should happen. Here it was that I walked into this business place, and had to convince myself to give them my money! There is something glaringly wrong there.  Granted, no one likes pushy sales people - they give the profession a bad name.  But no business can survive without effectively selling it's product or service.  Advertising is not enough - that just puts you in the game.  Every business needs people who are either passionate about the product or service, or can fake it.  In fact, your staff doesn't have to like selling, they don't even have to be trained to do this.  What is needed is interest, and a little knowledge.  Had that instructor possessed even a basic idea of the course which was offered by the competing school, which is literally down the road, then she would have been in a better position to help me make my decision.  How many potential students could they have lost because of this fundamental flaw?

My advice to this school would be to go spy on the competition!  They are right next door to you.  Take a walk, get a brochure, ask some questions!  And when a customer asks why they should give you their money, they last thing you want to say is that you don't know.