THE INTERNET ALLOWS DIRECT SALES FROM THE MANUFACTURER TO THE CONSUMER.
If that’s true, then why did consumers spend $8.4 Trillion last year at brick and mortar stores? In contrast, only $145 Billion was spent (2007 figures) in click and order stores, which is less than 2% of the total consumer dollars spent.
If that’s true, then why did consumers spend $8.4 Trillion last year at brick and mortar stores? In contrast, only $145 Billion was spent (2007 figures) in click and order stores, which is less than 2% of the total consumer dollars spent.
More confusing facts.
Currently any home that has broadband internet access will watch 25% less television. A manufacturer’s TV advertising budget just lost 25% of its effectiveness. Yet, 25% of consumer spending has not shifted to the internet. Where will the advertising dollar be spent that used to be spent on television?
The internet has already put many newspapers out of business. The printed page is not as efficient as the digital page for current events. As you may have guessed, newspapers earn most of their money by selling advertising. Where is the advertising dollar going that used to go to newspapers?
The typical commuter has a minimum of 200 different radio stations to listen to while driving to or from work. How can a company know which one would be best for their product line? If a company makes the wrong choice, the advertising produces no sales.
Remember Webvan, a local digital grocery store? Before Webvan went belly up, they advertised on a bill board at the intersection of Highway 101 and Highway 17. Perhaps 100,000 people a day passed in front of that bill board … which is why that bill board cost $100,000.00 a month. After one year, Webvan had spent more than a million dollars on advertising with that the one bill board. How much cream cheese and bagels, Oreos and milk, Coke and Pepsi would they have to sell in order for the profits to exceed $1 Million? http://www.symbiosis4u.us/MP3/CokePepsi.mp3
Television, newspaper, radio, and bill board advertising are losing effectiveness. Consequently, many companies are asking, “How can we reach new customers and sustain old customers if the type of advertising we have always used is not working?” How can a company advertise without taking any risk?
Personal franchising is the answer.
Personal franchising creates a direct connection between a company with something to sell and consumers who buy.
True story: a few years ago a small company in LA invented a healthy energy drink that actually tasted good. They wanted to market it nationwide. At that point in time, most people had never heard of an energy drink (other than coffee), let alone tasted one. How could they market a product when people did not have a basic category for the product?
Historically, the default solution would have been a nation wide advertising blitz so people would have a deja –vu moment when they saw a can of this new energy drink in the store. The small company in LA could buy a coast to coast advertising blitz … for a mere $100 Million.
Of course, there was no guarantee that the blitz would work since it would have been almost impossible to target those consumers who already drank energy drinks. Energy drinks did not have a “consumer profile”.
Most products have a clearly defined consumer profile. If you make a fishing rod, you could target fishermen by advertising on fishing shows on TV, in fishing magazines, etc. You would not advertise your new bamboo fly rod in Cosmopolitan or Rolling Stones magazines. If you make a toy for toddlers, you would not advertise in prime time on TV because your target audience would be sound asleep in their cribs. There is a good reason that late night info-mercials do not air on Saturday morning.
Without a consumer profile, how could the energy drink company know if an energy drink consumer ever watched television, read the newspaper, or listened to the radio? How could they create product awareness (advertise) for a consumer they could not identify? Were potential consumers young or old, male or female, rich or poor, athletes or couch potatoes? The company did not know.
What if typical energy drink drinkers used TV only to watch DVD movies, got the latest news online, and listened to CDS during commute, how could a blitz advertising campaign reach them? With regard to energy drinks, there really was no consumer profile, with one exception.
The only exception had been an Austrian company called Red Bull. Red Bull identified their most probable consumer as “party hardy college students”. Red Bull actually created a market, and ultimately a customer base, by giving away their energy drinks at college fraternity parties. Apparently “party hardy college students” liked the idea of being a wide awake drunk all night long. Red Bull could afford to give away massive amounts of samples, because they had already formed a large customer base in Europe. Red Bull was not a startup company when they entered the American market.Since the small company in LA was a startup company, money was tight. Giving away hundreds of thousands of dollars of sample products to poor college students, who could not afford to buy energy drinks, did not seem like a viable solution. Besides, Red Bull had already cornered the poor college student market, such as it was.
That’s when the small company in LA heard about personal franchising. Personal franchising was as unknown to this small company, as healthy energy drinks were to the general populace. Here’s how the energy drink company used personal franchising in lieu of blitz advertising.
The energy drink company put product pictures, explanations of the ingredients, and the benefits from those ingredients, on the personal franchising company’s website. They did not pay for this advertising immediately. They paid for the advertising AFTER energy drinks were sold. And here is the really mind boggling part … as much as 25% of the advertising paid AFTER the sale, when to the person who made the purchase.
In the first six weeks, the company sold more energy drinks than they had in the previous year. After one year they had become the second largest energy drink in the USA, flashing past Coke and Pepsi energy drinks, while nipping at the heels of Red Bull. Massive growth, in one year, without TV spots, banner ads, bill boards, direct mailings, EBay, radio ads, celebrity endorsements, or Google Adsense ads. http://www.symbiosis4u.us/MP3/EnergyDrink.mp3
Did the energy drink company ever discover a consumer profile for energy drink drinkers?
Yes.
The energy drink consumer profile is described as any person who wants to make some money after buying something that makes then feel good ... and makes them healthy.Which does not make sense because the energy drink consumer profile also describes people who buy computers, books, toys, car parts, ham, Mickey Mouse ears, flowers, landscaping, TVs, and office supplies, just to name a few. Which is why Dell, Barnes and Noble, KB Toys, Kragen Auto, Hickory Farms, Disney, Flora Gift, Landscape USA, IBM (Lenovo), Circuit City, Office Depot, and hundreds more, participate in this “pay for the advertising after the sale” system.
So who was buying all those energy drinks?
Grandparents bought the energy drinks so they could play longer and sleep better. Frazzled parents of teenagers bought the energy drinks to compensate for months of long days and short nights. Corporate employees in cubicles guzzled one of the dozen or so flavors of energy drinks to prevent afternoon energy slumps. Athletes drank the energy drinks before a competition (not a stimulant, just adaptogenic herbs and vitamins).
Kids with ADHD bought the energy drinks (actually their parents did http://www.symbiosis4u.us/MP3/ADHD.mp3 ) because they did better in school. People, who had never heard of an energy drink, were buying some just to find out what they were like. Apparently, the only people who did not buy the energy drinks were … poor college students.
Did the energy drink company ever discover a consumer profile for energy drink drinkers?
Yes.
The energy drink consumer profile is described as any person who wants to make some money after buying something.
Which does not make sense because the energy drink consumer profile also describes people who buy computers, books, toys, car parts, ham, Mickey Mouse ears, flowers, landscaping, TVs, and office supplies, just to name a few. Which is why Dell, Barnes and Noble, KB Toys, Kragen Auto, Hickory Farms, Disney, Flora Gift, Landscape USA, IBM (Lenovo), Circuit City, Office Depot, and hundreds more, participate in this “pay for the advertising after the sale” system. http://www.symbiosis4u.us/MP3/dotscam.mp3
I wonder if these companies might be envisioning last year’s $8.4 Trillion in consumer spending shifting from brick and mortar stores to this type of click and order, no risk, sales format?
Maybe, only time will tell.
In the meantime, I am not completely satisfied with the energy drink company’s consumer profile. Their answer simply spawned another question.
If you have any insight into a possible solution to this question, I would really appreciate your comments. Here’s the question.
What is the consumer profile for people who want to make some money after buying something?
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