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MY Convenience > YOUR Price

I came across a GIF on my twitter feed that I found surprising yet obvious — a graph that highlighted the rise of consumer prices across industries:

Consumer prices by major category

I saw our medical care sky rocketing from 2000-2015, which we all felt, yet it was still saddening. I saw housing costs shoot up similarly, which was also apparent from my trips to San Francisco, New York City and Philadelphia. But then I saw apparel at the bottom of the page dropping from 2000-2005 and landing lower in 2015 than in 2000. Initially, this shocked. Then I thought about all the retail ads for great sales, discounts and offers — all price based — that I see every day. And it made sense.

To dig a little deeper, I then visited a popular apparel retailer’s website and all of the value propositions were based on price. All of them. I was bombarded by free shipping over $50, card members’ exclusive 40% off, no card 30% off, signup for email (pop up) for an additional discount. It was discount heaven (or hell). The seed had been planted.

Note: I did not review the data behind the GIF, nor its overall validity; I was mostly interested in the fact that prices have remained low in apparel for so many years (back to when I started shopping for myself, in fact). I understand there are many things impacting fashion merchandisers and retailers (such as new apparel labor markets overseas and the fluctuating price of cotton). But my focus was on the marketing approach each respective brand had chosen. Discounted behavioral training.

I then I came across this interesting data on LinkedIn, which got me thinking about my social media and data obsession:

Brick and mortar retailer market value (2006 vs. today)

I then fact-checked the data using Google and looked at the then current market value of Amazon, Best Buy and Nordstrom and this chart seemed valid (at the time — it may have changed since the writing of this article). Looking at the list of companies dropping in value (most over 50%), I noticed the apparel trend across JCPenney, Kohl’s, Macy’s, Nordstrom and Sears. And I started thinking about what these brands were doing to compete for my business vs. Amazon, where I do the majority of my shopping.

With this in mind, I looked at the Sears website to see what might sway me. I saw a $19.99 10K earring that had a value of $119.99 — seemed strange, did gold take a dip? Then I saw 50%, 35%, 30%, 25%, 20% off various products, and 10% extra with a $75 purchase. There was no other value proposition but price. No emphasis on speed, convenience, status, value adds, nothing. I quickly jumped on Amazon to see if I noticed a value proposition difference. Here, I saw a new music album now available on Prime, Prime Now free two-hour delivery, some new Dash buttons, and a slew of recommended products based on my activity. My prediction — Sears won’t make it. RIP.

Amazon is the master of convenience. I am always logged in, I buy anything I want whenever I want with a few clicks. Amazon has my payment preferences and my addresses saved. I automatically get 5% back on my Amazon credit card, and shipping is almost always free (I only shop Prime products). They have an easy searchable history for repeat orders and many times they remind me about a reorder (at just the right time). This list could go on.

One of Amazon’s coolest additions (been around for a bit now) are their Amazon Dash buttons. These nifty gadgets are actual buttons that are shipped to your house for a specific brand. Think: Tide, Clorox, Bounty, Starbucks, Neutrogena, etc. You configure the button to a specific product (it is Wi-Fi enabled) and when you click that button, the product you chose is ordered and shipped to your house. I do this for several repeat-order items including my nutrition shakes. When I run low, I press the button, I have it in two days, I get 5% cash back, and I don’t pay for shipping. It is genius. In fact, I’m moving many of my household supplies to the dash button. Now, also in Amazon fashion, you get the button for $4.99 and then you get a $4.99 credit on your first press. How impressive is that?

My team lead, and Kobie’s Chief Strategy Officer, David Andreadakis, says that convenience has statistically been 2X more important than price in consumer buying behavior. How much will retailers need to drop their price to compete with Amazon? The answer is: too much, it’s not possible. They need to stop competing on price or perish. Sadly, many are choosing the latter. Amazon is not competing on price. When I compare my typical purchases on home items, pet supplies and nutritional items, Amazon almost always offers the same price as their direct retail competitor.

So much of our loyalty can be driven by convenience. We will stay loyal to a brand because they are the easiest path to get the product or service we need. This is a habit-based behavior. Other brands use other loyalty strategies such as status and reciprocity, among other habit strategies. Do you know anyone who is willing to make an extra stop just to fly their preferred airline? I know many who would. That’s a status play. Loyalty drives behavior, and behavior drives revenue. We love to help brands understand how to play their cards right and win that loyalty. We can do that for yours.

Author: Adrian Trzaskus

With a keen career focus on strategy, technology and implementation, Adrian Trzaskus has successfully created and managed Omnichannel loyalty programs and marketing for nationally-recognized Fortune 50/500 companies. A multi-disciplinary leader, he has a distinct and unique understanding of loyalty marketing concepts, design, implementation and innovation across industries including such as retail, financial services, telecom, real estate and entertainment. Adrian, in a variety of roles throughout his career, has a unique ability to understand what motivates customers and knows how to help brands connect with them on a personal level. He has extensive experience navigating the loyalty ecosystem and integrating disparate channels, devices, and partners, with a demonstrated acumen for maintaining client relationships and leading teams through complex initiatives. He has built program roadmaps, provided concepts and use cases to optimize loyalty programs, and has delivered user experience plans focused on engagement and brand awareness — including social, mobile, gamification and more. Adrian holds an M.B.A. from the University of Florida and a B.S. in Business Administration from Saint Joseph's University in Philadelphia.

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