Never underestimate the customer…

It seems my last post about the death of group buying is being supported by evidence elsewhere – see this article from the Sydney Morning Herald:

Group buying is another reflection of herd mentality, which is in our DNA. Just look at the reaction of young teenage girls to manufactured boy bands when the ‘band’ arrives on your shores.

And it is herd mentality – or the desire to part of a group – that influences a lot of consumer behaviour. Facebook is a recent example. But if you have ever run a retail business or any type of business where you deal face-to-face with customers, you know to always expect the unexpected from those customers.

When my family owned a supermarket on Sydney’s north shore, Thursday night was known as late-night-shopping night, because stores were only allowed to open late on Thursday evenings – until 9pm. Nowadays the rules are slightly different.

Thursday was also the day (as mentioned in my previous post) when all retailers advertised their loss leader products to try to attract more customers to their stores.

I’ll not forget a particular evening. I was operating one check-out (probably a vision you’d not planned to have today) and my mother was operating the other one.

Every week, like clockwork, a particular lady would come into the store with the tear sheet of specials that were advertised in the metropolitan newspaper. On this particular day tins of pinapple pieces was reduced from $0.54 to $0.49 – a saving of 5 cents. There was a limit of 4 tins per customer.

For some reason we had been able to buy the brand of pinapple pieces on offer for less than usual  wholesale price, so our normal retail price was $0.48 – this meant our standard retail price was cheaper than the advertised special price.

The ‘customer’ arrived at the checkout with her basket full of specials, each at the limit of the number of items she was allowed. She never bought anything else but the specials.

As she placed the tins of pinapples on the checkout counter, she exclaimed “these are on special”. To which my mother replied, they are advertised as a special but our normal price is 1 cent cheaper than the special price.

The confused customer asked for clarification and my mother again explained that as our normal price was cheaper than the special price the customer would be saving an extra one cent on the advertised price.

The customer then exclaimed “so I’m not saving anything from you on your normal price?” to which we confirmed “no”. So she promtly said “well I’ll not have the pineapple then” paid for her other specials and walked out the door.

She believed that if she was getting a ‘deal’ on our normal price then she wasn’t going to buy the goods.

This is the type of mentality that exists in the people taking up group buying deals. Last weekend I was at a lunch where two couples were organising a dinner, but only if they could get it through a group buying deal. They didn’t want to go out together at full cost.

Like I say “never underestimate the punter”. The deals they buy are all about themselves, not about the retailer supplying the offers. The punters don’t care if they never go back to the retailer, unless it’s at half price.

Eventually the retailers and other businesses making the group buying offers, will realise thay don’t have to outsource their sales promotions to a profit-making group buying mob. After all, the group buying mob is in it for themselves too – not for the small business that use their group buying ‘service’.

If a business wants to give away 50% of the price to attract new customers, they can do it themselves, via their own lists (email and mail), local advertising, letterbox, search engine marketing and other proven channels, even social media. At least they can capture the details of those who take up the offer and not rely on collecting their money from a third party.

Buy hey, these are proven channels so why use them? It’s much more fun and far cooler to use the magical new wonders of “the internet” regardless of whether it’s profitable or not – after all, everyone’s doing it and we all want to belong to a group, don’t we???


One comment

  1. Never under estimate the customer and don’t over estimate them either. The number of group buying bargain hunters who return to an establishment and pay full price are few and far between. Unless they are roped into another offer when they cash in their voucher, it’s pretty unlikely they’ll be going back. Offers CAN be constructed so they work for the retailer but you have to know how marketing works in order for that to happen.

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