Monday, November 26, 2007

More Vouchers = Bad Christmas

Gap warns consumers over hoax email vouchers - Brand Republic News - Brand Republic

Brand Republic ran a stroy this morning about some fake vouchers which were floating out there in the online world.

There seems to be a growing surge of online vouchers floating around. In the last week I've had vouchers forwarded to me from GAP, Selfridges, Carnaby Street and Wagamamas. The many newspapers are mentioning people like Threshers.

I remember reading about couponing in a business book. It's all about identifying people who are willing to pay but are put off by high prices. Give them a relatively difficult but straightforward means of obtaining a discount and they'll buy. The effort these people go through then means that the free spending people who wanted the product at the higher price anyway still pay full price. Hey presto, everyone's happy.

The problem is when too many of the high spending people get a hold of the discount voucher. The internet makes it very easy for vouchers \ promotional codes to be spread around in areas where the retailer or producer doesn't necessarily want them to be. Before you know it a discount meant for friends and family appears all over town.

Obviously the majority of retailers will put some crafty T&Cs on the voucher to ensure that they don't end up bankrupting themselves with this sort of offer. However the customer experience in this sort of situation will be quite bad. You've gotten the consumer's hopes up and then dashed them.

Branding considerations also need to come into play. It's nice to see your brand being sought after, but people shouldn't perceive your product as cheap or a bargain (unless you're talking about Tesco Basic). A brand's value is in two things: Amount of people who want it and the amount people will pay for it. Apple's trick is not just the fact that everyone wants their products, it's also the fact that they're willing to pay almost twice as much as the nearest competitor.

Most retailers are fully aware of the potential risks involved with giving out these voucher codes. The current vouchers available show the fact that retailers are a little more worried about Christmas than normal.

All shops have something to gain by saying that Christmas will be bad (helps lower expectations for their quarterly reporting and allows them to not look greedy over the christmas period) but they very rarely do anything about this pessimism until later in the season. This season people seem to be slashing all over the place before all the decorations have gone up.

Good thing is that if they're desparate now, they'll be more desparate later. Might be worth postponing the Christmas shop!

No comments:

Post a Comment