Wednesday, March 4, 2009

Restaurants, Rock, and Hair Cuts

Montreal's Taverne Crescent just swiped a page from London's Little Bay restaurants on how to market during a recession. Actually, I think it could be just 'how to market to the people you want as customers'. If you haven't heard the back story it goes like this:

Last week Taverne Crescent decided to introduce a pay-what-you-want menu. The idea was to increase traffic, take the pressure off the dining experience and serve customers who'll have a better chance at arriving and leaving happy. Plus, they'll get a little buzz on the side (like this, this and this).

London's Little Bay is a case study with some some success - 10,000 patrons and featured news stories for weeks. The trend in pay-what-you-want menu's has spread to dozens of restaurants around the world.

You can't help but read these stories and think of two thing: Radiohead and Nine Inch Nails. Both bands have generated their own amount of buzz for the pay-what-you-want model. Radiohead offered their album for a pay-what-you-want (more than $2), and Trent Reznor from NIN promoted Saul Williams' album as free or $5 (depending on quality). In a time when a $16 CD trickles about $1.60 to the artist, Saul Williams managed to sell about 30,000 copies to pocket $141,610 (over twice the revenue). Radiohead had massive success with Rainbows. They sold more records, merchandise and concert tickets then they did in the previous three albums.

When you have a band, restaurant or business that is comfortable enough to open up the price you've found the sweet spot in marketing.

Think about it.

How much would you pay for your telephone? For your car? For those brand name shoes? For a haircut? You might think your $30 haircut is worth $10 (but you still paid $30). You may spend $2500 on a huge TV, and feel that the buying experience was only worth $900. Would a consumer ever really choose to pay $2.99? Or would they just round it up to $3 (or down to $2).

This isn't about being cheap - it's about assigning true value to what we buy and more importantly what we sell. As marketers we love to assign "value" to the things we advertise. I use quotes, because "value" is one of those words that is plastered in every marketers vocabulary- without "value" your boss will probably be pissed. Everyone you market to only has a finite amount of money to spend. In most cases, no matter what you charge, they won't go beyond what they have to spend. Instead of pricing out what you need to make from a product, determine what it would actually be worth. Don't look through the corporate beer goggles of your brand - look at it as a regular consumer. What would someone pay you for your product if they could pay whatever they want?

This would change the game a bit wouldn't it? You'd probably change who you market to and how you talk to them?

I think this would help answer a lot of questions about why last quarters sales were down, why that last product was a bust, or what is wrong with our current strategy (for most of us it has nothing to do with the economy). Is what I'm marketing useful and is it worth it?