La filosofía camusiana dentro de esta Tesis

The headline read, “Pricing Power Is Dead.” My gut reaction was nonsense! Price is a huge deal. And then I read on and realized that the author was dead-on. Price is a huge deal, and the idea of price isn’t what is dying. It’s pricing power that is dead.

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I think I’ll write a novel where the bad guys are a syndicate of major retailers who conspire to knock out the Internet. First, they resort to vi-olence, but even corporate-funded terrorism fails because the phone companies haven’t been cut in on the deal. Finally, the bad guys will give up on violence and write a check to Congress. The Internet gets taxed until it is dead, and retailers everywhere rejoice.

How can you compete on price when a lower price is but a few clicks away?

We all have stories. Last week our son, Rod, who owns a car stereo and alarm shop, tipped a waiter $20 on an $8 tab. The waiter had told our son that he planned to buy a new car stereo and asked if he could get a good deal. “Absolutely! If I’m not there, tell them I sent you, and we’ll give you the best deal in town.” He should have said “best deal on the Internet,” because that’s exactly where the waiter made his purchase on a boatload of gray market car stereo equipment. (But he did apply the $20 toward the installation fees—of course, after asking for a deal.) In some respects, the Internet is leading a fast race to the bottom, as margins in manufacturing and retailing alike get slimmer and slim-mer. Buying direct for many items may eventually wipe out distribution channels that have been in place for decades or longer. If there is good news, it is that new structures will take their place. We’ll just have to learn to live with them.

WHAT TO DO?

When the angel with the blue, blue eyes asks, “Pops, will you take us to the circus?” there really is no debate. Add in the fact that the owner of the voice is only six years old and that Pops is pronounced in three south Texas syllables, and the answer is a foregone “Yes, Princess, we’ll all go to the circus.” Buns and the county ag barn aren’t normally on a collision course, but for one night my city girl will hold her nose and wait for the first unwelcome whiff of tiger, elephant, and, of course, ponies.

We bought our tickets, were thanked by several fez-wearing Shri-ners, and stepped inside to the sound of numerous high-pitched voices shouting “sne cerns” (snow cones) in an accent I couldn’t begin to place.

Other voices touted cotton candy (pink or blue), popcorn, and a pleth-ora of stuff your mom wouldn’t let you have even after dinner. Lucky for the Princess and Big Guy, we aren’t mom and dad. We’re Pops and Granny Buns, and besides, how often does the circus come to town?

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We rode the elephant and then the ponies. Big Guy held a python and posed for a six-dollar photo. By the time the ringmaster took his place in the spotlight, the Princess had already devoured a whirl of cot-ton candy as big as a 60’s bouffant hairdo and as blue as the eyes that peeked over the top.

The circus was small but wonderful, with three rings and a cage for the tigers, Chinese acrobats, jugglers, and a duo of clowns who commu-nicated loudly through shrill-noted whistles. The tiger act was wonder-ful, the elephant was amazing, but as with kids everywhere, it was the whistling clowns that drew the most laughter and approving applause.

The “children of all ages” were totally drawn into the moment, and that’s exactly where we were when the ringmaster brought the show to a sudden halt saying, “I want to stop for just a moment. I’ve noticed that many of our circus friends are enjoying the circus whistles and would probably like a chance to take one home. We’re going to make a special offer for tonight’s performance only.”

Oh, no, here it comes! I thought. Turning to the clowns, he asked,

“What would our audience expect to pay for a real circus whistle just like the ones you’re using tonight?” The clowns whistled a response that the ringmaster interpreted, “Ten dollars? Maybe some other night, but not for this audience!”

More whistling. “Did you say five dollars? Not tonight!”

Then there was whistling that could only be interpreted as puzzled.

I was totally into the moment, expecting the Princess whose blue eyes had grown to saucer-size to ask, “Pops, what are they saying?” But the Princess needed no help at all interpreting whistle-ese.

“No, boys and girls! Tonight and only tonight you can take home an official circus clown whistle for just two dollars! Everyone who wants to take home an official circus whistle, raise your hand.” A forest of small hands shot into the air, some still holding their four-dollar cotton candy.

“Keep your hands up, folks, and our circus representatives will come to you as long as our limited supplies last.”

And that was that. There was no saying “no.” No attempt to explain the concept of rip-off. No economics lesson about plastic whistles made in China. No quibbling over two dollars. There were just two official cir-cus whistles and the prospect of hearing whistle-talk all the way home to Mom and Dad.

How did that happen? How was a guy who saw the whole thing com-ing caught standcom-ing in the bleachers fishcom-ing a few more greenbacks from his jeans? Experience. We hadn’t bought three laps on a pony or a chance to mount a prodigious pachyderm. At least I didn’t. I bought the

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magic of walking beside the pony with a Princess who would only be six once. I bought a memory of Big Guy hoisting a 30-pound python and looking smug, as only a sixth grader can look. I bought the experience.

We’ll save you the trouble of backing up a chapter or two to remind you of the five things most important to a retail customer.

Number one: We want friendly, caring staff.

Number two: We want knowledgeable, helpful staff.

A fair price is number three on the list, and it’s not even a close number three. Friendly weighed in at 41.4 percent. Knowledgeable was 27.0 percent. In distant third place at 18.3 percent was fair price, yet this is the one that gets all the attention.

In the second quarter of 2004, Neiman Marcus reported that its strong earnings were due in part to full-price selling. While the rest of the world was waiting for the sound of another price going down, Ne-iman Marcus was listening to the gentle tune that goes cha-ching! (Any-body can give away product. It takes brains to sell it.) Neiman Marcus essentially tells the market, “We have what you want, the way you want it, and you’re going to love the experience.”

Back to our list, number four is merchandise that is organized and easy to find, 8.8 percent, and number five is speedy and accurate check-out, 4.5 percent.

At least four of the five top customer satisfiers have to do with the experience of shopping and buying. You can argue that price is or at least can be part of the experience. As anecdotal proof, I offer a look at a couple of national pizza chains where the marketing premise is summed up in a single word—cheap. I’ve heard many parents say, “We order that pizza for the kids and their friends and order our pizza from another place.”

In the coming years, as price edges lower while quality climbs higher, experience will be the point of difference. And that’s where we meet Fitch:RPA, specialists in retail experience. Fitch:RPA is a division of Fitch, a global, multidisciplinary design firm with over 550 associates in 18 studios in 11 countries. Fitch, a WPP company, enacts a distinct four-step process, executed by 17 disciplines for the last 45 years in more than 50 countries and with over 2,200 brands.

Fitch:RPA bills itself as a “Retail Experience Agency,” a position that says right up front that something different is about to happen. It’s not a design service where you just get advice on fixtures and color pal-lets. Retail experience is not the usual matter of creating marketing ma-terials, although both can be a part of the deliverable.

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Too often, retailers start with a store layout as a given; it’s the premise or starting point. Creating an effective retail experience—one that sells product—begins with the customer and requires intense and effective listening. Says Mike Bills, managing director of Fitch:RPA:

“The goal is to create consumer-centric experiences that transcend mere aesthetics and touch consumers at the point of interaction. Every customer interaction is important, including how a consumer reacts to and interacts with environment, product, packaging, corporate iden-tity, collateral, events, and digital designs. Across these and brand touch-points, we create real, tangible experiences that invite and de-mand interaction and distinct moments that drive repeat, destination visits and uses.”

To create a world-class retail experience, we have to give top consid-eration to customer needs “. . . instead of decorating around existing op-erational parameters,” adds Bills. Price, selection, goods, and services are no longer the only purchase triggers. (They probably never were; we just thought they were.) Smart retailers who encourage customers to talk and then listen and act on what they hear will create experiences that build long-term brand affinity and loyalty, before, during, and after a purchase.

REALLY?

Are we really on our way to an experience economy? We decided to perform a simple test to see if industry is really looking forward or sim-ply clinging to the past while waiting for someone else to take the first step. The question was simple: What one social movement, technologi-cal advance, legislative action, or economic event is likely to have the greatest impact on your industry in the coming five to ten years? That’s pretty straightforward, and so were the answers. The majority answered,

“Huh?” It turns out that too few retail thinkers are thinking further than, say, next Friday.

Think of all the “what ifs” that could totally turn your business up-side-down. Consider the book you are holding. Only a few years ago, books online or available via CD-ROM were thought to be the beginning of the end of the publishing industry. True, book sales aren’t what they could be, and reading among young people is at an all-time low, but the forecasts of imminent doom were more than a tad premature. In spite of having rather poor vision, at least someone was looking to the future.

(By the way, why do you think e-books have been so poorly received? It

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turns out that we like to highlight and dog-ear. We like the feel of a book.

We like to tuck books in our carry-on and leave them in the bathroom.

We like the experience of a book. E-books will succeed once the rest of the experience, that part that lies outside the printed word, becomes part of the package.)

Here’s what the National Automobile Dealers Association (NADA) gave us as its preview of the future of the auto business. How about some really huge numbers to get us started? In 2002 (the most recent fig-ures available), there were 135,920,677 passenger cars on the road in the United States. Add in 92,938,587 trucks and buses and you have a traffic jam of 228,859,264 vehicles on the road. And that’s just in this country!

The auto industry is huge with a capital H. The average new-vehicle dealership sales are a healthy $32.3 million, and total sales for the indus-try are pushing $700 billion! When the auto indusindus-try makes a change, you can be certain that the entire economy will follow right along.

We asked Paul Taylor, chief economist for NADA, what was on the horizon. Surprisingly, we got nearly the same answer that we heard from a leading manufacturer of airline f light controls while working on an-other project in 2003. In the very near future, expect to see cars (and airplanes) that diagnose themselves and report to their owners or per-haps even directly to the technician. Onboard diagnostics can advise the owner to open the communications channel to the dealership, where fi-nal diagnosis can be made and parts ordered even before the vehicle hits the service drive.

Service will be more efficient, and cars no doubt will last longer. But won’t cars that last longer hurt sales in the long term? Taylor seems to think not, saying that longer-lasting vehicles may be seen as a better value by the consumer.

Also on the horizon is a potential sea change that will ripple through the economy, not just in the West but the entire world, that will have a tremendous impact on the environment. We’re talking about hy-drogen-powered vehicles, whose by-product of combustion is nothing but plain old H2O. The greatest stumbling block is not the lack of infra-structure, although that’s a big one. The problem is that hydrogen, while found abundantly in things as common as seawater, is extremely expen-sive to produce.

The industry is not waiting on a technological breakthrough in the cost of producing hydrogen. Fuel cell technology continues to be re-fined and other energy-saving technologies like using braking to recap-ture energy are showing up in the hybrid vehicles that have become increasingly popular. Taylor knows his stuff, but I am willing to bet the

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evolution of the auto industry will have as much or more to do with the experience of buying and owning a vehicle as it will with power plant and maintenance technology.

Our research consistently said consumers can’t stand the thought of shopping for a vehicle. A search of the world-famous Clusterizer for the parameters “car sales” brought up these turnoffs on the first page alone:

• “Pushy salespeople/car dealers offend”

• “Being approached and hounded by sales associates at car deal-erships”

• “Pushy salespeople/car dealerships, take your pick”

• “Salespeople following you around. The biggest offenders are car salesmen.”

That explains the success of Santa Fe auto consultant Fred Vang, who makes a living matching people with the cars they want to buy. One call to Fred and a bit of pleasant conversation followed by a couple dozen questions about how, where, and even why you drive, is all it takes to have the car of your dreams delivered to your home or office without once having to endure that happy horse manure about having to “check with the sales manager.”

Technology may change the industry, but it may be that poor buying service experiences may kill it first!

Another huge segment of our economy that, in many respects, tracks parallel to the auto industry is the lodging industry. America is dotted with hotels and motels, a surprisingly large number of which are mom-and-pop operations, many totally independent. The American Hotel & Lodging Association sent us this response: “Thank you for con-tacting us. To answer your question, the health of the U.S. economy is closely tied to the nation’s hotel industry; conversely, the national econ-omy is the largest factor affecting the lodging sector. Barring major dis-ruptive events, we anticipate that this will continue to be the case in coming years.”

From their Web site, we lifted:

While external factors such as rising interest rates, inconsis-tency in the overall economic recovery, the Presidential elec-tion, the Iraq war, security, and world affairs continue to inspire caution, they no longer appear to be driving the course of the lodging sector. To a growing extent, the lodging industry and its customers are incorporating these concerns into—but not

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ting them dictate—business. We believe this trend will continue, barring major disruptive events.

Concerns about safety and convenience continue to affect lodging demand. However, Americans have increasingly fol-lowed advice from the Department of Homeland Security to go forward with travel plans, gather with family and friends, and continue to enjoy their lives and freedom.

Ah, so experience has come to include feelings about safety! And what about the soon-to-be-realized self check-in, where all you do is swipe your credit card at the lobby kiosk, verify your room preference, and you’re on your way? Just use your credit card as the room key. The industry has done so poorly at making check-in a welcoming, positive ex-perience that travelers would just as soon skip it and say “good-night” to a machine.

Know it or like it or not, retailing is and will always be about the ex-perience.