Why Do They Do That?

Number eight in a series of every once in a while columns that wonders why businesses do what they do.

Why no courses on retail direct marketing? The morning mail had an advertisement for a series of Direct Marketing Seminars to "give you the edge you need for success in Direct/Interactive

There were courses for "Law and Direct Marketing" and "Insurance" and "Catalogs" and "Financial Services"--a total of 30 subjects taught on different aspects of how to succeed in direct marketing.

But no course for retailers who need it the most to succeed in an ever increasing competitive marketplace.

And if you think you've previously read this complaint in this space saying attention-must-be-paid to this business group...you're right. Which makes me wonder about an industry organization that offers to help everyone in direct marketing...except retailers.

Why do they do that?

* Less Is More

The fast food restaurant advertised a slice of pepperoni pizza and a 16 ounce soda at a special price of $2.75. Customer places the order but asks for a small soda instead of the large one. The server agrees, hands over the order and the customer moves down to the cashier to pay. She says, "That's $4.75."

"Wait a minute," says the customer. You advertise a special for $2.75."

"That's for the pizza with the large soda," says the cashier. "You took the small soda. That's extra."

"But what happens if I change my mind and get the big soda instead."

"Then you get the special price," she said.

The customer returns to exchange the small drink for the larger drink. The server gives him the large drink and throws the small drink away.

The customer pays the special price and asks, "Isn't this a stupid way to do business."

"Hey," said the cashier, "I only do what the computer tells me to do."

Why do they do that?

* It's Free--If You Remember to Ask

Our local supermarket follows the lead of his competitors at Thanksgiving. Spend X dollars over a certain period of time in his market and you receive a free turkey. When shopping this holiday, I suddenly remember the offer and knew we had spent much more than the amount required. When checking out, I asked the cashier why I hadn't received a notice saying my free turkey was waiting for me.

"You have to ask for it," she said.

"Ask for it? But you have my Frequent Buyer card, your computer shows how much I spend, isn't that enough? "Oh yes," she said, "that's enough to make sure you are entitled to the free turkey. But then--you have to ask for it!"

OK, I asked for it and she said, "Now you have to take this slip back to the meat department, ring the bell for the butcher to come out of the backroom, tell him what you want and he'll take care of you.

All together now: Why do they do that?

* One More Time

Stan Golomb is well-known in dry cleaning circles the maven of marketing in this field. He sends a monthly newsletter to his clients. And a recent issue included a story where he told of a promotion by Shell Oil. The company wanted to build repeat business so they created a program where their customers would receive a free 3' x 5' American flag when they returned to the station eight times in a row and bought at least eight gallons of gas each time.

Made sense since the oil companies spent a few million dollars on researching "what makes a loyal customer." The result: Someone who came back to the same station four times in a row." That meant they developed a "habit pattern." So the idea was good: make them come back eight times in a row and double the odds to have a new steady customer.

One day while his gas tank was being filled, Stan remembered the promotion and asked the attendant why he never received his free flag.

"You have to ask for it," he said,

"OK, I'm asking," said Stan.

"Where's your card?" she asked.

"What card?"

"You need a card that I punch whenever you buy gas."

"I didn't know you needed a card."

"Well, you do...."

This went on for a while and DOES have a happy ending because the attendant knew Stan was a steady customer and gave him the free flag.

But this could have been avoided if Stan (and every other motorist) had been handed a card whenever someone--anyone--came in for gas.

Which makes us wonder: Why do they do that?

Uh...But How Much IS It?

A day does not pass without the daily mail making several offers for products...and never mentioning the price.

An advertisement from NEC Technologies talks about their new lightweight projectors. Good descriptions, Attractive mailer. But the headline on the outside of the mailer is, "Act now and get FREE projector townies worth $199."

Admittedly having an added value feature is good and to be desired. But are they selling the FREE Town Case that holds the projector or the projector?

And is it confusing to readers who scan the mailer and only see "$199" and "one touch projector" and subliminally think they are one and the same?

We once bought a limited number of expensive children's coats. We put together an attractive ad and were about to bring the layout to the newspaper when several staff said we should take out the price.

"Why?" we asked.

"Because some people will be turned off when they see the high price."

"Wait a minute," we said, "didn't we buy the coats because we thought we'd sell the coat? If we were afraid of the price, why did we buy it."

We also pointed out there were other considerations. If we did NOT give the price, many readers of the ad would assume it was too expensive. If we tell the price and explain the reasons: the impeccable tailoring, the rare fabrics, the limited quantity, then we would attract people to come and see this quality merchandise.

We included the price and sold all the coats in one week.

Would we have sold them without mentioning the price? In time, probably. But as quickly? No.

We also received a fax announcing seminars for speakers. The listed 42 locations, gave the dates, sponsors, brief description of "what you will learn" and phone numbers to register. But did not mention what it would cost!

Was it $100? or $1,000. They didn't tell me and I didn't' take the time to call, fax or e-mail and ask them. Why do they do that?

Bad Business Decisions

And if you're wondering if these mistakes pointed Out semi-annually in this space are confined to small operators, consider these business decisions:

* After World War II, Sewell Avery, president of Montgomery Ward was convinced the country would go into a recession because of the unemployed soldiers in the marketplace. So he refused to expand his business. Sears borrowed money and expanded to the suburbs. Montgomery Ward never recovered from this error.

* Also, after World War II, the two biggest business papers were the Journal of Commerce and The Wall Street Journal. They were almost tied in circulation and influence. Then, in 1951, the Journal of Commerce decided to not print the stock tables since it was too expensive and they felt no one read them anyway. Today's circulation of The Wall Street Journal: is about 1.8 million. Today's Journal of Commerce circulation: about 17,000

* When I.B.M. offered personal computers in 1981 they left the development of the operating systems to a small company called "Microsoft." A decision The New York Times called, "the most costly mistake ever made by a major American company."

* And who can forget Coca-Cola's decision to introduce New Coke described by Roberto Goizueta, Coke's chairman "one of the best decisions we ever made." Three months later the company was overwhelmed by letters of consumer complaints and decided to return to the original recipe. Subsequent research discovered that the consumer tests had asked those that sampled the new drink if they liked the new taste. They said they did. But the question never asked was, "What if we substitute this new taste and eliminate the Classic Coke taste."

* And speaking of major mistakes by major companies...do you remember AT&T's foray into the computer business with a $4 billion takeover of NCR in 1991. They soon saw there was no meeting-of-minds. After five years--and losing billions of dollars, they sold NCR.

* And let's have a show of hands for readers who remember Quaker Oat's buying Snapple for $1.7 billon in 1994. And selling it only three years later for $300 million?

To which we humbly and with wonder simply ask...

Why do they do that?

Murray Raphel developed Gordon's Alley, a multimillion dollar pedestrian mall in Atlantic City. One of the major reasons for his success: direct mail. He has been telling the retail direct mail story as a contributor in Direct Marketing for more than 30 years and travels around the world giving direct mail seminars. He also serves as a consultant to major corporations throughtou the world. He can be reached at Raphel Marketing, inc.