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Wednesday, July 13, 2011

"Giveaways" Build Buzz - "Discounts" Look Desperate

Brother_can_you_spare_a_dime

There is a 7-Eleven near D.C. that accommodates about 12 parked cars. 

The other day there were maybe 25 vying for spots, in the middle of the day. 

This wasn't the A.M.'s commuting rush when people fight for the last sugarfree Red Bull or gratefully scoop up the last "taquito roller."

We had absolutely no reason to be there.

Except for one thing: The Good Witch of the Convenience Store had waved her magic wand and today was Free Slurpee Day.

My kid, nauseous from a long bus ride home, reminded me. "I need something icy," she uttered sweatily. "They're giving away free Slurpees at 7-Eleven. Can we go?"

We pull up to the parking lot and the scene is unbelievable. It's like a state fair. People streaming in and out as happy as can be.

Inside, the Slurpee line is snaking from the machines, around the lottery counter, around the fruit and sandwich shelves, and even out the door.

What are they waiting for? A FOUR OUNCE cup of sugar water. A mini-portion.

And they are thrilled!

That day, by strategically using a little generosity, 7-Eleven made some happy memories for a lot of people in the community. 

And that is why a giveaway builds buzz.

Just like it does in Starbucks and Dunkin' Donuts and every other establishment that tries it.

So why don't discounts work the same way?

The short answer is that discounts look desperate. And they ruin the brand.

Macy's is an excellent example of taking a venerable, respected brand with a deep heritage - decades of loyal followership - and trashing it on the altar of constant sales.

(Al Ries calls this "discountitis.")

Every five minutes, it seems that Macy's got a commercial on TV telling you to "shop early" and "save big."

Go into Macy's and the discount signs are prominently displayed, "40% off" this and "75% off" that.

I used to look at the Macy's star and think, wow, that is a classy logo.

Now I look at the star and think, wow, is that a degraded brand.

There is a Target around the corner with the same brand colors.

I am starting to think that their discount-designer merchandise is exactly the same as the Macy's merch, which used to be pretty high up on the scale.

On a broader level, it has to do with displaying strength versus displaying weakness. Nobody wants a ticket on a sinking ship no matter how pretty the view from the upper deck:

* Wal-Mart, though it isn't known for its giveaways, is an incredibly successful brand because it starts with the "lowest price" offer and sticks to it. The customer walks out and feels victorious for having made the trip. (Although commodity brand strategies are extremely dangerous...I wouldn't want to be them.)

* K-Mart, which gives me the impression of being forever one step away from bankruptcy, is an incredibly shamed one because nobody wants to remember that they are wearing a top from the last-ditch-$1 discount rack.

If you want to make people feel good about your business without detracting from the value of your goods or services, give a small amount away once in awhile. It makes you seem generous. Part of the community. A friend.

If you want to seem like a company flailing while it drowns in quicksand, offer deep discounts.

Financially a giveaway and a discount may cost you the same thing.

But in the long-term, you can only enhance your brand by offering customers a sample. While you will most certainly destroy it by giving away the store.

Good luck!

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Photo source here