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Fancy Cake Economics, Or: When to Raise Prices

Wednesday, December 9th, 2009

My girlfriend and I recently went out for dessert in downtown San Diego.  We ordered a tall piece of chocolate cake with two layers of crème brulée and a citrus Napoleon, so named for being short, squat, and a tad grandiose, I’m sure. They were delicious, well worth the high price.  And our six-dollar pot of tea was the height of subtle complement, with rich oranges and smoky undertones.  It slapped the rich chocolate layers high-five and then came back around for a fist bump with the pillowy pile of French dictatorial pastry to the right.  Dendrobium orchids and rose petals festooned the frosted pinnacles.  The slight winking in the candlelight proved to be edible gold flake.  The final bill for this experience?  About $30, after a decent tip.  All in all, a good investment, the ideal antidote to a weekend that had just a touch too much dead turkey carcass.

But one area where the investment fell flat?  Quantity.  And not for the reasons you’d think.  I can put food away, but the twin masses of lovingly prepared deliciousness were too much for both me and my companion.  We wanted to finish them and lick our plates, but some small voice of reason told us that attempting such a feat would turn a pleasant evening into a masochistic tale of woe.  The human body simply cannot take that much buttercream.

Chocolate freebasing.

Chocolate freebasing.

That left us two choices: try to take the hacked up chocolate cake and Napoleon with us, or leave them there.  They would never be as good as they were that night under the palm trees and tea lights, and it seemed silly to take them home to a fridge already chock-full of leftovers.  We were boarding a flight in 24 hours anyway.  So, instead, we left them, two half-spent plates of confectionary goodness going to waste like a poorly-told joke.  Wasting all that food lent an unpleasant taint to the delicious flavors we’d experienced.  I know, I know: we didn’t have to leave the food like the overindulged Americans we are…there’s nothing better than congealed day-old Napoleon, after all.  But I don’t want to have to choose, for what I paid.  I don’t think we’ll seek that place out again, or, if we do, we’ll order significantly less food.  We’ll pick either a delicious sheaf of chocolate cake or a scrumptious Napoleon paperweight.

This Napoleon was exiled to the dumpster.

This Napoleon was exiled to the dumpster.

Spend less money, leave less food.  No big deal.  But it got me to wondering: how often does an experience like ours occur?  How often does getting too much detract from the user’s experience of the product?  How would the dessert experience be affected if the restaurant halved their portions and upped their prices?

Now, that’s not usually a good move; everyone knows the refrain of the shrinking cake/burrito/sandwich/beer patron.  “They used to be bigger and cheaper!” said with a shaking fist.  When  a product gets smaller and more expensive, it can look like someone’s trying to pull a fast one on us, toying with our need for, say, a piece of chocolate cake the size of a pug.  What a downer, then, to get a piece of cake barely bigger than a toy poodle.  Disappointment and angry Yelp! reviews may abound, at least at first.  Seekers of pug-sized chocolate cakes will have to go elsewhere.

Let’s take a moment to consider the musts of the expensive-cake market.  People don’t want to be rolled out of restaurants with a wheelbarrow when they pull up to a place like this.  They probably put on nicer clothes.  They want something special, something they can eat and feel good about.  They value making better choices for themselves, which is exactly what you’re helping them do by halving the portions.  That’s right:

People appreciate your assistance in making decisions.  It’s OK to charge money for that.

So, when I plunk down $6.00 for half the amount of cake I was getting charged $9.00 for before, I’ll consider it a deal.  I’m thinking here of the satisfaction of cleaning one’s plate, of not breaking out into a cold sweat in the process of finishing what was served.  No hemming and hawing about whether to force more cake down my throat, pack it into waxed cardboard, or leave it to go to waste.  Great meals are for finishing, so I’ll pay you to help me have the most snag-free experience of this great meal, and then I’ll thank you for it.  This is the great thing about a market like this one.  When you offer a specialty item, you can actually augment user experience by offering appropriate portions and pricing them accordingly.

You’re probably thinking: I don’t sell fancy cake with crème brulée in the middle of it.  OK, point taken.  But you might have something else that you do sell that could benefit from this divide-and-charge method.  And your customers?  They could benefit too.  Nobody wants your product to feel like work, so make it as painless as possible.  Then say, you’re welcome.

My reluctant marketing guru, Naomi Dunford, seems to be giving the smaller-more-manageable-cake-thing a try.  She recently snatched her successful Online Business School off the shelves, and informed her readership that the OBS of the future is going to be a slightly different animal upon its resurrection.  She’s making it into “modules”, slicing her formidable cake smaller, and selling them piece by piece.  You buy one, you read it and do its bidding.  Your business glows.  Then, grab the next one, and repeat.  Small, manageable steps; no 264-page PDF sitting in your downloads folder, waiting you to break page 11.

That’s some tasty economics, right there.

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How the Personal Branding Illuminati Use Twitter, Part 1: Schawbel, Kern, Godin

Thursday, October 22nd, 2009

Next: Trunk, Dunford, Kawasaki

Twit much? I don’t care what anyone says, the jury’s still out on where all this social media bruhaha is going. In case you haven’t noticed, it’s now considered a little gauche to have 17 different buttons to different trending sites at the bottom of your blog posts. So 2008. And Twitter presents an interesting question as well, notoriously losing 40% of new users after one Tweet. In these posts, I examine the use of Twitter by six personal branding padrinos and padrinas: Dan Schwabel, Frank Kern, Seth Godin, Penelope Trunk, Naomi Dunford, and Guy Kawasaki. What I found was surprising: everyone seems to use it differently. Check out today’s list to compare Schwabel’s utilitarianist vibe to Frank Kern’s tantalizing stage exit and Seth Godin’s understated Twitter driblets (Chirps, perhaps).

Dan Schawbel, the Good Son

The ‘Me 2.0′ author uses a tagging system in many of his Tweets, ranging from ‘ADVICE,’ ‘MUST READ,’ and ‘JOB SEARCH’ to ‘COOL,’ ‘HUMOR,’ and ‘OPINION’. This is a great move for two reasons: it tells you right away to what you’re devoting your precious click-through, and it spells great things for searchability in the great Twitter/Search Engine union. (Google and Bing just added their notches to the Twitter bedpost.) He Tweets on a wide range of subjects, throwing in the occasional fist pump for content on his current object of affection, Brazen Careerist (where I have a profile that I rarely use…do you?).

Authenticity Rating: 3.5/5 Pretty good. I appreciate that Dan frequently posts musings of a completely non-self-promoting nature, like this one from October 18th: Wordst mispelling of my name OF ALL TIME —> Dawn Schwabel

Usefulness: 4.5/5 For personal branding advice, Dan puts his Tweets where his mouth is. He eats, breaths, and lives personal branding bushido.

Branding Mojo: 4/5

Following to Followers Ratio: .94 (48,893 Following, 51,948 Followers)

Interesting: Dan also appears to hold two other Twitter accounts, @millenialbrand and @mbranding, with zero activity. Is it sloppiness or is the branding Jedi just snapping up good Twitter names the way you might snap up beer.com c. 1996?

Edit: Apparently this theory is wrong wrong WRONG!  He doesn’t own any of the other accounts.  Thanks, Dan.

Frank Kern, the Snob

‘The Dude’ of online marketing first signed on with @Frank_Kern for almost a year, using it 7 times before switching to @masscontrolkern in August of 2008. All was well until a few days ago, when he pulled a Miley Cyrus and shut down his Twitter account completely with a nose-thumbing Tweet about getting real work done. His followers topped out at 17,372 after 1593 Tweets, according to the stats (twitterholic.com/masscontrolkern). Honestly, I only added Mr. Kern recently, and I don’t remember him Tweeting much in that time. Perhaps he decided that zero Twitter presence was better than one with intermittent fits-and-starts.

Authenticity Rating: ?/5 Hard to tell…I can’t remember his Tweets! Does this mean that Twitter lends itself to general forgetability, or that plugging into Frank’s Tweets-of-consciousness wasn’t that great?

Usefulness: 0/5 Well, he’s certainly not very useful now. I can’t even get to his site now that his account is deleted. He didn’t just stop drinking the Twitter Kool-Aid, he took ipecac for it.

Branding Mojo: 0/5 or 5/5, depending on how you look at it. He’s pulled a J.D. Salinger, withdrawing from nonessential contact like DM’s from people requesting free marketing advice, pretty please.

Following to Followers Ratio: .002 (34 Following, 17,372 Followers)

Interesting: Frank also deleted his Facebook profile. A visit to his home site (http://masscontrolsite.com/) also reveals that he’s closed his email list to new subscribers, and that he’s trying a more laid-back approach to his next release. Is this a call back to simpler times, a critical de-lousing of time-wasters, or simply bad strategy?

Seth Godin, the Quiet Industrious Guy in the Corner

This guy has written about a bazillion books on better marketing. It’s just simple metrics to feel like kind of a schlub compared to Seth, although I’m sure he would argue that. He manages to be the king of Twitter redundancy, with two separate and active accounts (@sethgodins and @thisissethgodinsblog) saying exactly the same thing: I updated my blog! As someone who rarely updates I find his frequency impressive, but isn’t that what we have RSS feeds for? Rather than drumming up interest in his brand identity, Seth simply uses his bluebird to point followers directly to his site. Biz Stone, eat your heart out!

Then again, with personal branding mojo to spare, perhaps Mr. Purple Cow doesn’t have to bother with being interesting. His 12,995 followers agree.

Authenticity Rating: 4/5 The man’s Tweets are straightforward blog promotion. Nothing wrong with that.

Usefulness: 3/5 While I can’t depend on Seth’s Twitter feed to tell me interesting things about Google stock, it does let me know whether he’s writing on a topic I’d throw 60 seconds (or even 10 minutes) at.

Branding Mojo: 4/5 It’s a little boring, but consistent. To his credit, Seth’s method has a way of eliminating anything potentially embarrassing or obnoxious.

Following to Followers Ratio: .0006 (8 Following, 12,995 Followers)

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Gen Y? Fuggheddaboutit. Get Viral With Boomers ASAP.

Monday, October 12th, 2009

Recently, my mom sent me an email about safety.  One of those emails that’s been around the block a time or two, know what I’m sayin’?  With the list of forwarded email addresses a mile long.  That kind.  I skimmed it—you should too, when you read it below—and initially thought it was pretty unremarkable.  But I was wrong, because it says something rather interesting towards the end.  See if you catch it.  Straight from Lois:

>     Wonder how many
> people know about this ~
>
> A 36 year old female had an accident several weeks ago
> and totaled her car.  A resident of Kilgore ,
> Texas she was traveling between Gladewater &
> Kilgore. It was raining, though not excessively,
> when her car suddenly began to hydro-plane
> and literally flew through the air. She was
> not seriously injured but very stunned at the
> sudden occurrence!  When she explained
> to the highway
> patrolman what had happened he told her something
> that every driver should know – NEVER DRIVE IN THE
> RAIN WITH YOUR CRUISE CONTROL ON.  She
> thought she was being cautious by setting
> the cruise control and maintaining a safe
> consistent speed in the rain…..But the highway
> patrolman told her that if the cruise control is
> on when your car begins to hydro-plane and your tires
> lose contact with the pavement, your car
> will accelerate to a higher rate of speed making
> you take off like an airplane.  She told the
> patrolman that was exactly what had occurred.  The
> patrolman said this warning should be listed, on the
> driver’s seat sun-visor - NEVER USE THE CRUISE
> CONTROL WHEN THE PAVEMENT IS WET OR ICY, along
> with the airbag warning. We tell our teenagers to set
> the cruise control and drive a safe speed – but we
> don’t tell them to use the cruise control only when
> the pavement is
> dry.
> The only person the accident victim found, who knew
> this (besides the patrolman), was a man who had a
> similar accident, totaled his car and sustained
> severe injuries. NOTE: Some
> vehicles (like the Toyota Sienna Limited XLE) will
> not allow you to set the cruise control when
> the windshield wipers are on.
>
> If you send this to 15 people and only one of them
> doesn’t know about this, then it was all worth it.
> You might have saved a life.
>

Did you catch it?

Yep, product placement.  And really, cruise control in the rain?  Would anyone really do that?  I smell something a little fishy here.  I have no idea whether Toyota had anything to do with this email, but I sort of hope they did.  Because this email shows that in 2009, the forwarded email is still partying like it’s ten years ago.  Still a great place for marketing, and naturally, copywriting.  My Mom and people of her generation are e-mail fiends.  And now, they’re catching the Facebook wave.  What are the folks born between 1947 and 1964 doing on twenty- and thirty- somethings’ beloved Facebook?

Same thing everyone else is.  They want in on the fun, the photos, the updates about their friend’s cat’s eating disorder.   My Mom has a Facebook page (I just sent her my friend request; I hope she accepts), but she still uses email as her primary mode of communication, for now.  Which is interesting news for marketers trying to tap into the boomer market.  It makes sense; viral marketing and the coveted “Digg” or “Stumble” or what have you, is founded on the premise of the heavily forwarded email.  And if my mom and her peeps are still forwarding emails while maintaining a presence on Facebook, this straddle effect is a primo opportunity for marketers to dump the slapstick-loving brojocks (Tag antiperspirant, Jackass) and start focusing on this older, and perhaps more refined, audience (Wines, pet luxury items, and other things my Mom likes that I consider uninteresting).

I’m not the only one who thinks so. Facebook is big, but did you know that a certain bluebird-themed social media giant owes a large part of its success to its older users?

Naturally, not everyone likes this trend. But the people who can properly tap into this presence are gonna win, big time.  Especially with the recession, when disposable income for many in the lower age bracket is on the decline.

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