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A timely blog post

PM,

Interesting post. Also, your link is broken. I just cut off the part about previewing the post, but some people might have trouble figuring that out.

Now, onto some comments. I see a couple of problems with the idea of an unlimted ad budget. First off, we are working with a fixed market size. This isn’t like advertising to the internet. We are mostly working with a fixed number of house holds and a fixed number of eye balls. At some point, regardless of how effective a SINGLE advertising campaign maybe, if multiple are run side by side… some overlap is going to occur. This may increase response rate due to multiple impressions, or it may be wasted dollars. Really hard to say.

Secondly, advertising that brands, but doesn’t discount is okay. However, you need an offer to track. An offer is typically a give away or a discount. Now you’ve started conditioning your clients to order with a discount. When does the discounting stop? Where is the pain threshold? If you continue to send out a coupon for a $10 pizza and then they know that they can get a $10 pizza whenever they want, you then have to send out a coupon for $9.00 to excite that customer again.

Just some other ideas to think about.
 
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Thanks Rick and Scott.

Scott - Your mention exactly what shot you in the foot marketing wise actually. Marketing is the only thing that you should NOT look at as an expense. The BB tells you the same thing. There is not one pizza shop out there that is maximizing its advertising/marketing potential. There is a huge difference between tapping your target market to it’s fullest potential, and the minimal marketing most pizza shops do.

I think we can all agree that that selling one more pizza at the end of the night priced at 5 cents over cost will add 5 cents to your profits that you wouldn’t have had. We can also agree that it is probably a waste of time to generate that order, because the same energy directed toward lower hanging fruit will produce exponential results.

If, on the other hand you are sitting on a few hundred post cards, have a database, and just aren’t sending them out, you are tossing money out the door. Running one advertising campaign utilizing multiple vehicles is in no way wasted dollars. It is a tried and true tactic, and the shops doing it now are at the top of the market. That is a very well measured and pretty much incontestable fact. Overlapping is a necessary part of your advertising. The response rate from 3 impressions in 10 days is significantly higher.

Shops that continue to rely on antiquated practices will go out of business. Just look at history. When the first POS came out many many people said that they couldn’t use a computer, or didn’t need one, or they cost to much…
 
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How do you address the limited market and changing effectiveness and training your customers to only buy with a discount?
 
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I am not quite sure of your point there Scott. Of course the ‘limited market’ you mention is a factor, but really, when you had a pizza shop did you come close to maximizing your marketing potential? We both know the answer there is no. That is the point I am trying to make. There is a huge opportunity for people who are willing to take the next step, and take advantage of it. Those who aren’t ready to take that step will be working for those who do in 6 years. The next 5-6 years are going to be full of change for the restaurant business in general and pizza especially.

As for discounts, coupons are as antiquated as the Dominator. Giving customers a discount is not a bad thing at all. Value meals and ad-ons are a huge part of Pizza 2.0. Perceived value has far more of a hook than the old school $3 off. Marketing will continue to move away from enticing the customer to buy now to a more soft approach of filling a need.

“You have a family? Our family meal is for you.”
“Stop by for a pan of baked lasagna, and bring it home for a family meal. (Don’t forget the healthy salad”"

Doing a sector analysis and surgically catering email marketing to the households will be as common place as weighing out cheese. The next version POS systems will have that as an innate function. SMS messaging and email, tied into a encompassing marketing campaign will be what keeps the top shops at the top. You don’t need a 40 person marketing department or a crystal ball to see that one coming.
 
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pizzamancer - I see the overall point of the blog you posted. But, I also see the other points presented in this thread. The blog post makes a valid point about our views of where to book advertising when we spend money, but the statements are not specific to the industry. Obviously if you are spending money on a campaign and it is making you money, you don’t drop it to save a couple bucks during slow times. But, the blog is talking about a much different industry that does not have a localized market.

While I am a newcomer to TT, I imagine virtually everyone here is working on a much smaller scale that Amazon. The blog writer is urging us to change the way we think about advertising dollars, but the example is not relevant to most of us here. I think that was Scott’s point. He wasn’t saying you were wrong for posting this information, just cautioning against spending marketing $ on an irrelevant audience.
 
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I can’t see that Godin is recommending discounting as such.

The overall message of the story is if the marketing activity is making money (this isn’t limited to advertising), that is, making you more money in than it is costing you, then you should keep doing it.

How well your marketing efforts work of course depend on a lot of different variables and the need to track your efforts and continually improve your message never ends.

As usual Seth Godin speaks the truth 🙂
 
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