Branding CRM Marketing Misleadership Relationship Marketing Value for Value

The Unintended Consequences of Variable Pricing

It’s easy to imagine how a company moves to variable pricing. They follow the money. They test into it. They realize that the buying behavior of shoppers varies from day to day and hour to hour. Their analytics tells them that someone using Safari has higher average purchases than someone using Firefox. They know that visitors that come to their website after visiting certain websites are more or less price sensitive than if they come from other referring sites. And sometimes, they’ve even learned that it pays to increase prices based on repeat visits. In other words, on some sites, the best price you’ll ever get is the first one they show you. Shop around, come back, and you’ll pay more. (Sort of like a car salesman, who knows that if you come back, he’s got you, and he doesn’t have to lower his price to make the sale.)

Then a marketing manager or someone in the sales department makes the case that they can improve profits by harnessing all of this data into a variable pricing strategy. It’s hard to argue with the data.

So the company invests in a pricing engine or builds its own pricing algorithms and institutes variable pricing. And guess what? Profits go up. Sales go up because shoppers are getting deals created with their buying habits in mind. After all, it is an accepted rule of Internet marketing (and direct marketing before it) that the more relevant and personalized the offer, the better the response. And milking every extra dollar out of a sale (or, in some cases, many extra dollars) increases profits.

A slam dunk, right?

Anybody who remembers the relevance of that phrase knows where I’m going with this.

Pricing may seem like a commodity, but in fact, it is part of brand identity. As is the relationship a buyer has with a brand. And just to be clear, a retailer is a brand, too. Sure, Target sells brands, but it is also a brand. People shop at Target as opposed to Wal-Mart for many of the same reasons that they choose Land’s End over Old Navy.

If you found out that the person next to you in line paid less for the same sweater at Land’s End than you did, how satisfied with Land’s End would you be?

Some shoppers will be so upset they’ll never come back. And others will find out how to get the lower price, and then make sure they do that from now on.

Let’s call the first shopper a Brand Shopper. And the second a Price Shopper.

Price Shoppers are smart. They find coupon sites. They find discount codes. They follow blogs and Twitter feeds that promise to find and deliver the best prices. Some of them use bots or apps to notify them of the best prices on specific retailers and shopping aggregators.

And in many cases, price shoppers know that brand distinction isn’t as important as it used to be. As Seth Godin famously said, most products these days are “good enough.” In other words, the upcharge for a top brand isn’t always worth it, and price shoppers often know that.

If you are courting price shoppers, then you’re always in a pricing war where the shoppers are as well-armed as you are… sometimes better. And the competition can almost always undercut you… unless you’re the rock bottom price, in which case, you’re not varying your prices anyway. You’re Wal-Mart.

With variable pricing, price shoppers learn when to buy, and when not to buy. The profits you initially expected from this major segment wither away.

Now let’s look at Brand Shoppers, the core of your business. Your house list, so to speak. They love you. They swear by you. They only wear/drive/eat you. But it turns out, brand is about more than just quality, or value. Brand is emotional. Brand lets people willingly buy inferior products out of love, or a sense of belonging, or even habit. In other words, brand is like a relationship, the human kind.

And nobody likes to feel cheated on, or duped, or lied to, or made a fool of. When they do, they dump you like a bag of bread that’s gone moldy.

So what happens to your brand loyalists when they find out that you’re playing fast and loose with pricing and they get no benefit for being a loyal customer? Even worse, what happens when they find out that you’ll give a better discount to someone who’s never bought from you before, rather than they, who sing your praises, evangelize your brand to all who will listen, and buy whatever new product you throw at them?

So yeah, variable pricing looks great from inside the bubble. But can someone please explain to me the value of a brand in a world where we’re made to feel like chumps if we don’t outsource our shopping decisions to mindless shopping bots that always find us the best prices, regardless of source, regardless of emotion, regardless of loyalty?

Like I said. Slam dunk.

Branding Misleadership

Cover-Up Exposed: The Death of the Maytag Repairman

Do you remember the movie “Dave?”  In the 1993 political comedy, the President suffers a stroke while having an affair, and rather than let the public know, his Chief of Staff and Communications Director convince a look-alike to impersonate him.

In a conspiracy reminiscent of the movie, a much loved popular icon died recently, and rather than let him go, his handlers have conspired to make us think he’s still alive.

I’m talking about the Maytag Repairman, that lonely symbol of stoic superfluity in the face of unwavering reliability, a commercial icon who has been with us since 1967.

I’m not complaining about the latest actor to play Ol’ Lonely, Clay Earl Jackson, who replaced Hardy Rawls, who replaced Gordon Jump, who replaced Jesse White, the original Maytag Repairman.

No, I’m complaining about something that actually matters: brand integrity.

You see, the point of the Maytag repairman was that he was lonely because Maytags were so reliable that there was nothing for Ol’ Lonely to do. It was the core of Maytag’s brand image, the way Volvos are safe, Coke is refreshing and Apple is cool. “Built Strong to Last Long” says the Maytag website.

I was having lunch with my friend Steve the other day, and he told me something shocking. His Maytag broke down, more than once, and in the ensuing nightmare Steve found out that Maytag doesn’t service their own products anymore. They subcontract to third party repairmen through a third party customer support line.

In other words, the Maytag Repairman does not actually work for Maytag anymore.

Not that you’d know it from the language on their website: “To help you depend on your Maytag appliance for years to come, we’ve handpicked the best maintenance and service technicians.” And if you do need help, they’ve made it easy for you to schedule an appointment: “Skip the phone call and schedule an appointment online right now.” After all, they wouldn’t want you to talk to a live customer support representative who might spill the beans about their domestic outsourcing.

Another thing you might not easily learn from their website is that Maytag was bought by Whirlpool on April Fools Day, 2006. (No joke:  Wikipedia says April 1, although the Whirlpool corporate site says March 31. What a difference a day makes.) According to the Maytag article on Wikipedia, the plants would be closed within a year, most employees terminated, and the Board of Directors and CEO given 5 years severance. The name, however, would continue to be used on re-branded Whirlpool appliances. And obviously, so too the Maytag Repairman.

The Maytag site won’t tell you any of this. The beautifully produced flash Maytag Timeline goes all the way to 2007 and neglects to mention the sale.

In “About Maytag”, under “Corporation” there is in fact a link to Whirlpool, “Our Parent Company” as well as mentions in the press releases. And even though the “Investors” link says “Read the latest news and press releases from Maytag and Whirlpool Corporation” it takes you straight to the Whirlpool site… and then promptly disses Maytag.  Right there, in the Corporate Profile, it says “Whirlpool’s primary brand names — KitchenAid, Roper, Bauknecht, Ignis, Brastemp, Consul and its global Whirlpool brand — are marketed in more than 170 countries worldwide. Whirlpool Corporation is a significant supplier to Sears Holdings Corporation, which owns and controls the Kenmore brand name.”

Did you see Maytag listed?  Me neither.

Even worse, Kenmore was listed. Now I’m really worried. I was raised trusting Kenmore, and if Whirlpool has brought the same care and consideration to Kenmore that it’s brought to Maytag, I may have to switch to LG.

While the death of the Maytag repairman may come as a shock to you and me, customer review sites like BizRate and RateItAll are filled with uniformly negative reviews by customers who discovered he was gone the hard way. From their high end machines to their low, washing machines to refrigerator/freezers, the majority of the reviews all basically say the same thing:  Don’t buy Maytag. “Broke twice in a year and a half.” “We were warned but didn’t listen.” “Nightmare on Elm Street doesn’t compare.” “Buy at your own peril — Maytag’s folly.” “Extended service plan is awful.”

Interestingly, some of the customers say they bought their lemons because of positive online reviews. I did see professional reviews by a company named that were uniformly glowing and served to raise the overall ratings, at least on Biz Rate.

But when I went to Consumer Reports, I found that in the one category I checked, Washing Machines, Maytag was the most repair-prone among front loaders and second most among top loaders. (I wonder what Consumer Reports says about

To sum up:  a company that built its brand reputation on quality and reliability, that took everything they stood for and created an iconic brand image symbolized by one of the most memorable advertising campaigns of all time, is not only not reliable, it isn’t even a real company anymore.

And yet, the Maytag Repairman is still starring in commercials, spewing an empty promise, like a long gone Fred Astaire dancing with a vacuum or a ghastly computer generated Orville Redenbacher shilling popcorn. Dead men walking.

In this day and age, can a brand actually believe that it can get away with pretending to be something that it’s not?  Is a brand reliable just because it says it is?  Is misleadership a virtue now?

I subscribe to the belief that a brand is the conversation its stakeholders have about it, not the marketing propaganda it spews at consumers.

So can someone please explain to me how long we’re going to allow this unholy zombie of a Maytag Repairman to walk among us before we get our torches and send it flaming into the blackness where it belongs?