There's Nothing Like Cool OOH Spectaculars

The Martin Lindstrom report on Ad Age highlights some interesting OOH treatments in Istanbul, Turkey. Unilever is constructing full size castles on top of construction sites, while a local insurance agency is placing fake burglars on balconies.

Here's the link to the short video.

Bad Move, BK

With the success of, "The King" and the square pants video, I'm sure Burger King didn't need to put out this faux pas...but they did. To advertise its new whopper, the "Texican," Burger King made an interesting commercial featuring a cowboy and a little person luchador, or wrestler popular in Mexico. The major problem is that the little luchador has a cape with the mexican flag, and a Mexican official saw this as a violation to their strict laws banning the use of the flag in certain contexts and additionally saw this as a potential misrepresentation of the image of Mexico.

The BK guys should have seen this coming.
Here's the AdAge article

Pricing Strategies Utilized by Overstock.com

Overstock.com is a fascinating option for pricing strategy analysis because it represents all that e-commerce has to offer: competitive pricing to the hilt and an auction model. It is all about slashing prices on the traditional exchange portion of the site, while at the same time invoking an eBay model for cars, homes and other items on the other. As I mentioned before, the site can be a bit overwhelming, but the one takeaway, at least on the traditional commerce section of the site, is that this place is all about low pricing. The prices, marked in red, seem to be the one constant in the jumbled site, that is organized to an extent but pretty much is just controlled chaos. Tons of products appear on the screen and it is easy as a consumer to get lost - but the red text seems to snap the user back to reality, reminding him/her that this site will save them money.

The Internet has created a new kind of buyer, one that is price sensitive and empowered, which basically equates to a business and marketing nightmare. With a mere click, the prospective buyer has access to items priced on multiple, sometimes countless sites. Shopping around has never been easier.

With the ease of the pure play model, costs are being driven down by such phenomena as self-service ordering, JIT inventory, automated online customer service and less printing costs or basically less of any cost generally associated with a brick and mortar business. Overall, it is relatively cheap to set up shop online, which means that setup fees and exorbitant operational costs no longer have to be translated to the consumer. It's just the cost of what little infrastructure exists that gets tacked on to prices.

Pricing Strategy Identification

Fixed Pricing Strategy

The traditional product exchange section of Overstock.com uses the fixed pricing strategy because it is a typical exchange. Overstock purchases wholesale items and sells them online for dirt cheap. Therefore, the specific strategy is markup pricing, which is simply the cost of buying the product from the producer plus the amount added in for profit and expenses. They do offer, however, sales or discounts on a limited time only basis at fairly regular intervals. Normally, something somewhere on the site is on sale; sometimes it is a specific product, while other times it is a whole product category. Overstock's goal appears to be the price leader - they have an "Online Best Price Match" button next to purchases that challenges the buyer, who may have purchased the item already or not, to compare the price to other sites. If there indeed is a cheaper price offered at another outlet, then Overstock will match that price for the buyer. If the person has already purchased the item then they can absorb the savings in the form of a credit to their account.

Specific Prices

Within the products that follow the typical online wholesaler/retailer model on Overstock, pricing varies greatly from product to product. They don't sell something specific, because they are continually getting leftovers from many different places. This makes pricing difficult and more changeable. A London Fog trench coat, for example, is going for $74.99 at this moment. Next to that price is a heading that says, "Today's Price," insinuating that the prices change daily, although that has not been my experience with the site. Ultimately, there must be a set percentage of profit that Overstock wants to glean from each purchase, and therefore sets the price to achieve those. It always shows the percentage off from the retail price and calculates your savings. That percentage of savings can be anything from 7% to 56% and beyond.

Dynamic Pricing Strategy

The auction side of Overstock.com can be identified as utilizing a dynamic pricing strategy, which is the strategy of offering different prices to individual customers. Within dynamic pricing, Overstock.com more specifically typifies the negotiated strategy. This strategy sets price based on back and forth negotiation between buyer and seller, much like an eBay model. This speaks to the empowerment that now defines the shopper and the shopping experience. What is interesting about this model, while it seems so new and exciting, is that it has been a manner of doing business for centuries. Bartering and haggling have always been a part of market exchanges, but now it exists on the Internet. Additionally, customer reviews bring a great deal of value to this process because it brings credibility to the site and the seller.

Specific Prices

Just the nature of a dynamic pricing strategy makes pinning down exact prices a bit difficult. They use the "reserve" method, much like eBay, where a seller sets a secret minimum bid he/she is willing to accept. From there, the pricing is up to whatever the buyer wants to pay - it just all depends on the perceived value of the product in the eyes of the buyer. The seller gives the buyer an idea of how much something is worth by suggesting a starting price, but from there it is up in the air to be interpreted as it will be. There is a section that is "$1 No Reserve" where people can basically get rid of their junk. There is a shipping fee, usually about $5 give or take, but otherwise the bidding starts at $1.

Effectiveness of Pricing Strategies

These pricing strategies seem to be extremely viable because they reach distinctly different targets. There are the people that want to make a straight purchase of cheap merchandise, and then there are the people who find great bargains through the auction route. Of course there are people who like both, but either way, overstock is covering all the bases by targeting consumers and their buying styles.

According to the Business and Company Resource Center, Overstock.com is reporting $834.40 million in revenue, which is not bad for a site that got started in 1999 and has steadily competed with other operations out there. Amazon.com, offering a similar wholesale model but not with the “lowest of low” prices like Overstock reports revenues of $19,166 million. This is a huge difference, but it relates to its purpose. Amazon has anything you want at reasonable prices. Overstock has all the leftover “finds” of normally expensive retail items available at up to half the cost.

When it comes to the auction portion, they aren't eBay by any means, a heavy hitter with $8,541 million in annual revenue. But that's not to say Overstock was trying to be eBay. The primary model of Overstock is the simple wholesale merchandise exchange, while the auctions appear to be an experiment. Luckily for Overstock, it appears that their experiment is really catching on with a culture that is used to Internet shopping and well versed in negotiating prices in the online space.

The success of a pricing strategy is often rooted in pricing goals. Overstock is undoubtedly market-oriented due to its fierce pricing competition and guarantee to match or beat any price online. With the number of sites out there that claim to sell discounted wholesale items, Overstock has made a name for themselves that allows them to own wholesale online shopping. Wholesale translates to an image of the lowest of low prices; therefore, if Overstock is associated with the lowest of prices, then they are well on their way to meeting their goal.

Just for fun - here is the most random clip from a commercial for Overstock.com's Valentine's Day contest that never was aired. I'm speechless.

The FTC to monitor blog and social networking comments?

The FTC is looking at cases that might lead to legislation punishing untruthful statements by companies in the social networking domain of the internet. Consumers would be protected from false product testimonies on Twitter and the likes.

Read the article