The Australian Small Business Blog

Tuesday, July 14, 2009

How One Business Spends 50 cents to Make $100


The best earning marketing dollars are spent on your customers rather on advertising where the money goes to some media mogul. Consider this example:

Coles is currently offering to pay the GST on feminine hygiene products under the banner “Why should you be taxed for being a Woman”. Why are they doing this and will it work?

This is a fairly emotional appeal, but as a male I can be objective on this (he says quickly ducking to avoid sharp objects being propelled at him by the females in his life).

Clearly many women feel this is an unjust tax. It was very controversial when first introduced, although the then opposition and now government has done nothing to remove it.

Firstly, by raising this issue, Coles gets far wider coverage than their advertising would otherwise reach. It becomes a topic for talkback radio and newsletters like this.

Secondly, the actual cost for Coles on a typical product of value around $5 will be 50 cents. Given the tight margins in supermarkets, this might be most if not all the gross profit on the item.

Thirdly, it is most unlikely that a woman will visit Coles to buy these products only and go somewhere else to do her weekly shopping. In fact she is likely to get her $100 weekly groceries at the same time as the purchase of these products.

Finally, would someone change where they do their weekly $100 grocery shopping for just 50 cents? If the 50 cents off had been for razor blades or Cornflakes it would just be seen as another special, easily ignored, but in this case, Coles are appealing to women’s feeling of injustice, and some might just change to support the principle.

Will it work? As in all these strategies there is only one way to find out.

Can you think of a way of spending money on your customers to get them to try you?

Will you convert to Coles, or do you just see this as cynical manipulation?

What do you think? Remember, the best commenters this month will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.


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2 comments :

SpeedMailer said...

I was thinking about this very subject whilst doing my weekly shop in Coles today. As with all marketing campaigns, the results need to be tested and measured, but how on earth can they do that for something like this? I suppose they'll have to ask a sample proportion of their customers.

cynthia said...

I am a female 25-30 who did raise an eyebrow when this marketing campaign first launched. It did highlight an issue that otherwise wouldve been unnoticed by me, but Im afraid I could see right through it and it is rather disappointing. On average I would 'save' 50c - a month! To bring a subject as large as feminism and equality to such a small saving seems to insult a movement/cause like this rather than create more regular, loyal customers. Im not a 'feminist' or radical by any means, I am simply saying, with the business/customer realtionship, that I know I pay 10% GST on practically EVERYTHING....above wholesale and retail profits...so please dont try to make me feel you are looking after my rights and my wallet, Coles! If I were to brainstorm changes to this marketing plan - 'Not being taxed for being a parent', or 'Not being taxed for being a senior' - would have a much more significant reach and would amount to more savings...real savings!

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