Every medium has its typical characteristics and the audience behaviour varies significantly according to the medium. Remember McLuhan's famous phrase, 'Medium is the message'? Yes, it is still relevant. The strategies of the marketer hence should - and often does - change according to the medium.
The ability to tailor and the ability of the user to take action instantaneously in digital media means there are fundamental changes happening in the way a product is sold. One positive fall out is that the product cycle time has been reduced in many cases, creating an overall efficiency in the marketplace. On the flip side, there is an increased tendency to jump into negotiation during the attempt to capture the imagination of the targeted audience (during persuasion).
In short, negotiation is invading where persuasion ruled.
Let us take some familiar examples. A Facebook advertisement tells you how great an e-commerce site is. But only an extra offer like if you register now and buy today, you get a free gift certificate right away, might lure you to register. Or, suppose there is an app that will allow you to organise your friend's birthday, but in order to use it, you must share your details (that is still fine), allow the app to write on your Timeline, and so on.
Such "luring away" activities are not limited only to digital media. Marketers try to do that in all media, but typically, in other media, you cannot act so fast and so easily. Various studies in the past have shown that quick freebies have had only marginal impact on buying behaviour in traditional media1.
So, even concessions offered have to be "reasonable". In digital media, though, where the user can take immediate and effortless action, it happens far more frequently.
The question is: what is wrong with it? If it is reducing cycle time and enhancing efficiency, it should be welcome. Shouldn't it?
Let us put a similar paradigm. Which is easier? To inculcate good manners in a child or giving him/her a toffee to act "in proper manner" every time he/she is needed to, in front of others? And which is better? Any parent knows the answer!
The first is persuasion. The second is negotiation. Negotiation is not just costlier (as any concession costs something), it is a one-time tactic. Persuasion has more long term impact.
Persuasion is the process of getting someone to do something by convincing them that it is the reasonable thing to do1. So, a successful persuasion means that the persuader has managed to convince the persuaded by appealing to her reason/emotion or both.
Negotiation, on the other hand, is luring the other party to take some action by giving some concessions, even if the latter is not convinced2.
While negotiations have their own place, typically they are part of the sales process. And, they should be tried when you have failed to persuade. The golden rule is to negotiate where you must, persuade where you can.
Apart from Apple, which stands out as the most prominent example of brand owners that don't jump into negotiations at the drop of a hat, there are examples of many other such companies in different areas which, through a combination of better products and effective marketing, have created a positioning for themselves where they are able to sell without offering as much discount as their competitors.
While most luxury brands do not offer discounts, let us keep our focus, for the time being, on brands that charge a higher price because of their perceived (read 'persuaded') quality of products/services and not because of their luxury value. Some examples include Bose Speakers, Singapore Airlines, and to some extent, Flipkart.
While Flipkart offers discounts in comparison to the offline book stores, that is because the online model is more efficient and it just passes off some of that gain to the customers. It is one of the costliest e-commerce sites when it comes to buying books in India, yet it has the lion's share of the online books market in the country. It has, through its quality service delivery and effective marketing of that capability, built a positioning where buyers are willing to pay 10-15 per cent higher to buy a book from Flipkart rather than buy from a cheaper competitor. It has managed to convince (persuade) people that buying from Flipkart means faster and reliable delivery.
The disadvantage of jumping into negotiation is manifold. Some of them are:
• Negotiation is always costlier because you are giving concessions. Every concession has some cost.
• Negotiation is always a one-time thing. It is transaction-specific and not product-specific. You can convince once and sell many times but if you have offered concessions, you have to offer every time.
• Negotiations/concessions often result in dilution of credibility. Try getting an iPad3 at a 2 per cent discount. You know what it means.
But more than all the above, for the marketer, and especially for the creative community, it is an admission that persuasion has failed. In essence, marketing has failed. Anyone can offer concessions; but only those capable can convince.
If profitability of a firm is impacted, credibility of a firm is impacted, and your users do not connect with it - they have bought it for the concessions, not because they like it. This creates a lacuna of trust in the brand.
And, theoretically speaking, that has happened because the creative community has failed in its part of the job to convince the potential buyer why he/she should buy without those concessions. Yes, it is a theoretical argument, but as we see exceptions - like Apple - still exist. They are the most admired companies.
It is not a typical problem that a creative guy should wake up every morning and worry about. But if the trend continues, there are reasons to get thinking.
1. Reference of research paper:
a. 'The Dynamics of Consumer Response To Price Discounts': Randolph E. Bucklin; James M. Latin
b. 'Effect of product category on promotional choice: comparative study of discounts and freebies'- by Subhojit Banerjee
2. How to Resolve Conflict Persuasion vs. Negotiation http://suite101.com/article/resolving-conflict-a130430
The author is senior information architect, Sapient Nitro