A decade ago, I wrote an article in Fast Company called We Offer It, You Buy It; Take It Or Leave It. Here’s how I kicked off that article:
Does the headline of this article represent an attitude that customers are drawn to? It sounds like a customer strategy taken right from the Seinfeld’s “Soup Nazi” playbook!
Do customers prefer choice and the ability to influence every last detail in their decisions about certain products and services? I say “yes”—they prefer choice. Unilateralism on the part of product and service providers is not the pathway to marketplace success; it creates undesirable friction in the relationship.
The more sophisticated the buyer and the more configurable the product or service, the more giving the customer access to what they want comes into play.
You certainly aren’t going to find them configurable products and services in:
- Big box stores e.g., Home Depot, Lowe’s, Sears, WalMart, Barnes & Noble
- Apparel stores e.g., Macy’s, Nordstrom
- Automobile dealerships, e.g., Ford, GM, Honda, Toyota
- Sporting goods stores
- Grocery stores
Where would I find configurable products or services?
- Banking, financial institutions and insurance companies
- High-end automobiles, e.g., Bentley, Rolls-Royce
- Custom-made clothing
- Traditional Chinese medicine (acupuncture & herbs)
- Fire/rescue vehicles
- Semiconductor capital equipment
- Computers, related peripheral equipment and networks
- Smartphones via application availability
Let’s consider the automobile industry. The industry personifies the mass production paradigm and literally stuffs the channel (auto dealerships) with finished goods. The dealers have quotas about how much product they have to take and pass-through to customers. What they have trouble selling is sold at a discount. When a model year changes, last year’s models lose immediate value and must be sold at a discount. Banks won’t finance “last year’s model” at last year’s list price.
I look at what’s happening with the COVID-19 situation in the auto industry. Automobile dealerships are closed. They aren’t deemed “essential businesses” that need to be open. The inventory carrying cost (flooring) doesn’t go away–it builds unless a dealer can work out an arrangement. Essentially, the cost structure is persistent and builds as time goes on. And, at the end of the day, the business model is “We Offer It, You Buy It; Take It Or Leave It.” Not very compelling.
The next time you drive by a dealership, I want you to look at all the cars on the lot. Think about all the dollars tied up and all the waste associated with that business model. Think about the paradigm of inventory devaluation simply because a new model year is introduced. And, given the modest level of innovation from one model year to the next, is the business paradigm still relevant?
In January 2020, I saw a TV advertisement for “Hot Tubs, Hot Tubs, Hot Tubs.” It was a 3-day event at a local fairground. They were advertising close-out sale prices on the 2020 hot tubs–in January of 2020! Really?
If you are announcing special sales, you are selling a commodity with a low level of differentiation. For some products, that’s fine. But, for some customers, they want and expect something more. They want choice.
Thought for the week:
“Early to bed, early to rise, work like hell, and advertise.” – Ted Turner