From Knowledge at Wharton
All marketers, from time to time, confront products that become difficult to sell. While the ultimate goal of marketing is to target products to customers who are ready to buy, occasionally products or services require an additional push. When that happens, marketers need creative ideas to tide them over until the market returns or the company is able to change strategic direction.
If customers aren't buying, more often than not it is an indication that a company is targeting the wrong people. To find the right people, a company must study its market and customers, figure out why its product is or is not clicking with certain segments, and decide what buttons it can push to get targeted customers excited.
"A selling job is always difficult if you don't really know your customers well and if you simply make projections based on your own experience and intuition," says Wharton marketing professor John Zhang. Zhang recommends marketers put themselves in the shoes of customers and think critically.
According to Wharton marketing professor Stephen Hoch, when a product or service becomes a tough sell, it's because customers have obvious objections to it. The goal, therefore, should be "to frame an offer to get rid of the objection." For example, in response to concerns about high gas prices, a car dealer can offer free gasoline to move SUVs off the sales lot. However, Hoch says, that will obviously only work for customers who object to SUVs because of the price of gas. It won't work for customers who have turned against the product based on concerns about the environment.
According to Hoch, retailers also face situations where consumers hesitate to buy a new product because they have a similar product that still works. Auto marketers addressed this issue by encouraging vehicle trade-ins, an idea that might also work for other products. Hoch says recent Wharton student research shows people are more willing to buy a new item for a trade-in discount than they are for the same discount without the trade-in.
Business cycles can make certain products difficult to move until excess inventory or confidence in the market returns. At the moment, real estate is in one of its cyclical slumps, and in some markets it is not clear where the floor will be.
Wharton marketing professor Leonard Lodish says in this case, marketers need to think seriously about adjusting their price until the market corrects. Pricing is a critical element of successful marketing, in good times and in bad, he says, and many companies do not focus enough on getting their pricing right. Marketers need to consider not only the value of the physical assets for sale, but also non-tangible elements that play into what consumers will be willing to pay.
Lodish points out that some products, like SUVs and real estate, take time to respond to market demand. In the meantime, marketers should rely on pricing and sophisticated segmentation of the consumer market to find buyers who might still be interested in the waning product.
Another challenge for marketers arises when government regulators step in and change the rules of the game, says Hoch. This typically results in fewer players in the market. Companies that find a way to survive with a strategy that takes into account the government action stand to win big if they are able to continue to do business, or build an expanded customer base, as competitors die away.
Even so-called "sin products," such as those associated with trans fats, can find a market, says Lodish. "There are people who don't care whether a product has trans fats while others won't buy those products at almost any price." Again, the key to selling a product in this situation is segmenting the potential customer base to sift out people who would never consider buying the product and focus instead on those who would. Companies should observe what they buy and don't buy and relate it to other variables that can be used to segment -- such as socio economics, demographics or stores people shop in.
According to Erin Armendinger, managing director of Wharton's Jay H. Baker Retailing Initiative, consumers are always ready to indulge themselves when marketers are able to get their message through. "Even a product that is a little bit bad for you -- like clothing you don't actually need -- is not about need. It's about wants and desires," Armendinger says.
Finally, products become a hard sell as new technology or innovation renders them obsolete. Music stores, Armendinger says, are a good example of a market that is becoming extinct as consumers move away from albums and CDs to buying and sharing music online. "Hopefully you see the market moving and make changes before it is too late," she says, adding that Kodak is an example of a company that envisioned the demise of its signature product -- photographic film -- while embracing the future with digital imaging products and services. "You should realize when something is in decline and find a way to sunset that while at the same time, come out with a sunrise," she says.
It can take a generation for a product or service to become completely obsolete, Hoch adds. Companies able to survive in a declining or difficult market can benefit by winning a greater share of an albeit smaller pie as competitors pull out of the business altogether.
While troubled products need marketers' most creative solutions, salespeople must be mindful of the line between promotion and deception. It's fair for companies to do what they can to help consumers perceive a product in the best light, or stress a product's assets that may make up for its failings, says Lodish. But perception is an important aspect of the process. "The perceptions about what your communications say should not be inconsistent with reality. You can say things that are technically true, but that people will interpret in ways that are not true. In my view, that's morally wrong."