Optimarketer: The Marketing Optimization Blog

The Downturn May Not Be The Only Thing Keeping You Down

No doubt about it -- the piss-poor economy is wreaking havoc on lots of businesses. But in some organizations, the biggest contributor to disappointing performance is found right in the corner office.

A percentage of marketing groups are run by dictatorial know-it-alls who clearly don't know it all. Year after year, they fail to test new techniques against tired approaches that should have been replaced ages ago. Try to introduce something fresh and they claim they've tried everything. (They haven't.) Ask to get a discussion going about changing things for the better and it never happens.

Yep, your father's command-and-control paradigm is alive and well. In some businesses, autocrats rule with a fear-based style that attracts and retains yes-men and yes-women but expels dissenters with the potential to transform outcomes. In these cases, the biggest obstacles to recovery are internal, rather than external.

The solution? Unfortunately, in the majority of these situations, the old dogs aren't about to learn new tricks, and the best move is to move on to a non-dysfunctional organization.

What do you think?

Higher Price Equals Higher Demand? Yeah, Right

Did I ever tell you about the 12 credits in economics I earned as an undergraduate? At the time I didn't see why someone had to practically major in economics to get a degree in marketing, but I did learn some valuable stuff.

Case in point: Price elasticity, which has to do with the relationship between changes in price and changes in demand for a product or service. Those professors taught us that a change in price typically causes a change in demand. Raise the price and orders tend to drop; reduce the price and they go up.

As a career direct marketer, I've run thousands of controlled tests, including experiments involving a single variable: price. Again and again, I've kept every other element constant (i.e. creative, media) and only tested, say, $19.95 against $14.95.

In every projectable price test I've ever run, when I raised the price, orders fell by some amount. Every single time. No exceptions. But throughout my career, I've heard folks say, "Ya know what? We raised the price and business ... went up!" (Some have also claimed that a price increase didn't change the demand level one bit.)

My response to these claims has always been the same: show me the data. As of today, I've never seen anyone adequately substantiate the claim that a higher price resulted in no change in demand or higher demand.

What say you, my fellow direct marketers?