“Saved by Zero” Stretches to Detroit’s Desperation
Anyone who watches football on Sunday probably has Toyota’s “Saved by Zero” jingle permanently (and annoyingly) ingrained in their head, and recent news shows that Ford is employing a similar tactic to boost sales. In addition to joining its colleagues on Capitol Hill to ask for some federal financial help, Ford has come out with an employee-pricing-for-all strategy after the company’s sales plummeted by 30 percent last month.
The use of employee-pricing tactics is touted as “an interesting experiment in fixed pricing” by the all-things-automotive gurus at Edmunds.com. And indeed, being offered an “insider’s” rate is certainly an enticing psychological gimmick. Actually, the folks at Edmunds call it a gimmick and a spade: “You can call it employee pricing or rebates or incentives or deep discounts, but the bottom line is the bottom line: Cut prices, sell more.” (Last week’s “Family & Friends Discount” offered by Gap, Inc. is another example).
When it comes to pricing, there is obviously a huge psychological factor: People associate any lower-than-retail pricing as scoring a deal and when billed as an inside deal, the result is to feel way more special than one’s fellow consumers. Certainly not a new ploy, but as evidenced by some of the U.S.’s largest retailers, a tried-and-true way to move a lot of volume in a short amount of time.
What is the long-term implication of these strategies? While it’s true that the thinness of everyone’s wallets results in less buying, the downturn doesn’t negate the need for informed, reality-based pricing as a foundation for our economy. Downturns, big and small, have happened before, and that data can be injected into pricing approaches today. No matter what the economic climate, we need to work toward pricing – whether it’s for cars, cable-knit sweaters, or lamb chops – that is informed by the cost, supply and demand factors that matter for profitability.
