From tonysounds@yahoo.com Wed Aug 25 06:42:48 2010
Subject:Re: Epoch

It's a nice plan actually, with the only real drawbacks being the limited number of demos (and a waiting list for same), and getting the pricing correct. 
 
I like the added benefit that this sytem keeps American UPS or FedEX employees working.

"The meek shall inherit nothing."  -FZ 
"Hitting 'play' does not constitute live performance." -T
www.myspace.com/tonyorant
 

--- On Wed, 8/25/10, AnotherScott2 wrote:

From: AnotherScott2
Subject: Re: [CWSG] Epoch
To: CloneWheel@yahoogroups.com
Date: Wednesday, August 25, 2010, 7:22 AM

 

You guys are right that marketing a $2000 product that can't be returned nor evaluated in advance is a herculean task. I think I have a solution, though.

Here's how a demo program could work for both the manufacturer and the buyer. The manufacturer says they are trying to bring it in under $2000. So let's be optimistic, and say that they can theoretically sell the unit at a reasonable profit for $1,899 allowing for only minimal marketing expense. Now let's build in an extra $100 per unit marketing expense, raising the price to $1,999, and let's take that $100 per unit marketing money and apply it to a demo program.

* Customer pays $1,999
* Customer receives Demo unit.

Customer then has 3 options:

* Customer can return Demo unit for full refund. Cost to customer: Return freight. For simplicity and consistency, manufacturer could supply a prepaid UPS shipping label upon issuance of the RA, and make it a flat fee for return, say $49, which for a company (who typically gets better UPS rates than individuals), should roughly cover their total send/receive cost, averaged out (actual freight costs vary by distance). Evaluation costs customer a not entirely prohibitive $49, costs company next to nothing (apart from, initially, the product depreciation of turning a bunch of new units into demo units, but I'll get back to that).

* Customer can return Demo to receive full new non-demo product. Company pays for the return freight of the demo and the freight for the replacement unit. Evaluation costs customer zero. Company has sold the keyboard for $1999, and their built-in $100 of demo marketing money has more than covered their additional freight expense.

* Let's say the customer is perfectly happy with the Demo, it's in nice shape, it actually shows little to no evidence of use. S/he doesn't want the down time of exchanging it for a new one, or would like to save a little money. This customer can keep the demo, for a $100 discount (i.e. manufacturer refunds $100 to customer for keeping the demo). Customer paid nothing for evaluation. Manufacturer got the $1899 they really needed, and the extra $100 demo marketing money went for the purpose of making a unit a demo for marketing purposes.

Everyone wins. Of course, if the company actually needs a base of $1999, then they have to raise the full retails to $2099 to cover the expense of the demo program. That's not as pretty a number, but the idea still works, and in fact, people can still end up buying them for $1,999 if they're willing to keep a demo. If the company's stock of demos gets too big, they can increase the differential between buying a demo unit vs. new to achieve a better balance, through some combination of raising one price and lowering the other, until they find a sweet spot that works long term. Like any manufacturing business, there's always a certain amount of price elasticity, and a little time required to find the right balance of price vs. supply/demand. But conceptually, this should work and be a better use of marketing dollars (in this economy) than trying to get major distribution, full page ads in magazines, artist endorsements, and the other stuff that marketing
dollars usually get funneled into.

The only place this really fails is if the majority of people return the product, in which case the company has a bigger problem... a product that people don't like.



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