Monthly Archives: October 2006

menu driven pricing – pumping profits the easy way

check, please...i thinkA recent New York Times article on the creeping – make that galloping – upward price spiral at the nation’s best or otherwise restaurants got me to thinking about how discretionary selections are made in general and how they might be manipulated in the competitive aftermarket powersports sector.

To recap, the piece begins with the premise that in many parts of the country entrees are now topping the $40 mark, and that’s often without any side item; $6-dollar brocolli, anyone? We’ll leave aside comments regarding value, as that invariably involves judgements based on ambience, location, and how much we care to contribute to the owner’s IRA.

Instead, I focused on one aspect of this new trend that in hindsight seems obvious: restauranteurs discovery that even though diners may not order the most expensive item on the menu, the presence of even one over the top dinner pushed the per ticket price of other entree selections up as a result.

In other words, if the price spread were from $20 to $40 with stops in between, the higher the top price, the greater the likelihood diners would bump their choice to a higher priced entree that stopped just short of the most expensive selection. This is a clear example of discretionary spending manipulated by product positioning.

So one conclusion might be that by including a very high premium priced product in your catalog, odds are favorable that customers might increase their price threshold by a like factor, even if no one actually bought the highest price product offered, and assuming (probably) that the hi-low-median gap wasn’t too exagerated.

Perhaps this is what Neiman-Marcus has known all along; Fabrege eggs and gold-plated Hummers aside, it’s good for the bottom line regardless of resistance to the most expensive piece up for grabs.

the end, it’s clear, is not that near – i think

I continue to bring up the rear on news that’s already been shredded and discarded with a few random observations that, taken together, may or may not be significant.

Lets start with HFM CEO Jack Kliger’s comment that, “We are no longer threatened by digital media,” in remarks to the American Magazine Conference in Phoenix last week. “We are figuring out how to use it to our advantage,” he continued, which is reassuring news to other publishers who continue to lose share to net-com and on the heels of the Wall Street Journal’s announcement that they’ll now offer color to advertisers. Just slightly coincidental was news that WSJ’s September ad revenues shrank nearly 6%, while classified lineage was down over 13%.

I’m not that interested, from way down here at the bottom of the hill, in the stats or dollars (combined advertising and circulation gross revenue of the top 300 books up 5.2% in ’05, down from 8% in ’04) in play. There are a few print pubs that have approached the problem in a very creative way, but most haven’t. My opinion? The decision makers just aren’t that hip to what the gamers have to offer in the way of engagement. In other words, Rolling Stone gets it. Rider doesn’t. Enough already with the garbage heavy metal bass loops, especially those that start on load. Ditto site design that’s a couple of “Alien” sequels late for a date.

And there’s this: who, really, has the time for so much fragmentation? Multi-tasking aside, there just aren’t enough lifetimes, especially when a lot of folks spend way too much time on their own sites and blogs. Uh, like this.

Print’s not going away. Culture, not to mention the paper mills, won’t let it. But perhaps it’s role will change from primary content informer to primary digital media supporter. For example, there’s little argument that print is the preferred format for long copy. Despite repeated attempts, there’s been very little success with publishing books in digital format. There may come a time when some recombinant strain of hi-def will change that, but for now screen res scrolling just doesn’t come close to the efficiency — and tactile pleasure — of a page at a time on paper.

Still, there’s no denying that when it comes to immediacy digital wins hands down. And that ain’t changing back. Anyone with a need to know now gets results straight to their Blackberry. Most of the rest of us log in and download the latest eZimes and html push content to our mail program.

And have you heard Apple’s hype that “many businesses” are now handing out iPods by the box full to grateful employess? Yep, this so they can podcast the spin du jour straight into the only slightly sweaty palms of their employees. (As someone who really digs podcasts, I’ll say that there might be too much of a good thing at work in this example.)

Back to Mr. Kliger’s views. I think they are threatened, to the extent that there’s no way — ever — to bundle sound and video with print. Oh, well, maybe you can throw in a “features packed” cd with that new sub, but they’ll only wind up as coasters on the assisted living wing of the old folks home.

They’ll grow, though, when the boundaries of traditional print are torn down and the perhaps left brain disciplines and experience of magazine journalism are paired with the Tony Hawk right brain hang out world of cell phone video and Garage Band crazy audio capabilities. It’ll be hybrid. And I won’t predict shape, size or color.

As of today, the networks continue to scramble as they define and redefine why broadcast is relevant and oh, by the way, you can ALSO catch content AND MUCH MORE at our web site. Referring back to the second paragraph, it seems clear who’s using whom to whose advantage.

And the offspring will only get faster and more efficient, while the parent(s) struggle to keep their seat at the head of the table.