Okay, so if you’re like me, you’re already tired of all the annoying holiday shopping ads on TV that are all telling you that right now is the best time to buy (fill in the blank product here) right now! And of course with Black Friday just past us, the ads were in full force with “door buster” deals and other extra perks for shopping early. Added to the drama this year was the fact that value stores such as Wal-Mart and Target opened on Thanksgiving evening as opposed to 4 AM or whatever obnoxiously early time it was last year. But now that the drama of the biggest shopping day of the year has died down a bit, I started to wonder if any of the ads and marketing strategies actually paid off for these brick-and-mortar stores.
In a Forbes.com article posted on November 28th, the author suggests that rather than Black Friday sales results giving us a glimpse of the holiday season’s hottest items or predictions on whether this holiday season will be better or worse than last year, consumers’ shopping and purchasing trends and habits are changing and that retailers should be cognizant of these changes if they are to have a successful holiday sales season.
For example, the traditional big shopping days such as Black Friday are less and less appealing to consumers with Black Friday sales down 1.8% from 2011. Whether stores open on Thanksgiving night or at 4 AM on Friday, consumers find neither time convenient. They are choosing to shop at more schedule-friendly times or even online. With e-commerce and personalized electronic ads becoming more and more prevalent, is it any surprise that Black Friday online says were over $1 billion, which made it the largest (dollar wise) online shopping day of 2012 so far? This is a 26% increase from online sales on Black Friday 2011!
Another message retailers need to interpret is that consumers may be becoming calloused to the inundation of sales ads. As we learned in our marketing class last quarter, mass media is not nearly successful as it used to be. Retailers need to create more personalized, relevant ads for their target market and cut through the incessant advertising noise that bombards consumers every day.
This article got me thinking about our Capsim simulation and how some of these concepts might apply. Although we just started and we’re all still forming our strategy, there are some key concepts that we’re putting into practice this quarter. It will be key for us all to identify our target market, know and understand the needs/wants of that market and then create products and a marketing campaign that our target market will be receptive to. Although there is no Black Friday in the Capsim simulation (which I think we’re all thankful for!) for us to use as a basis for purchasing trends such as the Forbes.com article suggests, we will hopefully put into practice some of these key business concepts as we move through the 7 Capsim rounds.
4 thoughts on “Black Friday and the Capsim Connection”
Black Friday or Thanksgiving Eve shopping has become an annoyance for many customers. The “deals” don’t justify the process, lines, and angry shoppers. Wal-mart, Kohl’s, and Best Buy are the key players for the hot offers but even then some of their offers were available the Wednesday before Thanksgiving. It takes away the luster and excitement people once had for Black Friday and there is very little differentiation between the big box stores. According to the National Retail Federation, store sales were up only 6% from last year.
I think there is also a bigger picture that needs to be addressed with the many retailers that attempt to bring in customers through these reductions in prices or offers for gimmick inferior products that really plays into a changing consumer behavior within the marketplace. For many years, retailers have considered “Black Friday” as the day that they are able to finally bring their balance sheets into the positive territory for the year. In essence, the entire formation of this hyped up day is purely for the financial gains of retailers. After the recent economic shock, consumers became aware that their past financial indiscretions are becoming a problem for their long term survival in an economic downturn.
As mentioned by the OP, I feel that retailers need to take a longer term view of restructuring the way that they sell and price their products. The idea of relying on a few days of extreme discounting is counterintuitive to these firms as they essentially cut out the demand for the rest of the year. Perhaps a movement from less effective marketing efforts to a strategy of everyday low pricing will help retailers not only even out their revenue streams but also slowly end their strategy of deep discounting which hurts their profitability. If firms are to engage in price warfare, let them do so through strategic decisions on infrastructure and supplier selection as opposed to the “oh my god they have a 200 dollar TV which I would never buy in the first place if I were not drunk on consumerism” marketing push strategy.
I have noticed 2 trends over the last few years regarding Black Friday that seem to be accelerating: 1) Fewer extremely discounted or “free”(after rebate)hot items or “doorbusters”; 2) Longer Black Friday sales or multiple Black Friday Weekend sales that last into the following week. What’s interesting about the former is that it seems that either the stores don’t need as many heavy discounted goods or loss leaders to draw people into the stores, or they can’t afford to absorb those discounts into their sales margins. With the latter, it seems that many retailers are attempting to use this concept of Black Friday to promote longer, milder sales in an attempt to draw more people into stores, bypassing the mania that surrounds the usual Friday-morning-only sales.
This year, I observed another interesting phenomenon (because I happen to be researching digital SLR cameras): at Costco, the promotional prices for the DSLRs has actually decreased in the week following Black Friday! I would be curious to see if this is the case with other popular BF sale goods.
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