Wednesday, December 02, 2009

Is inertia marketing ethical, legal or effective?

Thanks to Chris Gosling for passing on this story about the perils/rewards of inertia marketing.

Imagine you went into your local pub and was charged you £7 for a pint of beer. You paid them, drank the beer and departed. Next time you visit you are charged £8; you pay, drink the beer and depart. This continues until the end of the week you pay £12 for a pint and then a friend taps you on the shoulder and asks: “why are you paying four times more than me for the same drink?”

You are enraged, demand to see the landlord and ask him why you are paying so much more than your friend. The landlord says: “because he is a pain in the butt and always asks me to lower the price - you are daft old sod and don’t ask, so I add another pound to compensate for what I lose from serving your him.”

So what do we conclude? You are a fool? The landlord is a brilliant marketer who is able to increase his gross margin by 100s of percent. If this works for a pub, why doesn’t Tesco try and do the same?

OK, what’s the point of these ramblings? Substitute buildings and content insurance for beer and you have what the Royal Sun Alliance insurance (RSA) company has been doing for years and years. Have a read for yourself.

So what do we do? Nominate the marketing director of RSA for marketer of the year or have the guy/girl publicly humiliated? Hero or villain?

I would think RSA knows that the trust in Financial Services cannot go any lower so the may as well exploit their customers. They are only doing what their customers expect of them. Dick Stroud

1 comment:

Chris Gosling said...

I hope you don't mind, cos I'd like to nick back your take on this story and shoot it to video - I love it!