Wednesday, July 28, 2010

"Value added" that actually adds value

About 5 or 6 years ago, a new trend started in my industry (for those of you who don't know, I make t-shirts and other merchandise for bands).  Record labels started coming to us asking us to create "bundles" of product - usually a new CD from one of their Artists matched with a t-shirt, poster, or some other similar item and then sold through our online stores.  They way the labels marketed this was by saying "Buy (band)'s CD and get a t-shirt for free!".  But you pretty much had to have been living under a rock at the time not to know that the sales of physical CD's where starting to tank.  It was obviously huge news in the trade press, and even the New York Times, Newsweek and other major newspapers and magazines where publishing stories about how a decline in CD sales was putting retailers like Tower Records and Virgin Megastores out of business.

So it became obvious pretty fast that the actual hook was "Buy the (band)'s t-shirt and get the CD for free!".  There where some notable "bundle" successes over the years, but the power of the t-shirt was never enough to offset the hemorrhaging of revenue the labels where suffering.  Even in the best of times, merchandise sales paled in comparison to music sales.  The "bundle", though a good idea, was an act of desperation by the labels.  Truth be told, it was merchandise companies like mine and the bands themselves that enjoyed the most benefit.  But that's not the way the labels where used to working.  In the good old days (from the label's perspective, anyway), artists where essentially meant to be indentured servants.

About a month ago when I was registering for the Solana Beach triathlon, there was an offer for either a San Diego Triathlon Series (which Solana Beach is part of) cycling jersey or tri-top.  I think they where $40 dollars.  You can never have enough jerseys, and $40 isn't a bad price for a jersey.  So I bought one, and then kind of forgot about it.  But when I picked up my race packet last Saturday they gave me an extra bag.  And inside the bag was my jersey.

I finally got around to wearing it today, and it's really nice.  It fits well, has a good quality zipper, good quality fabric, and is sewn well.  My guess is that the jersey would be closer to an $80 item if I had purchased it at the local bike store.

The race producer KOZ Enterprises didn't have to do this.  All the races in the series sell out.  So they are not coming at this from a position of desperation in a critical play to increase revenue or exposure.  Besides, the concept of buying a cycling jersey to get into a race for free is WAY more absurd than the CD/t-shirt model anyway.

I don't know anyone at KOZ so I don't know exactly why they are doing this.  Sure, there is some built in marketing value.  I'm sure I give their sponsors some "eyeballs" when I'm out riding my bike in the jersey.   But I'd like to think the motivation is in greater parts a customer-centric value play.  Why wait until things are bad and then pretend to give people value?  If you give people value up-front when things are good isn't that ultimately better in the long run?  This is the first time I've seen an offer like this but I suspect it won't be the last.

Maybe Sony or Warner Brothers should try and hire away some of the senior executives from the USAT.  It might help them get their sorry asses back in shape.  But then again, all of us would lose some of the good guys.

Speaking of apparel, I posted the first set of 2 potential graphics for the Endurance Athlete Project fall technical tee line.  I'll be posting more every night for about a week.  Please go check them out if you have a second.  And if you don't yet follow the EAP blog, or follow us on Twitter and like us on Facebook, you should (please).


KovasP said...

Quality will tell. Like the Nissan dealer in VA we used that always washed the car and, at random times, cleaned the inside (no small thing with 3 small children). The promoters who don't put out quality product, be it a race or gear, will eventually fall by the wayside.

Johann said...

I find it's usually the guys that don't need to do it that actually do something more. Maybe that's why they don't need to do it in the first place...

abbi said...

I agree, quality will tell and it's often the ones that don't necessarily need to do the extra that will and will still keep people coming back and wanting more...interesting that you are in the music merch business!

Jon said...

I wish you could opt out on the free T-Shirt at races and that would bring the cost down slightly. Most free race T-Shirts are TERRIBLE and I would never wear them out into public.

How much do you think it costs a race to design and purchase t-shirts for everyone? Say for a 300 person race?

Caratunk Girl said...

Wow, looks like a great jersey. Rarely do you get something that nice for the price but who knows, maybe they got a deal too?

valen said...

I'd tend to think that the tri club was somehow involved in the tee, in that case they've probably got a bit of input on what they wanted and the quality?.
as you mention, many times we get a lemon on the race packs.

Tri-James said...

I agree - I encourage a no shirt option for every race the running club hosts. The shirts become bike cleaning rags.


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