ARTICLE: http://www.pcmag.com/article2/0,2817,2394726,00.asp
Verizon’s “Hit Em While Their Down” Marketing Strategy: Droids for A Cent
SM: Despite Patrick’s optimism, I can’t help but hear this news and say what’s the catch? Yes, on the surface this promotion is great PR to counter your competitors and maybe it’ll help steal some customers. However, what does it say if you’re selling a product for a penny in a market where the standard cost for smartphones range in the hundreds. What would the perceived value of a Lexus be if they sold it at a Toyota Level? No matter what way you look at it, when you see a Droid phone for a penny and an iPhone for $300 you’re automatically going to assume the iPhone is a better choice. Yet that’s just the tip of the Ice Berg. Verizon justifies this deal because it locks in the consumer with the company for two years. Are they overcharging so much for service that it’ll make up all the money they lose on the sale of the phone?
In the end, the true losers are Verizon customers. The company should be doing more to focus on improving their relationships with current users than spending money on consumers who are going to jump ship in two years for the next great deal. Not to worry though, these new customers will be as angry as true Verizon customers when they realize this is simply a ploy to get rid of excess inventory before the holiday releases hit the shelves. Just two summers ago my friend used one of these types of promotions to get the original Droid. Two weeks later, Verizon announced the upcoming release of the Droid 2, which by using a phone upgrade I got a month later for only $50 dollars more than he paid. Closing words: consumers beware!
Let us know who you agree with and be sure to check back tomorrow for a new post and Ad of the Day.
Verizon’s “Hit Em While Their Down” Marketing Strategy: Droids for A Cent
Upon reading about this promotion last week, I was immediately crushed by the fact I am a Verizon subscriber. Droid Smartphones for only a penny? A lousy cent? How could the brand’s value have dived quicker than the RIM’s Playbook? Not to worry folks, Android is as strong as ever. Ice Cream Sandwich is coming soon(!), but that is for another discussion.
What this promotion means is Verizon is ruthless and brilliant. Last week, both Apple and Research In Motion (Blackberry’s maker) courted the media for vastly different reasons. With Apple’s announcement of the Iphone 4S and RIM’s rolling “berryouts,” the media couldn’t care less about the little green robot. So Verizon throws out this undeniable deal promoting their Droid phones, which hits the consumer in the sweet spot: the pocket book. It beckons the distraught Blackberry user to try a different (and better) smartphone software. It dares the IPhone user to waste $300 on a new phone that ISN’T EVEN the IPhone 5, when they can get a brand new Droid Bionic for a mere cent.
But it really targets those suffering AT&T users, poor consumers who love their IPhones so much they will deal with terrible service and dropped calls. Verizon perfectly timed this promotion to coincided with AT&T users ending their 2-year contracts. Now they can transfer to a better carrier on the cheap. This way, Verizon draws consumers away from AT&T with a 2-year agreement, and may sell some more IPhones if their newbies don’t like the Droid. Now, if only Verizon was this generous with its current subscribers, I would have a new Droid Bionic. Guess I’ll stick it out with the Droid II a little while longer.
-PW
SM: Despite Patrick’s optimism, I can’t help but hear this news and say what’s the catch? Yes, on the surface this promotion is great PR to counter your competitors and maybe it’ll help steal some customers. However, what does it say if you’re selling a product for a penny in a market where the standard cost for smartphones range in the hundreds. What would the perceived value of a Lexus be if they sold it at a Toyota Level? No matter what way you look at it, when you see a Droid phone for a penny and an iPhone for $300 you’re automatically going to assume the iPhone is a better choice. Yet that’s just the tip of the Ice Berg. Verizon justifies this deal because it locks in the consumer with the company for two years. Are they overcharging so much for service that it’ll make up all the money they lose on the sale of the phone?
In the end, the true losers are Verizon customers. The company should be doing more to focus on improving their relationships with current users than spending money on consumers who are going to jump ship in two years for the next great deal. Not to worry though, these new customers will be as angry as true Verizon customers when they realize this is simply a ploy to get rid of excess inventory before the holiday releases hit the shelves. Just two summers ago my friend used one of these types of promotions to get the original Droid. Two weeks later, Verizon announced the upcoming release of the Droid 2, which by using a phone upgrade I got a month later for only $50 dollars more than he paid. Closing words: consumers beware!
Let us know who you agree with and be sure to check back tomorrow for a new post and Ad of the Day.
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