The Musings Of An Opinionated Sod [Help Me Grow!]


Why Companies Should Stop Seeing People As Walking Wallets …
October 2, 2008, 7:13 am
Filed under: Comment

Pickpocket Wallet by Archie McPhee Seattle Photo: Archie McPhee Seattle

I’m starting to get abit fed up of companies who charge people more money simply because they’ve updated their product/service.

I know investing in new technology costs a bloody fortune, but unless there’s a fundamental benefit to the customer, I can’t see why they expect us to pay for what is the cost of them remaining relevant.

Take Qantas and SIA …

Both have taken delivery of the new A380 plane and both are charging more to fly on it.

They justify this by saying you get better inflight facilities … however whilst having a few more channels on the telly may be nice, it still doesn’t make up for the fact that …

1/ It takes just as long to reach the destination as it ever did.
2/ The leg room in economy is as tight as ever [they say there is more leg room – however due to the way the new seats operate, you actually end up feeling even more closed in, especially when you put your seat back]
3/ These new planes are the most economical in history – so in essence they’re making more profit from each flight than they’ve ever done before.

OK so the plane industry is having a hard time – and to be fair, it is one of the few industries that has progressively got less expensive as time has passed – but I still can’t work out why I am expected to pay a significant premium for very little in return.

The reality is they’re banking on the ‘curiosity’ factor and as we’re all mugs, we fall for it – however as Virgin Atlantic will probably do the same when they get their A380’s [though obviously they will offer REAL extra benefits – won’t you Lee / Steve / Paul?] I think I’ll leave it at that and focus on an issue much closer to home.

Singaporean Taxis.

Yes Taxis.

OK … OK … so the cost of a cab fair out here is ridiculously cheap, especially compared to London, Sydney or the most scary – Tokyo – however the cheeky bastards have decided that punters have to pay an increased fee more simply because they’ve updated their Model-T Fords.

However it gets better …

You see whilst SIA and Qantas can at least claim the A380 plane represents the latest and greatest in aeronautical technology, Singapore’s PREMIER taxi’s expect us to pay more FOR RIDING IN A KIA!

A fucking KIA!

16/09/2008

OK … so it’s only 20 cents more than getting into one of the normal Toyota’s or Nissan’s … however they also have the nerve to then charge an additional 20 cents for every 45 seconds of waiting time AND 330 meters traveled.

Seriously, I’m surprised they don’t try and add a premium if the cab driver has washed his/her hair …

Of course they don’t actually publicise this pisstaking cost structure – well, not in a way that the masses would find out easily – they just try and secretly get away with it, like those restaurants who automatically add a ‘10% service charge’ to your bill.

I tell you, if there’s one thing guaranteed to get my goat, it’s that ‘service charge’.

Apart from the fact it’s often the restaurant who benefits from this additional income rather than the waiting staff … I just hate how they they automatically add it to your bill.

Putting aside the fact you’ve already paid a fair wedge for the food they’ve just dished out, I can’t see why they think they have the right to decide WHAT I should give them.

It’s like writing a $1000 cheque from your parents bank account, then asking them to sign it because you’ve decided you deserve a ‘bonus’ for doing the dishes without them asking.

Actually it’s not that.

It’s like spending a $1000 on your parents credit card, then asking them to pay the bill because you decided you’ve deserved a ‘bonus’ for doing the dishes, even though that’s what you always have to do to earn your pocket money.

Look I often tip … it’s a byproduct of too much America in my blood … however this automatic ‘surcharge’ means that unless I’ve experienced service that went beyond the minimum standard I should expect, then I ask for it to be taken off.

Is it uncomfortable?

Sure … that’s why they do it that way … however the way I look at it is if I’m going to give anybody some money for doing nothing, then it’s going to be a charity or a homeless person.

The irony is I now tip less than I did when it was left to my own personal discretion – and that’s a direct byproduct of companies having the arrogance to assume they deserve more for offering the same – or, as is often the case – less.

This sense of entitlement is undermining brands, industries and even countries [are you listening Singapore???] and whilst money makes the World go round, we need to get back to remembering it should be a byproduct of a job well done rather than the blinkered focus of all our actions.


30 Comments

Mario explains to me that the real reason for this post is that you’re just feeling sore about anything to do with motor vehicles right now.

Comment by John

You lost at Mario? Don’t blame yourself Robert, those technology geeks probably hacked the system to ensure they achieved glory> 🙂

This is a very apt post especially given the financial crisis because brands will be trying to find more ways to obtain increased incomes while people will be looking more closely at where their money is going.

Once this situation is over it will be the brands who walked the fine line between financial management and brand management that prosper but they’ve got to survive the winters of discontent first.

Comment by Pete

i’m so with you on the ‘service charge’ rob. the italians are expert at this level of charging for something you should be getting for free and then asking for extra for the privilege of being charged. in face, my most hated word in the italian language is ‘coperta’. case in point: i walked into a cheap, crap restaurant in northern milan, starving, and sat down to eat. (mistake number 1) before i even say hi, they bring the menu, a glass of water, some bread and a smile, ready to take your order. the gnocchi was great and i was in and out in 10 minutes. total charge: gnocchi, bread, water (which was tap water!) and coperta (the cost for the privilege of sitting in their fine establishment).. ugh!!. lesson learned and just a small amount of admiration for the skill is shafting someone so swiftly 🙂

unfortunately neither qantas or sia have the charm or guile to get away with this without appearing like a pair of slime buckets.

Comment by lauren

I would rather talk about the A380 issue in private but I do agree with the overall sentiment of this post and feel history will show this to be a pivotal time in the life of many brands.

Comment by Lee Hill

ha Lauren, I remember being in Venice with friends who got SMASHED with the coperta in St Marks Square – It apparently costs a lot to have a string quartet playing music out the front of a restaurant there? 😉

I was smart enough to get myself lost off the tourist trail and enjoy a proper Northern Italian meal!

Rob, this “charging for nothing” is something I’ve been noticing a lot of late. Another great example is console games. Franchises like Fifa, Madden, NBA live etc… these come out EVERY year, and although they DO have cosmetic improvements and more advanced physics etc or more online offerings, it’s essentially the exact same game. Can you REALLY justify charging (in Australia) over $100 for a completely new 2009 edition of a game when in reality it’s merely a flashy update of 2008?

I discovered last night that Fifa09 will also charge you to update your league squads every week to mirror real life circumstances… that’s awesome, but shouldn’t it be part of the package I already paid an excessive amount of money for? I appreciate there is a team of people working behind the scenes collating and implementing this incredible feat, but it’s disappointing it’s not part of the WHOLE offering.

Comment by Age

Sadly John you’re right … which means you’re an genius of insight whereas I am nothing but an official loser. Damn!

I look forward to that conversation Lee … but I wish you wrote abit more about this issue because I know it’s one close to your heart and in these times where companies will cut back on advertising expenditure under the guise of ‘cost saving’ I think your counter opinion would be interesting to hear. Go on, be a love and say your piece because I know you will be when we get together, ha!

[PS: Are you still coming to PFSK?]

Finally Age – the reason the companies can get away with this sort of exploitative behaviour is because we bloody pay for it … the only way it’ll change is with economic pressure, not customer moaning … so start a ‘DO NOT BUY’ attitude and if enough of you do it, maybe you’ll be able to use the money you’ve saved on not having to buy FIFA ‘extra’s on another game or maybe even on having a kick about about with real, live human beings. 🙂

Comment by Rob

We all know that’s not gonna happen, Rob!

Comment by Age

I’m not knocking you Age … remember I played a bloody MarioKart competition with a bunch of Google and Cynic folk last night.

How I am married is beyond me – except for the fact my wife found the ‘virtual competition’ exciting which means she’s just as sad as me. More so in fact, because she actually agreed to marry me which makes her even more of a loser.

God I love my wife!

Comment by Rob

and what’s will pulling the biscuit-as-business-strategy post rob? or is that to be revealed tomorrow?

Comment by lauren

You saw that? Damn …

Well you’ll see it again tomorrow – it was a ‘technical difficulty’ which can alse read as me not knowing what bloody day it is!

Comment by Rob

lauren- remember that restaurant in munich?

Comment by marcus

which restaurant? the one we couldn’t get into, or the one full of ärsche that we ended up eating at?

Comment by lauren

I tip regardless. tipping is nothing more than the creation of future benefits by me at the place.

It’s just good business.

Comment by Frank

This post shows how stupid you are. You’d be funnier than SNL if it wasn’t for the sad fact you mean this shit.

Comment by Unapologetic Banker

So why is this post stupid Mr rich, successful and unapologetic Banker? I think the term is pot. kettle. black. Speak sense or just go home, that is if it’s not been repossessed.

Comment by Bazza

Pricing is probably the mosty under-considered elemetns of the marketing mix and I’m sure it will thrill you to know that it is getting a lot of attention in the academic realm.

Price partitionin whereby companies break down the charges for the elements of their offer (as with Ryanair and Age’s toys) is becoming more common and it is argued that it focusses the mind not only on the cost element but makes customers think in detail about the added benefit provided by each element.

It cuts both ways of course – it can annoy and cause certain customers to abandon the purchase as “hidden’ costs mount, but also it can engenede a greater appreciation of the differentiation of your service vis avis the opposition and with that can come greater loyalty. Higher prices separate the truly involved from the indifferent. Well that’s the theory.

Comment by John

EA are the worst at charging you for stuff that should be free.

Comment by Rob Mortimer

i think pricing is only under-considered when you get into service industries – when you have consumable goods pricing is the bit that’s usually over-considered. wouldn’t it be nice if there was an honest balance between the two. that, and more conversations about real value/worth, rather than how to make it appear so.

Comment by lauren

Doesn’t that assume Lauren that everyone would agree on what consitutues value/worth?

Comment by John

sure, but that assumption exists anyway, right?

Comment by lauren

The academic approach is valid if people know the price they are paying without these added features is proportionately less than it would otherwise be but when they keep their price premium it’s a highway to destruction.

Comment by Bazza

anyone remember when a pint over Stella went over 3 quid in the UK? that was me – sorry. I worked at Inbev, pulled together the thinking for 6 continents (own hundreds of pubs and chains like its a scream, O’neils, all bar 1 etc)to justify it.
all we had to show was that the increase in revenue per pint sold added up to more than the loss from number of people who decided not to pay it. we backed it up with some pretty thin consumer research, (price being low down the decision criteria, people not knowing how much the individual parts of the bill were, not counting their change, high cost = high quality) but really it all just came down to an simple equation. The actual consumer psychology is fascinating, I’d love to see the academic stuff, but it won’t get the share of thought it deserves as long as brand owners continue to act out of lazy, short sighted self interest.
by the way – you were all correct about the banker – don’t know what I was thinking on Tuesday

Comment by Mr McG

Look at Baz being all mature – god he’s changed sooooo much!

Good point though … best demonstrated by the slow murmerings of discontent towards his current employer now they have decided to follow the Microsoft model of brand/product development.

Comment by Rob

Mr McG – I work at Lowe; what killed Stella (or is killing Stella) is the discounting. That 2000 Grand Prix winning IPA paper basically was the root of why the brand fucked itself.

I definitely buy into the idea of good profits and bad profits (price rises which makes your audience hate you, or in this case, discounting). NPS may be largely bollocks, but that’s a good theory.

Comment by Will

The question too few people ask is ‘when is enough, enough?’ … because contrary to popular belief, there is a magic point where the money rolling in sees the life of the brand rolling out.

Comment by Rob

i drink beer.

Comment by marcus

Absolutely Will.

The discounting, spurious artois brand extension, and negative associations are all damaging the brand.

Comment by Rob Mortimer

Not as much as the tatse of the stuff though.

Comment by John

Rob – it’s really discounting. The sub brands were working (slowly but surely – Peeterman was doing well), but aye, the discounting lead to the associations.

I don’t mind the taste of Stella.

Comment by Will

I like the idea (not mine) that consumers already have in their minds the idea of a “fair price” and it is the job of marketing to discover what this “fair price” is (and often it bears no relation to the actual cost of the product). This idea of the “fair price” can sometimes be influenced by advertising, but not often.

Comment by andrew




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