You know how when you shop on Amazon there is a price and a then a “list price” which is usually much higher?
The effect is that you feel like you’re getting a big discount shopping on Amazon.
It turns out Amazon might be publishing list prices that are too high.
Mouse Print first noticed the problem with an array of general consumer products such as Kraft’s Mac & Cheese and a 100-count box of Splenda.
As if this afternoon, most of these prices have been fixed, except for a ton of pet food items.
Take for example the dog treats you see above. The retail value of one Merrick Flossies is approximately $4, making a 50-count supply valued at no more than $200. Yet Amazon claims the list price stands at a whopping $422.89, more than doubled what it should cost.
We tried to contact Amazon for comments, but did not receive a response.
The incident reminds us of last year when Amazon listed a seemingly normal book about flies for $23,698,655.93. Biologist Michael Eisen blogged about the unrealistic selling price, and documented how Amazon’s price for the book The Making of a Fly constantly went up day after another.
Here’s what happened: A professor required this book for a class and students naturally flocked to Amazon to purchase the text. Eventually, only two sellers still had the product available.
Because the book quickly became an exclusive, hot ticket item, Amazon’s algorithm for retailers to competitively price their product catapulted the retail value to more than $23 million.
We’re not sure if this is the same situation with the pet food offerings on the site, but it seems hard to believe the world is running out of doggie treats.
Deli Cat Dry Cat Food
Ok, we know having pets can be expensive but you can’t fool us, Amazon.
Higgins Celestial Blend Bird Food
Who can resist 89 percent off retail list price? Only ten left in stock!
Redbarn Filled Bone – Peanut Butter
Dog foods are getting so fancy these days, but at $6.70, the bone’s a steal.
Reality appears to have finally arrived at Procter & Gamble, the world’s largest marketer, whose $10 billion annual ad budget has hurt the company’s margins.
P&G said it would lay off 1,600 staffers, including marketers, as part of a cost-cutting exercise. More interestingly, CEO Robert McDonald finally seems to have woken up to the fact that he cannot keep increasing P&G’s ad budget forever, regardless of what happens to its sales.
He told Wall Street analysts that he would have to “moderate” his ad budget because Facebook and Google can be “more efficient” than the traditional media that usually eats the lion’s share of P&G’s ad budget.
This is coming from the man who increased P&G’s adspend by a staggering 24 percent over the two years through October 2011, even though sales rose only 6 percent in the same period.
Note that P&G’s revenues were up 4 percent to $22 billion in the quarter but the company’s costs for sales, general and administrative work were flat.
P&G’s staggering ad budget has become a bit of an issue among analysts. On the call, McDonald and his crew were asked about ad costs three different times! . McDonald eventually said:
As we’ve said historically, the 9% to 11% range [for advertising as a percentage of sales] has been what we have spent. Actually, I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we’re quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available.
In the digital space, with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient. One example is our Old Spice campaign, where we had 1.8 billion free impressions and there are many other examples I can cite from all over the world. So while there may be pressure on advertising, particularly in the United States, for example, during the year of a presidential election, there are mitigating factors like the plethora of media available.
P&G’s Old Spice campaign is a textbook example of what the entire company should be doing. The problem is that the entire company isn’t doing it. Check out Mr. Clean’s Twitter stream, for instance. Oh, right—he doesn’t have one.
McDonald’s recent discovery that digital media is free comes after the long-delayed launch of Tide Pods, now scheduled for a month from now but with only a limited supply. It was originally planned for July 2011. The ad budget for that campaign is estimated at $150 million and will come from agency Saatchi & Saatchi.
The problem is that while P&G has struggled to get a single U.S. pod out the factory door, several of its competitors have already launched competing laundry pod products.
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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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