For the last eight weeks I have been watching an incredible amount of advertising on Television, Print and online for the new Blackberry Storm.
The ad campaign was incredibly successful.
So successful that by all accounts the Storm was sold out all across America within 48 hours after its release.
According to reports somewhere between 100K and 400K phones we sold in the 2 days before running out
The question is why does a company like Verizon create demand, for say 2 million phones and then only produce 400,00 of them?
If the ad budget for Verizon was curtailed by 50% from the outset, they still would have sold out in 2 days, but would have spent half the money they did promoting the phone.
No shipments are expected now for about 3 weeks, however ads are still running on TV today.
Is it a good business decision to promote a product that cannot be bought?
Why would you market beyond your production capacity?
I don’t get it.
Do you?
I agree it seems strange that why continue to advertise if you dont have stocks but again – This isnt always a bad thing.
The more people that see the advert and go to a store to get one shall see how popular they are that sold out in 2days!
Yes it does make you question why not produce 1mil models but if it didnt sell thats dead stock costing you money where as if you get them in the door place an order.
You have cash comming in that you know is guranteed.
Well thats my thinking.
Regards,
Robbie
People in Business underestimate the demand of a product so they do not have the quantity of it – I have seen it happen with many products – Some marketing ads WORK so called “magic”.
I find that a smart move on the contrary!
Build the craving, show how hard it is to get one of these.. let the lucky ones who got one RARE piece brag about it ( thus doing viral, word of mouth advertising!)..
when something is readily available, consumers take it for granted. When It’s scarce they absolutely want it.. / are more curious to know about it..
WHY is it selling that fast? or .. It must be REEEALLY good to be out of stock so soon!
Apple did it too with the Iphone!
, .. I had to listen to the gloating of the few who managed to get one for days before it was available again. “How Cool is my phone..It can do this,.and that too” which is basically FREE advertising for Apple.
I believe it is a smart move….
think about it..would we have been talking about it on this blog today if it wasn’t out of stock?
I suppose manufacturing and marketing do not talk to each other.
Obviously the manufacturing budget is done years in advance of the marketing budget. Also, I doubt the marketing department talks to the manufacturing department. There are probably 50 middle management people in between and probably not even in the same building or even the same state.
So, they decide to make X # in 2007 then decide to spend X $ in 2008.
Whoops, we spend too much on marketing. That’s another meeting.
Seems like a simple strategy to keep that demand going. . . .I mean you wrote about it. How many other bloggers did too? Belshass has it dead on. . . You keep the buzz up by conveniently running out . . .
Does anybody really believe that they can actually manufacture 1.6 MILIION of these phones in less than 3 weeks?
Obviously this is part of the plan… hold back stock, keep the “rarity” factor buzz going. This is not a new idea.
Why do you think Diamonds have the value that they do?
The cell companies want to sell handsets at full retail price, but since most consumers want a discount (especially these days) they need to inflate demand such that it greatly outstrips supply to keep prices up.
Plus it’s bait, many of those ppl who go in looking for the storm can be switched into another product. Others will wait and pay full price when the next batch comes available.
It’s brilliant and we see it every holiday season. Any press is good press, right?
@Cartoonz: Because they are shiny and pretty of course. 😉