1. BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
BUYERS, SELLERS, AND ADVERTISING
HOW TO UNDERSTAND AND IMPROVE
SMALL BUSINESS ADVERTISING
JOE PIERGROSSI

2. CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
THE VALUE
MODEL

3. BUYERS SEARCH
FOR VALUE
THEY DEFINE VALUE AS
HAVING THE FOLLOWING MA-
JOR COMPONENTS:
 QUALITY
 SERVICE
 SELECTION
 PRICE
The Value Model / Page 17

4. Over the years I have asked hundreds of people, in formal and
informal surveys, what it is they are searching for in their consumer
buying, and the most common response has been value. It is inter-
esting that the key word here is value, not bargain. Further, when
people were asked to define value, the most common responses
were the four components listed on the previous page. Sometimes
they included convenience or terms as components, but the most
prevalent responses were quality, service, selection, and price; but
not always in this same order.
WORKSHOP (Vision and Advertising)
Okay, here is a two-part exercise for you to complete:
1. When you started your business, you likely created a vision
of how you wanted the business to be seen by customers. In
terms of this vision of your business, rank the four compo-
nents of value (quality, service, selection, and price) in their
order of importance to your vision.
2. Now rank these same four components of value in terms of
your overall advertising message, in all media, in the order of
the importance placed on each one in your advertising.
Page 18 / Chapter 3

5. It is likely that your response to the first workshop had quality,
service, and selection higher on your list than price. Depending on
your type of business selection might have been higher or lower, or
even absent from your list. For example, for a woman's shoe store
selection would be higher; whereas in any number of service busi-
nesses it might be unimportant.
The second workshop usually results in most businesses rank-
ing price at or near the top of their list. So if your two lists are in-
verted (quality, service, and selection at the top of your “vision” list,
and price at the top of your “advertising list) either your vision or
your advertising is incorrect. In other words your vision is saying:
“This is what we aspire to be as a company”, and your advertising is
saying: “price is more important than quality, service, and selec-
tion.”
WORKSHOP (Vision and Advertising Disagreement)
Were the results of your vision and advertising lists different,
or the same?
Why?
I need to add another thought to this discussion of value. Dur-
ing this current recession, price has become a more important ele-
ment to the notion of value. Buyer's are looking and waiting for the
best prices on many items that they need to buy, especially big tick-
et ones. So for many businesses a lower selling price may be a nec-
essary evil. But, if you offer higher quality, better service, and a
wider selection, your advertising needs to clearly state those facts.
The Value Model / Page 19

6. I have completed this exercise in every workshop I have con-
ducted on this subject. Nearly every person who completed the exer-
cise discovered a disagreement between what they thought was im-
portant in their vision, and what they focused on in their advertising.
Now, why would thinking, rational adults say one thing in the
vision for their business, and do something very different in their
advertising? Well, here are the most common responses I get during
my workshops:
1. “Everybody else is doing it.”
2. “The most important thing to buyers is price.”
3. “I get the most response from price ads.”
4. “Price ads are easier to create.”
The first, third and fourth responses are absolutely correct; the
second is not. It is true that many advertisers use price as the prima-
ry driver in their ads, and price ads often do get more response, and
clearly price ads are easier to build. Price however is not the most
important thing to consumers. On the next few pages I will present
the rationale why this last statement is true.
It is important to add however that price focused advertising
can and does make price more important to consumers than it
should be. Here are two case studies to demonstrate the point:
CASE STUDY (Semi-Annual Sale)
I once called on an upscale men's clothing store in the Midwest.
The owner, Jack and I had the following exchange in the middle of
our conversation:
Jack: “Joe, how do I get my good customers to stop shopping pri-
marily during my semi-annual (May and November), 50% off ev-
erything in the store sale?”
Page 20 / Chapter 3
Joe: “Stop having predictable, deep discount sales on everything in

7. the store.”
Jack: “But I have been doing this for over ten years, and my good
customers look forward to it.”
Joe: “I am going to guess that some of these good customers come
to you in April and October and ask you to hold merchandise for
them until the May and November sales. Right?
Jack: “Of course, these are my good customers, some of them I
have known for years. And if I don't do it they will probably buy
somewhere else.”
Joe: “I have two questions for you. One who created this problem?
And second, why do you want to stop it?”
Jack: “Well I did, by starting the damn dumb sales in the first place
during a very slow year. And I must stop it because I am cutting my
margins very thin. I make more sales but I make less profit. In fact
sometimes I even lose money on these sales. It is just not fair.”
Note: I once worked for a CEO who aptly defined a situation such
as this as “profitless prosperity.” The conversation continued:
Joe; “So essentially, you have trained your good customers to buy
your high quality clothing, get your extraordinary service, choose
from your wide selection, and pay an exceptionally low price too.
As I see it there is only one winner here...the buyer. And you are
right it isn't fair.
We went on to discuss several strategies to change the habits of
Jack's buyers from predictable, everything on sale at 50% off buying
to less predictable sales on “select” merchandise. We also agreed
that it wasn't going to be easy but if he wanted to stay in business
the change had to occur.
CASE STUDY (Oriental Rugs)
The second case study involves a personal experience. There is
a company in America that makes machine made oriental rugs; they
have been rated as the “Best machine made oriental rugs in the
world.” For years they have had 50% off sales on all of their rugs, at
The Value Model / Page 21

8. least once per year. Our family has been able to manage all of our
oriental rug purchases, from them within their well-advertised sales
events windows; it was easy. I look at it this way: we could have
paid twice as much for our rugs, but why would we? By the way,
they have since stopped having these predictable, deep discount
sales. Somebody must have realized that when you have the “best”
rug you don't have to sell them at deeply discounted prices.
WORKSHOP (Getting it All)
Have you had any personal experiences where you have taken
advantage of special sales, discounts, etc. that provided you with
more quality, service, selection, and at a lower price?
How did those experiences make you feel?
Page 22 / Chapter 3

9. THE PRICE DEMON...
CONSUMERS THINK THEY ARE
GETTING VALUE...
AND WHAT THEY OFTEN GET IS
A LOWER PRICE AND LESS:
 QUALITY
 SERVICE
 SELECTION
The Value Model / Page 23

10. This last graphic points out a problem that is much more com-
mon than the previous two case studies. As buyers, what we want is
the best value, meaning the best combination of quality, service, se-
lection, and price. And when we get 100% of all four, as in the
clothing and rug store examples, we view it as a major purchasing
victory.
But all too often buyers do get a lower price, but in the process
they also get less quality, service, and selection. Here is another
case study:
CASE STUDY (Wrought Iron Furniture)
For over 100 years a family owned, U.S. company has pro-
duced high quality wrought iron patio furniture. The furniture is
made of high grade, heavy gauge wrought iron. The iron is welded
together with the highest quality tools and material by experienced
crafts people; some of who are third generation with the company.
The welded joints are sanded and polished to become virtually in-
visible. The completed furniture is then dipped several times in a
patented rust prevention process. It is then finished with a coat of
primer paint, and several coats of top quality finishing paint.
Then they are thoroughly inspected, carefully packaged in pro-
tective material, and placed in a thick corrugated box for shipment
to the distributor or retailer. The average retail for this 48” round ta-
ble and four decorative chairs is $599. This price includes a five
year, unconditional, warranty against rust.
About ten years ago the company was approached by a mass
merchandiser: “We can't sell your furniture at $599, but we could
probably sell 150,000 sets, if you will build them to our specifica-
tions so we could sell them at $399.” The specifications included
lower grade and lower gauge wrought iron, lower quality welding
and finishing, less rust proofing and paint, and shipped in a plastic
bag.
Page 24 / Chapter 3

11. The warranty against rust was one year. And there was one ad-
ditional requirement from the mass merchandiser: The furniture
must look exactly like its more expensive cousin, and be branded
with the company's name.
The unwary shopper who had priced the more expensive
wrought iron furniture at a local independent, lawn and garden store
would find the set at the mass merchandiser and think: “Look at
that...I can buy the same set of furniture I saw at the other (more ex-
pensive) store for $200 less. Thirteen months later, the welds are
failing, rust appears everywhere, and of course the warranty has ex-
pired.
I learned this from an independent lawn and garden store own-
er who had heard so many unhappy stories about the mass merchan-
diser's furniture that he bought one of their furniture sets and placed
it in his store next to the model that he sold. It was a great selling
tool since when seen side-by-side the differences were obvious. The
independent store owner later told me that the manufacturer had
since stopped making the furniture for the mass merchandiser due to
the number of complaints and the blemish to it's good name.
In the event that the point is not perfectly clear, I have a case
study that is one of my favorites that offers another perspective on
the same theme.
CASE STUDY (Gas Grills)
I was in Texas calling on an upscale fireplace and gas grill
store. After introductions, here was the conversation:
William: “You probably can't help me. You see my gas grills cost an
average of $700. Anyone can purchase a gas grill that will also cook
your steak, at one of several mass merchandisers, for about $200;
some even less.
The Value Model / Page 25

12. Joe: “Are your gas grills any better than theirs?
William: “Of course but does the average buyer really care? All
they look at is the price.”
Note: I chose not to challenge William on his “all they look at is
price” statement, knowing that they most likely sold quality much
more than price in their sales demonstrations with buyers. However,
I had seen some of their ads and they were mostly product and price
ads. I elected to take our discussion in a different direction.
Joe: “How are yours better?”
William: “First, all of our grills have four cast iron burners, and two
cast iron grates, that are unconditionally guaranteed for life. The
outer construction is mainly stainless steel, and cast aluminum, not
sheet metal. Also, they have a patented “anti-flare-up cooking sys-
tem that makes it nearly impossible to burn your barbecue. Most of
the mass merchandiser's $200 grills, don't have any of these features
and will last a couple of years or so; ours is the last grill that a cus-
tomer will ever have to buy!”
Joe: “Do you clearly state those differences in your advertising?”
William: “No, we mostly use price point promotions, and special
sales events. We save the “good stuff” for when the buyer comes
into our store. You know, when a comparison shopper comes into
our store and listens to our product presentation, our closing ratio is
huge...two out of three! But I am willing to listen to your sugges-
tions for our ads, we need to get more traffic into the store.”
While it is true that product presentations are most effective in
the store with the real product and with a trained solves person,
your advertising must include some of the more profound differ-
ences that make your products/services different from your competi-
tors. We will revisit this notion a little later.
I have an additional observation to make, vis-à-vis this last case
study. When I arrived home following my trip to Texas and my
meeting with the gas grill guy, I looked out onto my deck and there
sat my seventh gas grill. I recall that I had paid between $150 and
$300 for each of them, and probably spent another $400 on burners,
Page 26/ Chapter 3

13. grates, and other replacement parts. Which totaled more than $2000
over the years (most at mass merchandisers.) Yikes!
I could have bought one grill for a fraction of the cost but I was
never properly educated, so I didn't know any better until I met the
gas grill guy in Texas.
I have since bought my last gas grill, and it is everything I was
told it would be. My family and guests think that my excellent bar-
becue fare is due to my skills; but frankly it's the grill!
By the way the ad we designed was simple. One half of the ad
had the following headline:
A LIFETIME OF INEXPENSIVE GAS
GRILLS
Followed by photos of ten inexpensive gas grills and:
COST $2500. *
(* Add $100 every other year for replacement parts.)
The other half of the ad had the following headline:
A LIFE TIME OF EXPENSIVE
GAS GRILLS
The Value Model / Page 27

14. Followed by a small photo of one of their gas grills and:
COST $700*
(* the cast iron burners, and grates are guaranteed for life.)
At the bottom of the ad the copy was:
THIS IS THE LAST GAS GRILL
YOU WILL EVER BUY!
Ahh...CLARITY!
WORKSHOP (Misled Buyers)
Think about a personal experience where you bought some-
thing for a lower price, and later discovered that other components
of the value model were reduced or absent.
How did you feel towards the sellers in these situations? How
willing were you to buy again from these sellers?
Page 28 / Chapter 3

15. In these days of buyer dominance, negative word-of- mouth
seems to be more common than positive. One bad buyer experience
can lead to many others hearing about it. And the seller most often
will never even know about the negatives being shared with
prospective buyers, and therefore not know the amount of lost busi-
ness caused by it.
Many buyers have given up complaining about a bad experi-
ence with a seller (it often does no good); they simply go away.
More lost business opportunities.
WORKSHOP (Ideas for your Ads)
Did the last two case studies, and workshops give you any
ideas for ads to use in your business? Write your responses now; be
specific.
The Value Model / Page 29