On Thanksgiving weekend, I was impulse shopping online at Starbucks.com. I’d like a new insulated coffee tumbler. Once I moved my desired tumbler to the shopping bag and proceeded to checkout, I found that I needed to purchase $75 to avoid the $8 shipping charge. Ok. I’ll just buy coffee, which I always buy anyway at their stores, to clear the $75. On the way to $75, I noticed one pound of coffee added to the shopping bag didn’t move the needle (purchase total). That’s because there was a buy-three-and-get-one-free promotion ongoing. Cool!
My box of Starbucks goods arrived with five pounds of great coffee and the very fine tumbler. At the end of the day (and I mean the end of the day), I was checking some junk email and wouldn’t you know it, Starbucks had a 25% off everything cyber Monday deal. I could have gotten a better deal! No tear in my beer.
What’s the point? How does this relate to energy efficiency? Glad you asked. If Starbucks were a program implementer and coffee beans were its version of energy saved, it would have been clobbered over the head for doling out freeriders. I’m a total freeriding freeloader. That pound of coffee I got was a waste of their money. Some other imbecile is going to make up for the largess doled out to me. In fact, I was the imbecile for many years as I paid full price for in-store purchases of coffee. Moreover, had I been a cyber-Monday nerd, I would have been an even bigger freeloading freerider.
Sit up straight. Place your left forearm across your sternum (that’s the bottom of your rib cage). Place your right elbow on your left wrist. Make a fist with your right hand and connect that with your chin. Go easy. Don’t knock yourself out.
Is not freeridership for energy efficiency programs completely inconsistent with every other goal-seeking, profit-oriented industry on the planet?
I like McDonald’s smoothies, and I like McDonald’s hamburgers… as well as a bunch of other stuff they provide, but these are the things I typically buy when I’m on the road by myself.
Does anyone not know what is on the McDonald’s menu? Surely, everyone can name at least a couple dozen items, not counting various sizes of burgers available with varying numbers of burgers and combinations of toppings. Yet, McDonald’s advertises.
McDonald’s spent almost a billion dollars on advertising in 2013 – an astounding 15% of total restaurant ad spending.
I don’t need no McDondald’s advertising. Do you need advertising?
According to Businessweek, McDonald’s US sales total about $36 billion annually. Therefore, according to the energy efficiency industry, I, your humble blogger, am being gouged 3% by McDonald’s every time I buy my two hamburgers and a medium berry smoothie. Stop the madness!
Three percent of revenue is far more spending than any energy efficiency program I’m aware of.
So, let’s carry it a little further. All ad spending by Coke, Pepsi, General Mills, Taco Bell, Hanes, Victoria’s Secret, FedEx, ESPN et al is an atrocity against the clueless, helpless consumer. All you coupon cutters and weekly circular fanatics are taking advantage by getting discounts your lazy neighbors don’t even know about.
Come to think of it, does anyone get anything back on retail advertising dollars? Who pays for those ads? Not the shareholders! The customers pay for the ads. And the customers get absolutely nothing in return because obviously they don’t “need” advertising because they are already buying. In this case, the non-participants (those not buying at McDonald’s) are “benefiting” from the suckers, er I mean, participants.
Let’s examine why these giant companies with well-known products advertise.
It works. The end.
These companies are hugely successful. They know what they are doing. They are not ripping off their participating customers simply to place timeout ads on the weekend’s NFL game. Trust me. They’d keep the 3% and give it to the shareholders if it was a waste of money. That would be a fat dividend these days!
The point of all this is no one (nobody) can separate the effects of the program on consumer behavior. Consumers never confess to being influenced by an ad, yet advertising is a $100 billion-plus industry. If McDonald’s hadn’t been successful with its hamburger back in 1948, it wouldn’t be selling the 121 items on its menu today compared to only nine back then. The 112 “new” items, including Filet-O-Fish, Egg McMuffin, Chicken Nuggets, and the dreaded Happy Meal, wouldn’t exist today.
In the case of energy efficiency, confessions of program influence would indicate weakness, ignorance, and not caring about the environment. Of course, I would have done it!
Companies keep advertising to remain relevant – to build their image and brand – to be cool. Is energy efficiency cool? No. We’re too busy with obsessive analysis of freeridership and attribution – asking people how smart they are and whether they like clean air and water, animals, and their mother.
Instead, how about focusing on being cool and effective and providing what customers want and need, and things like the iPhone and iPad – that people never knew they needed?
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