CONSTRAINING SUPPLY AS A MARKETING ADVANTAGE

Surprise ... there is enought H1N1 vaccine available to inoculate everyone. In fact there is more than enough supply...but guess what...no one is showing up anymore.

From the hours and hours line ups...vaccine inoculation centers are now shutting down, because why have a party if no one shows up?

So what changed? Surely the so-called hyped up threat of this flu didn't change...there is still a reasonable amount of fear mongering out there. But what did change is that the supply is now abundant...so the cachet of being able to say, "I got my shot even though there is hardly any out there" is gone. If everyone can have it, then it isn't special anymore.

Marketers have long known constraining supply is a great way of creating frenzy and sales. Just look at the Christmas insanity of people lining up each year for the particular "must have" toy of the season. Whether Tickle-Me-Elmo, Nintendo Wii or this year's Zhu Zhu pet....constraining supply, creates hyped up demand, and so the braggarts among us can lament about the hours spent in line, or bragging about how they got the "last one" of something.

But truly, there is a tremendous amount of manipulation that goes into this. As someone who understands demand forecasting...don't tell me that the official line of these companies "well, we didn't know how popular this would be" is true.

Think of the psychology behind this. When you go into a store and a sign says "Only 2 per customer", don't you immediately think...well this must be a great deal if I can only have 2, and so even if this item wasn't on your list, there it ends up in your cart. Or how about "Limited Time Only", or "If you buy this is the next 90 minutes, you also get this never to be repeated again deal"...of course never has a whole new definition in the marketing world.

So before you go loading up on things you don't need, understand that advertisers have psychologists on call and they are capable of manipulating you into buying things you don't even want.

And as the Borg said on Star Trek Resistance is Futile!

Single Sourcing May Kill You

I have never been a proponent of single sourcing. I also don't believe in having an endless number of suppliers for every product.

Yet what I've always strongly recommended is having a primary and a strong secondary vendor, because as seen particularly in the last year with the economic downturn, that as a buyer, you can be left swinging in the wind if you only have one supplier and that supplier goes belly up. Your business could be compromised to the point of bankruptcy.

The powers that be have always argued with me on this point. "Oh...we can get better pricing by consolidating volume! We win -- our supplier will do anything to keep the business." Well that's a nice naive thought that doesn't take into account the fact that firstly there is an a limit to volume pricing....for every 1000 let's say you add, you don't get a tremendously better deal, because there is a limit to the profit that a supplier can give up. Secondarily, you may actually get better pricing by ensuring that you continue to have some competition going on by keeping at least two suppliers in the game. And thirdly? One that the government of Canada is now seeing -- there is a tremendous risk relying on just one supplier.

In the paper today it says that Ottawa is "rethinking" their sole source to GlaxoSmithKline for the swine flu vaccine. No kidding! The inability to supply the vaccine after the federal, provincial and local governments have created a panic of "if you don't get the vaccine you will die" is almost criminal. But what is worse is the fact that bureaucrats who don't understand the implications of lack of supply and who inherently put their misguided trust into one supplier are those that gave in to the "powers that be" whom I argued with often in my career.

As I said in my previous blog....the lack of supply and quite honestly the logistics surrounding getting people vaccinated should have been put into the hands of a competent supply chain professional. By the time now that the vaccine will be available..the flu season will be mostly spent...I for one am not getting the vaccine, because I also have never bought into the Chicken Littles out there...and I used to work for a vaccine manufacturer!