Under the Influence with Terry O'Reilly - S8E10 - Distress Purchases

Episode Date: March 7, 2019

This week, we explore the world of distress purchases. Distress purchases are the things we need in life, but quietly resent having to pay for like insurance, car tires, laundry appliances and batteries. But the psychology marketers employ to steer you toward those purchases is fascinating. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan. You just have to love storytelling. Subscribe now and don't miss a single beat. new year new me season is here and honestly we're already over it enter felix the health care company helping canadians take a different approach to weight loss this year weight loss is more than just diet and exercise it can be about tackling genetics hormones metabolism felix

gets it they connect you with licensed healthcare practitioners online who'll create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at felix.ca. That's F-E-L-I-X.ca. Whether you're in your running era, Pilates era, or yoga era, dive into Peloton workouts that work with you. From meditating at your kid's game to mastering a strength program, they've got everything you need to keep knocking down your goals. No pressure to be who you're not. Just workouts and classes to strengthen who you are.

So no matter your era, make it your best with Peloton. Find your push. Find your power. Peloton. Visit Peloton at with Peloton. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. From the Under the Influence digital box set, this episode is from Season 8, 2019. You're so king in it You're not you when you're hungry You're a good when you're hungry. You're a good man with all things. You're under the influence with Terry O'Reilly. Deep beneath the emerald waters near coral reefs,

there resides a species called the damselfish. There are about 300 different variations of this colorful fish. In aquariums, damselfish grow to about 5 centimeters or 2 inches long, but they can grow to 7 times that size in the wild. At breeding time, mom lays her eggs in the shelter of an anemone. The anemone looks like a colorful sea plant. In reality, it's a stationary predator with explosively poisonous tentacles. Through a quirk of nature, the damselfish is immune to the poison. The anemone provides protection for the damselfish,

and the damselfish returns the favor by bringing food to the anemone. When a damselfish wanders away in search of food, it risks being attacked by a bigger fish. But the damselfish has a unique characteristic. When attacked by a predator, they emit a distress signal. They do it by immediately releasing a chemical substance into the water. As our friends at Quirks and Quarks have said, it's the equivalent of a chemical scream

that says, I'm being attacked. The fish literally becomes a damsel in distress. But here's the fascinating part. The distress signal is not meant for other damselfish. It's meant to attract secondary predators. Within seconds, the chemical lures other dangerous hunters to the scene, sometimes as many as 20, including sharks and octopuses. Now, you would think attracting even more predators

would be bad news for the damselfish. But here's what happens. The predators start to fight over the damselfish. It turns into a gang rumble. The original predator suddenly has to defend itself, and in the resulting chaos, the damselfish escapes. Without that clever strategy, the tiny damselfish would have almost no defense against a bigger predator.

But by releasing their unique distress scream, damselfish escape 40% of the time. There is an equivalent scream in the world of marketing. It's the sound we all emit when we're forced to buy products we don't really want. They're called distress purchases. These are the things in life we need but quietly resent having to pay for, like insurance, car tires, laundry appliances, and batteries. Distress purchases are usually unexpected or unwelcome expenditures, and marketers employ interesting psychology to steer you toward their brands.

We need the items, we reluctantly pay for them, but unlike the damselfish, there is no escaping. You're under the influence. In the world of marketing, it's relatively easy to sell a desirable product, like smartphones, or fashion, or beer, or donuts. Mmm, donuts. With those products, consumers are already licking their lips. But how do you sell a product people need but don't really want? This is what we in the marketing industry call distress purchases. As opposed to sexy products, people buy distress

items with a complicated mix of resistance and resignation. Desirable products involve seduction. Distress products involve pain reduction. Over my career, I've had to try and figure out how to sell many distress products. A big driver behind many distress purchases is time. Whether it's 3 a.m. and you need a bottle of Tylenol, or you've started dinner only to realize you're one ingredient short, time is of the essence. Enter the convenience store. Around since the 20s, convenience stores by definition are shops with extended hours in a convenient location stocking a limited range of household goods and groceries.

They're an I-need-it-now top-up shop. In other words, the mecca of distress purchases. The U.S. has over 155,000 convenience stores. In Canada, there are over 26,000, serving 10 million customers each day and pushing $60 billion a year in sales. That's a lot of top-up trips. 85% of all convenience store sales stem from five categories. Cigarettes, beverages, candy, salty snacks, and in the U.S., beer. They also stock distress items like batteries, aspirin, and band-aids. Many, if not all of these items, can be found in grocery or drug stores.

So, why do millions of people choose to top up at convenience stores? Well, the answer is threefold. First, convenience stores are generally open when other stores aren't. Many, even 24 hours a day. Thus, they're more reliable. Second, there are far more convenience stores than there are drug or grocery stores in North America, making them easier to come by.

And lastly, convenience stores are small. You'd think this would be a negative, but the easy navigation of convenience stores is a huge draw to customers. When you walk in the door for one of those products, you don't want to spend a lot of time looking. Convenience stores know that when we need to make a distressed purchase, we want it now. Walking into a grocery store for a single item

is a much more time-consuming endeavor. Speaking of grocery stores, my wife got a coupon with her food receipt recently that offered four cents off per liter on a fuel purchase at Shell stations. One of the stipulations on the coupon stated you have to go into the Shell convenience store to redeem the fuel savings. It's an interesting strategy. By going into the convenience store, the chances are great you'll purchase something else while there. And by the way, fuel is a distress purchase. Does anyone enjoy watching the dollars tick away on the pump?

That's why getting a few cents off per liter is a form of pain reduction. Meanwhile, another distress category is undergoing a transformation. Think for a moment about the last time you bought a new washer or dryer. Was it just for kicks or because your previous machine kicked the bucket? Chances are, it's the latter. Laundry appliances are a distress purchase that befalls each and every

one of us at some point or another. Over 80% of homes have a washing machine, and the average machine has a lifespan of 15 years. For decades, washers and dryers were purely utilitarian. Large, white boxes tucked away in the basement. And when a washer breaks down and can't be repaired,

it turns into a pricey distress purchase. Historically, laundry appliance shoppers focused on price and durability. Their machine had likely broken, and they needed to replace it ASAP without breaking the bank. In the marketing world, these appliances are referred to as white goods, or consumer durables. They are the big, non-portable appliances,

like washers, dryers, freezers, etc. For decades, they all came in white enamel, hence the term white goods. They don't get purchased often, they have long lifespans, but when they finally break down, it usually requires replacement. As a matter of fact,

the demand for durable goods is a leading economic indicator. When the purchasing of washers, dryers, and refrigerators starts to dip, it usually indicates an economic slowdown. And,

the day your washer or dryer goes on the blink, it means a big household slowdown. Because critical major appliances

are big ticket items, they fall directly into the category of distress purchases. But, our perceptions of laundry machines are evolving. they fall directly into the category of distress purchases. But our perceptions of laundry machines are evolving. Today's appliances are no longer big white boxes. Instead, they're sleek pieces of design.

Manufacturers realized there was a major opportunity with major appliances. They could be beautiful, technically advanced pieces of equipment that could be sold at a premium. As a result, many buyers are now upgrading their laundry machines before they actually need to. Washers and dryers have become status symbols, a major shift in thinking. Lower-end brands sell the need, top-end brands sell the need. Top-end brands sell the desire.

What was once a category of distress has reinvented itself. As another industry did recently when it was forced to deal with a lizard. And we'll be right back after this message. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at

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with iGaming Ontario. Perhaps one of the most distressing of all distress purchases is insurance. Insurance is a peculiar product because it's entirely intangible and won't benefit the buyer until, maybe, sometime in the future. It's also unsexy. But while no one wants to buy insurance, it's a necessary evil. The policies aren't cheap, and it's painful to write those

checks year in, year out. Historically, the majority of insurance companies advertised the same way. Either a straight-ahead litany of the facts, or a somber voice using a spoonful of fear to warn you about the hazards of life.

Earlier I told you how Allstate keeps rates low without cutting corners on service. Well, here's a man who knows how true this is. Mr. Taylor is a careful driver, but over these past 20 years he's had eight claims with Allstate, nothing very serious, until last year when the Taylors were in a two-car smash-up. Mrs. Taylor and the driver of the other car were hurt. Of course, Allstate handled their claims promptly. Then, insurance marketing was completely disrupted by one company that opted for a new approach. Big-time humor. And it all started with a lizard.

Back in 2000, GEICO debuted its brand new mascot, the Geico Gecko. But not for the reasons you may think. That year, a Screen Actors Guild strike prevented advertisers from using live actors. That was a big problem for Geico, as the insurance company was about to roll out a big new television campaign. So the animated lizard was born out of necessity. They chose a gecko because Geico had often been mispronounced as gecko. In this launch commercial, the lizard is holding a press conference. This is my final plea.

I am a gecko. Not to be confused with Geico, which could save you hundreds on car insurance. So stop calling me. Geico, a 15-minute call could save you 15% or more on car insurance. From that point on, insurance marketing took a big turn. More humorous campaigns started hitting the air, including the Aflac Duck, the We Are Farmers campaign, and Flow from Progressive.

The strategy behind Progressive's commercials, using their bubbly spokesperson Flow, is to try to humanize insurance, making the complicated process approachable. Flow is aimed at the younger demographic just entering the world of insurance, with the goal of lightening the confusion that often comes with comparing insurance rates. It's been a success for Progressive. Flow has 4.6 million Facebook likes. There are even Flow Halloween costumes. But sometimes using humor in the insurance business backfires.

In 2011, Allstate sent out a press release comparing accident rates to the 12 zodiac signs. The insurance provider used real data based on drivers' birthdates to make tongue-in-cheek comparisons to astrological characteristics. For example, Scorpios, which are known to be perfectionists by nature, have the safest driving records. Virgos, on the other hand, known as worriers, had the worst. But the public didn't laugh, forcing Allstate to release a follow-up statement

clarifying that zodiac signs have, in fact, absolutely no role in how they base coverage and set rates. Hilarious. Allstate learned the hard way that humor has its limits, and sometimes it's best to go with the flow. Tires are another classic distress purchase. They are critical to vehicle safety, but nobody likes having to buy tires. When your mechanic mentions the tread on your tires is dangerously low,

one thought pops into your mind. Yep, that's the thought. There are close to 300 million registered vehicles in North America. Most have four tires, so you can do the math. The three biggest tire manufacturers generate over $20 billion in sales alone. I spent over 20 years advertising tires, and I can tell you a couple of things. Over 80% of tire shoppers buy tires because of wear and tear. It's a forced, unwelcome purchase.

Only 1% of the public purchase tires simply because they like the look of new tires. So, marketing to cosmetics is neither effective nor persuasive. There are two different levels of tire advertising. The first is the campaign created by the tire manufacturer. When Michelin aired what was probably the best tire slogan ever, because so much is riding on your tires, that was Michelin doing brand advertising. No price, no deals, just a consistent message that equated Michelin with safety. When people

need to buy a distress product, they usually need answers fast. That means they will often choose a familiar or trusted brand. In a tight time frame, they are less likely to weigh all their options or do in-depth research. That's when branding kicks in. You're being forced to make this pricey and unwelcome purchase, and Michelin is adding a powerful emotional reason to pick its brand. Your family travels in your car. Because so much is riding on your tires. Michelin equals safety. Next, tire retailers pick up on that brand advertising at the store level

and offer prices to steer your purchase to their location. Emotion plus price. Package incentives are an appealing aspect of marketing distressed products because getting a deal on something you don't really want to buy lowers the pain of the purchase. Therefore, smart tire retailers will throw in a free oil change or the offer of free tire rotations or balancing in the future. Customer service is important. People want to feel accommodated when dealing with a distress purchase.

A loaner car or a shuttle service helps steer business toward a tire dealer. Smart tire retailers also talk directly to women, not just men. As I've mentioned before, women are often the chief financial officers of the family and hold a great deal of influence on buying decisions. We've come a long way since this Goodyear tire commercial from 1964. This flat tire needs a man. But when there's no man around, Women and men view tire problems very differently. For men, a flat tire is mostly about inconvenience.

For women, a flat tire is mostly about safety. Men see it as a get-the-jack-out-of-the-trunk problem. Women see it as a get-the-jack-out-of-the-trunk problem along with a I'm-stranded-and-alone problem. Therefore, women bring their own set of priorities to tire buying decisions. They ask more questions and don't like rushed answers. Smart tire retailers don't make showrooms look like intimidating man caves, but instead design with bright, welcoming colors.

And when all else is equal, pricing becomes the deciding factor. Fountain Tire created an interesting video recently. Highway 44 in Alberta is one of Canada's deadliest stretches of road according to collision statistics. And worn tire treads

increase the chances of an accident by over 25% in icy winter conditions. So, Fountain Tire set up a tread depth reader at gas stations just before the ramp

onto Highway 44. When people pulled up to a pump, their tread depth was instantly analyzed with a 3D imaging machine. As customers filled up, a screen on the gas pump said, we just checked your tires. We're here today to promote awareness about tire tread depths and how important they are. We want to make sure that you're as safe as you possibly can be. How do you think your tires are? Not very great. I have no idea.

I don't know, I was thinking about that. Probably not good. 31% of the tires tested that day failed. So Fountain Tire gave free snow tires to each of those car owners to help keep people safer on the road. So we'd like to give you a set of winter tires. Really? Seriously? In fact, we want to do it right now for you

because your tires are unsafe to drive on. It's easy to use fear as a marketing tactic when selling tires. But creating a message that said proper tires make the road safer for everybody was a positive message in a category of distress purchases. New year, new me. Season is here and honestly, we're already over it. Enter Felix, the healthcare company helping Canadians take a different approach to weight loss this year.

Weight loss is more than just diet and exercise. It can be about tackling genetics, hormones, metabolism. Felix gets it. They connect you with licensed healthcare practitioners online who will create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at Felix.ca. That's F-E-L-I-X.ca.

Whether you're in your running era, Pilates era, or yoga era, dive into Peloton workouts that work with you. From meditating at your kid's game to mastering a strength program, they've got everything you need to keep knocking down your goals. No pressure to be who you're not. Just workouts and classes to strengthen who you are. So no matter your era, make it your best with Peloton. Find your push. Find your power.

Peloton. Visit Peloton at onepeloton.ca. You may not think of a gym membership as a distress purchase, but consider it this way. It's one of the greatest examples of buying something you don't really want. Dave Trott, a very respected ad man in England and author of the excellent book, Predatory Thinking, which I highly recommend to marketers, explains the secret of selling gym memberships this way.

He asks, have you ever noticed how most gyms have a huge glass window up front? Do you notice how the gym almost always looks virtually empty? Do you ever wonder how they manage to make money? Prime location, huge square footage, lots of expensive equipment, all barely used. And if they're so empty, how do gyms make enough money to survive? The answer is this. They make money by encouraging memberships from people who don't want to go to the gym. The capacity of the average gym is around 300 if absolutely packed. But if 300 people actually turned up, it would be too crowded to get on the equipment.

300 people couldn't even fit in the changing rooms. Here's the intriguing part. If they only had 300 members, they couldn't make enough money to stay open. It's not a stable business model. Trot cites Planet Fitness as a typical example. They have a 300-person capacity gym, but they have around 6,200 members.

That's 20 times as many members as they can handle. The vast majority of those members don't go to the gym, and that's exactly why gyms look the way they do. They're designed to attract people who like the image of belonging to the gym. And that's exactly why gyms look the way they do. They're designed to attract people who like the image

of belonging to a gym, but not the reality of working out at a gym. So when you look through that big window, you see the sofas and cappuccinos, juice bars, massage chairs,

spa treatments, and huge TV screens. It all looks very attractive, relaxing, and fun. All the nice parts without the sweaty bits. Gym designer Rudy Fabino says the image gyms are after is like coffee shops, bars and restaurants. But it's based on the opposite strategy of most retail brands. Trott maintains they encourage trial, but not repeat purchase. The business model is to get people to pay for

a year-long membership up front. People are willing to pay in advance because they think it will motivate them to keep going. But after a few visits, they don't want the actual reality of the constant sweaty hard work. So, they keep the gym membership open and keep promising themselves they'll go every week. But every week, they don't go. And because they don't go, these thousands of unfit people aren't on display at the gym. What is on display are the few healthy people who do go frequently, who are fit and toned and attractive. They, along with the sofas and juice bars, become part of the image that is on sale.

The unfit people are never there, because, in their heart of hearts, they don't want to go. But they don't cancel the membership, because that would be an admission of giving up, of admitting they are never going to go. And those are the majority of people most workout facilities want to attract. So the gym gets the money and never has to supply anything for it. As Dave Trott says, it's a fascinating business model.

It depends on selling people something they really don't want. Marketing involves so many different skill sets and toolboxes. Luxury products require status and exclusivity. Bathroom products demand sensitivity and discretion. And distress purchases necessitate fast solutions. It's interesting that there's always a reluctance to pay for distress products. Yet, they are absolutely essential.

A car without proper tread depth is a danger to everyone on the road. A household without insurance risks the fickle finger of fate. And a busy home with a broken washer grinds to a halt. Maybe the problem is these products are purely utilitarian. They are the lowly unsung heroes of our daily life. There is no joy in vulcanized rubber. There is no bliss in personal liability coverage.

A new washer is nice, but nobody gathers in the laundry room admiring the spin cycle. That's the very reason marketers try to add emotion to distress products. Michelin equates tires with family safety. Progressive wants flow to make insurance feel like a friend. And Jim's wants you to feel good about membership. Cards. Because in the end, that's the way marketers try to take the stress out of the distress.

When you're under the influence. I'm Terry O'Reilly. This episode was recorded in the Tear Stream. Producer, Debbie O'Reilly. Sound Engineer, Keith Oman. Theme music by Ari Posner and Ian Lefevre. Research, Jillian Gora. Co-writer, Sydney O'Reilly.

If you liked this episode, you might like an episode titled The Psychology of Price. Season 3, Episode 2. You episode titled The Psychology of Price. Season 3, Episode 2. You'll find it in our archives. See you next week. Under the Influence. Recommended by women who used to use powders. By the way, I know you've been dreaming of wearing an

Under the Influence t-shirt. Or maybe I was dreaming that. But anyway, we have them for sale on our shop page. And if you listen to the show while sipping a tea or a coffee, have we got the mug for you. Go to terryoreilly.ca slash shop.