Are Product Launches Peddling For Profits?

After participating in a recent product launch (something I very rarely do), our Platinum Group was discussing the issue and I wanted to share those insights with you.

Considering the recent hysteria behind the massive Apple iPad launch, it got me thinking about how most Internet marketers conduct their product launches.

Most of them work because they’re based on basic human psychology. But I believe people who do use it do it poorly.

In fact, I think they do so because the strategy, particularly as it applies to Internet marketing and digital products specifically, is inherently flawed. What I mean is, in order for it to work — and work well — it must rely on three major factors:

1. Anticipation
2. Social proof
3. Scarcity/​urgency

Granted, you can manufacture these. And when you sell Internet, digital, or information products, you have to. Why? Because these products are, or are seen as, limitless.

And therein lies the rub…

The best and most profitable launches in history didn’t rely on any of these. At least, not in a direct way. Sure, these factors do play a huge role in most successful launches. But they occur almost as natural byproducts. They are not manufactured.

And that’s exactly what iPad did for their launch day. They used #1 (anticipation) and #2 (social proof). But they didn’t use #3. In other words, they launched without the need to create or promote any kind of manufactured scarcity.

Why? Because they didn’t need to.

Obviously, iPad is a physical product, which is naturally limited. That scarcity was made even greater on launch day because of #1 and #2. In other words, they didn’t have to “close their doors” and reopen them at some later date to create scarcity.

Granted, Apple may have limited their in-​​store stocks on launch day to create more demand. I don’t know. And they did a lot more. Seth Godin shares a few others. But I’m referring to the product launch strategy’s three major factors specifically.

My point here is, natural scarcity or creating a genuine sense of urgency — better said, possessing or projecting one — will trump a manufactured one. Every time.

Manufactured scarcity appears self-​​centered, questionable, and suspicious. When you look at how the FTC, Visa/​MasterCard, Google, and now Facebook — with its recent slap — frown upon generated scarcity, you know people are lashing out against the practice.

When Jobs introduced the upcoming iPad, it created a ton of anticipation. With the iPhone being as popular as it was, news generated inherent social proof since people already had experiences with the iPhone.

But there’s more to it than that.

Apple created genuine scarcity because they have strong brand recognition, are well positioned, and have a history of delivering solid products with great value. They didn’t have to poach other people’s lists, create sales contests, or use high-​​pressure tactics.

Now, I’m not saying joint ventures, sales contests, and manufactured scarcity are wrong. But if you keep using them, product launch after product launch, then chances are you will be be seen as nothing more than a salesman. A slick, smarmy, snake-​​oil peddler.

(That’s not just my opinion, either.)

Apple didn’t create demand, which is why they didn’t need to manufacture scarcity. Whether the product was a physical one didn’t matter. To paraphrase Gene Schwartz in Breakthrough Advertising, “They didn’t create demand, they merely channeled it.”

Speaking of channeling demand, let’s look at some of the differences.

When I used to teach marketing management in college, there are two schools of thought in marketing. One is called the pull strategy, and the other the push strategy.

What do they mean? With the push marketing strategy, you are pushing the product through distribution channels. A “channel” can be, for instance:

ManufacturerDistributorStoreConsumer

In Internet Marketing and with downloadable products, the channel looks more like this:

Seller/​VendorWebsite (eStore/​Delivery)Consumer

The push strategy is the one most often used by salespeople, infomercials, direct response advertisers, and direct marketers. And, obviously, Internet marketers, too.

The pull strategy, on the other hand, is where reputation and recognition generate awareness and demand. And that demand pulls the product through the distribution channel — thus requiring a lot less legwork, and a lot less need to sell. For example:

ConsumerStoreDistributorManufacturer

Now, let me put this in a better perspective for you.

Ostensibly, a push strategy can make a lot of money. There’s no denying that. That’s how many marketers make their “millions,” particularly via these massive product launch parades. Problem is, you have to constantly push products to stay afloat.

Sadly, this constant need to push products creates that unflattering “salesman” stigma, where most Internet marketers are largely seen as peddlers and not businesses.

In order to stay alive — or to maintain their standard of living — most Internet marketers need to constantly create new products, make new offers, and seek new “addicts” to push their products onto. (Sounds dangerously close to drug dealers, doesn’t it?)

That’s why most of them churn and burn their lists.

If they stop pushing more products, there is no business.

That’s why Sylvie and I call them “serial drive-​​by marketers.”

If you use a pull strategy, or complement your existing push strategy with a strong pull strategy, you will work a lot less. The rest will almost take care of itself. The business will keep going, no matter what. And above all, there will be less of that peddler stigma.

What constitutes a strong pull strategy?

Aside from offering in-​​demand products and solid value, there’s positioning, brand recognition, business identity, good customer service, a loyal fan base, authority in your field, and strong relationships with your customers and prospects. Just to name a few.

(Sure, there are more than that. But how many Internet marketers use any of them? Very little. For example, how many online salesletters have you seen with a logo? ‘Nuff said.)

Think of it this way: there’s a difference between the pawn-​​shop mentality and the retail store mentality. The former constantly needs products on its shelves to sell to stay alive. But the latter doesn’t need new products to sell. (And by “new” I mean “more.”)

Rather, retail stores need traffic. Consumers. Markets. People with needs. You simply create products to fill needs, not create needs (such as using fake scarcity) so you can shove your products down people’s throats during some big, limited product launch.

In other words, we need to think more like a retail store than like a pawn shop.

Now, I’m not saying we need to become like Wal-​​Mart or some other big box store. And we don’t need to focus on branding alone, or to advertise via some upscale, big budget, Madison Avenue advertising firm like many big brand stores do. No, not at all.

But we need to think like Wal-​​Mart.

We need to think like an Internet marketing business instead of like a peddler.

How would you feel if, upon entering your local Wal-​​Mart, they only had one product available at any given time? Or they had limited quantities of a product you know well and good wasn’t limited? Or they used high-​​pressure, time-​​sensitive tactics to sell you?

Sadly, most Internet marketers conduct their business like pawn shops. I’m not saying we should stop using direct response. Direct marketing, particularly for small businesses, is essential. But it should complement a good business strategy. Not replace it.

How great would it be if you sold products like crazy simply because people asked? How great would it be if you never had to sell or use any kind of manufactured scarcity to sell? And how much more money would you make, especially over the long term?

Bottom line, start focusing on creating long-​​term, solid businesses rather making serialized promotions for subpar products with time-​​limited, over-​​the-​​top product launches that at best merely provide short-​​term cash injections.

Something to think about.

By the way, if you’re interested in how to become a recognized authority, and position yourself and your business in a way that generates authentic demand and scarcity, then I encourage you to come to next week’s Authority Event in Charlotte, North Carolina.