Here is your NoSpin Debunker for December 4, 2003

When your business gets nickel-and-dimed by a vendor, what do you do? Take the NoSpin Poll for December 3, 2003 (bottom right of the www.NoSpinMarketing.com homepage)

A Marketing Lesson in Nickel-and-Diming from Mickey Mouse

Webster's Definition--"..to nickel-and-dime: "To succeed to obtain something gradually by the repeated expenditure of small sums or the slow gathering of votes, power, money, etc in small increments."

It's a classic pricing approach that many businesses use successfully to suck people in with a base price (typically, one that is seemingly reasonable or low) -and then once they've got them signed up or otherwise "captured," pour it on with (high profit margin) extras that are either required or virtually can not be avoided. Buyer beware-and especially first-time buyers.

The Walt Disney Corp plays the nickel-and-dime game to the absolute hilt. While Disney knows that price is a factor for most consumers, it knows that once they have you on premises at their 50+sq mile Walt Disney World acreage (or DisneyLand) or one of their cruise ships, that they essentially "own" you. Continual add-on charges give the illusion of making the overall price more palatable (vs a much larger upfront charge). They also know, of course, that we as parents are even more at the mercy of our children's wishes on Disney property.

A Thanksgiving Disney World Vacation to Remember

Last week I returned with my family from a 7-day sojurn at Disney World in Orlando and Disney cruise in the Bahamas. It had been over 25 years since I'd visited this USA tourist-Mecca, and cruising on a big ship was something I'd never done before. So I was basically a Disney novice. The vacation was lots of fun--and being able to do it with several of relatives whom we rarely get to see--made it very special.

Disney's entertainment and overall service (especially on the cruise) were first-class, and the food on the cruise was very good (which surprised me). Bus service to and from the hotel and parks was lousy (and I can't imagine it during true peak times of year), and food (besides being overpriced) at the parks was abysmal, but that didn't really surprise me.

Still, in spite of our overall positive experience, there was something that gnawed at me from the first few moments of entering our Disney operated hotel room: that there was virtually no avoiding being nickel-and-dimed for the 7-day duration, and that I was going to get taken not for merely a few more nickels and dimes, but a bunch more money (than the "package" purchased). My feeling of getting "gamed" didn't ruin my experience there, but it will give me pause to consider another such trip in the near or distant future. Next time, there are many more relaxing, fun venues for kids of all ages at similar or less cost.

The Quasi-All-Inclusive Package

Disney uses incredibly creative "quasi-all-inclusive" packages that are pretty tough to decipher (even with the additional information that you get AFTER you're signed up). Most all-inclusive packages (e.g. Sandals resorts, etc) are a lot more clear-cut: you really only pay for incidentals and merchandise. Disney's quasi-all-inclusive packages are adventures into mind-blowing additional drainage of the pocketbook. Disney's base packages themselves are not inexpensive-as many of you, I'm sure, already know-and certainly vary according to time of year, etc. But Disney undoubtedly makes a lot more profit from the other stuff that you have zero-or very little-choice in avoiding. That's where the nickel-and-diming comes in.

Within 10 seconds of entering our clean but basic hotel room on the Disney World premises (and before I could intervene), both of my young children grabbed 2 very accessible Mickey Mouse mugs by the TV, ripped the top cellophane off, and I'd just spent my first "nickel-and-dime," actually $24 worth of plastic. That eye-opener was merely the beginning. I expected to pay for some merchandise, various odds and ends, and alcoholic drinks, and I was under no illusion that there would not be additional costs. But I hadn't a clue.

Where Money...Evaporates

The next eye opener was that there was no coffee pot in the hotel room, a true rarity these days. Unless you are asleep, Disney does not want you to spend time in their small and fairly stark rooms. They want you to spend more money in the parks, in the shops, restaurants, etc. Coffee, I found out the next morning, was $2.00 for a small cup in a place off the lobby, but of course I hadn't remembered to bring one of the Mickey cups for a "free refill" (and my room was a serious walk from the lobby--and I forgot the next day as well). Too bad too sad, without my Mickey cup.

I won't bother to list all of the other Disney nickel-and-diming, but a few other examples included:

  • Even standard activities (excluding obvious extras like parasailing) on Disney's Castaway Cay, such as snorkeling ($25 per person) and bike riding (a mere $6 per hour/person), and rafts etc were all extras.
  • Soft drinks on the ship (vs. water or juice) were an extra couple bucks each, but of course you could purchase a different $20 Mickey mug (per individual) to use on the cruise for 4 days-and get refills (and, if you remembered to tote it around at all times).
  • "Smoothies" for kids at dinner (on the cruise) were an extra a few bucks apiece (not a big deal), but prices were not mentioned on the menu, other kid drinks were free. And guess what the servers offered first to the kids (and which of course, they then demanded each evening): smoothies. The servers are well trained.
  • Gratuities for 5 different sets of cruise ship servers, etc on the boat were an additional $200 minimum ante (excluding other individual gratuities added) that is mentioned after you sign up; service was excellent but come on...
  • Etc, etc... oh, and of course there was the old trick of offering 2 for one beach drinks and use 1/2 or less the alcohol per drink.

Don't get me wrong, there were lots of good things included in Disney's base package, but somehow that made the nickel-and-diming approach (per above) stand out even more.

Perhaps I'm just getting to be an old fuddy-duddy at this point in my life, but my gut reaction as a buyer and a business person was that we got gamed some by Disney. Certainly, though, Disney has truly made an art and science out of nickel-and-diming its patrons for maximum profit.

The Pitfalls of Nickel-and-Diming

While it may not be unethical doing business by nickel-and-diming, there is more than a bit of deception by most companies that use it.Some companies can get away with it--at least for awhile. But personally, I think that there are a lot of customers out there who respond to clear product and service pricing options (which may certainly be variable)--and not being gamed by the seller. That's not to say that you should lead with pricing in your marketing strategy--or not always try to re-market to current clients--but rather that you avoid the temptation to take the buyer to the cleaners.

For buyers who are completely price insensitive, there's obviously no issue. But for most buyers who do use price as at least one important factor in their decision, you may get them the first time--but probably not the second. And those folks who do perceive that they were nickel-and-dimed--even many those that had a relatively positive experience--are going to tell others.

Am I giving the multi-billion dollar Walt Disney Corporation advice not to nickel-and-dime? Since they are one of the premier brands and companies on the planet, that would be more than a little presumptuous, and I seriously doubt all the recent Disney Board of Directors turmoil (Roy Disney and another long time Director resigned last week) revolves around this issue. But there's more than one way to skin-a-cat when pricing and marketing your services successfully. And any business can avoid nickel-and-diming and decide to use other pricing strategies to their respective benefit.

PS. If you are contemplating a Disney package, my advice is to add at least 25-33% to the package cost when you are looking at the price tag. Then make your informed decision. And then enjoy your time with Mickey and friends!

Back to work, so that I can pay some of those Disney bills. And if you need any marketing help to get ready for 2004, please give me a buzz or email me.

615.383.7157