Archive for the ‘Beware when Buying and Selling’ Category

A Fool and his money – Bye, Bye

Wednesday, September 10th, 2008

Yesterday I said that marketers love fools.  It is logical, because there is a saying:  “A fool and his money are easily parted.”  Does it mean that marketers are dishonest?  No, I don’t think so.  I do think there are dishonest marketers, as there are dishonest people in every occupation – but that would be as far as I am willing to go.

 

Many people believe all marketers are dishonest and can tell stories to proof it.  The development I referred to yesterday, many people losing money hand over fist blames the marketers.  It is easier to blame the marketer than to admit that you were a fool!  But in most cases I don’t think the marketers were dishonest.

 

We must understand something about a good marketer and a good salesperson (I wish I was good at it).  I will try to explain with a story.  My youngest daughter is an excellent salesperson – born that way.  My middle daughter (I have three) is not a salesperson, but very creative.  So the middle daughter started making bead necklaces and jewellery and the youngest sold at school.  As happens in many businesses, there soon ensued a fight between marketing and production, because sales outstripped production by far.  That is another topic.

 

I asked my youngest daughter how she did it.  This was her reply:  “It is actually very easy.  I like my product.  I show it to people and I am very enthusiastic about it and then they are very enthusiastic about it and they buy two or three.” (She was 12 years old at the time!)  The key phrases: “I like my product” and “I am enthusiastic”.

 

I think a good marketer and salesperson is optimistic by nature.  So with the sales person’s infectious optimism and enthusiasm, we get involved and in the end nobody can stop us from buying.  We will fight to sign the contract.  Good sales people …

 

I am very, very analytical so this is easy for me.  I always want to check that it makes “logical sense.”  But many marketers are not like that.  If a developer tells them it is a good deal and that the price will treble in a year and rent will be astounding, they believe it.  They don’t challenge it.  And it is NOT only in property sales.  Some people just go out and sell.  They believe the company and it is not their job to check what the employer claims.  So they believe the claims the employer makes, even if it is unrealistic.  It just fuels their enthusiasm.  And they get many buyers so excited that they JUMP on the bandwagon.

 

That is what I call the marketing hype – the cloud with free food, beer and wine served by topless girls – there has got to be a catch!  Just separate the facts from the hype, and decide on the facts.  That is wise, and you do want to buy wise, don’t you?  The salespeople out there should give me good marks for this tie down!

 

Tomorrow I will tell you about the time when I was not a fool.

Marketers love Fools

Tuesday, September 9th, 2008

I simply love this story (I don’t think it is funny, I think it is true, which does not mean that it cannot be funny …)  A man arrived at the Pearly Gates and St Peter said he may enter.  Just before entering, he looks back and sees a cloud where food, wine and beer is free and served by topless girls.  “What is that?”  he asks of St Peter.  “That is hell” replies St Peter.  The man enquires if heaven has the same facility, which St Peter denies.  “Well, can I rather go there, then?” asks the man.  St Peter nods and replies: “Just jump.”  The man jumps and falls through the cloud and lands in the hot coals of hell where the devil works him into even hotter coals with his 3-pronged fork.  The man objects that he did not intend to come here, but rather aimed for the cloud in the sky.  “Yes, I know” says the Devil, “but that is marketing department.”

The point of this story is that we are very often taken in by marketing hype.  We believe the promises – because we want to, or because we need to or because we want to be known as the person who struck the deal of the century. Or for whatever reason.

A few years ago there were a couple of new property developments in our area.  If you listened to the marketers, it could have been a piece of heaven they were selling!  EVERYBODY would like to live there, to such an extend that they would pay more than double what they could pay for a bigger flat a kilometer away.  And capital growth?  Just wait 5 years and this flat that you now buy for R1 000 000 will be worth at least R5 000 000, if not more, with buyers breaking the door down to buy.  Amazing! 

What were the facts (I believe figures don’t lie):  The flats were selling at R1 000 000, the cost per square meter much, much more than anywhere else.  The rental was expected to be R3 500 per month.  In other words, the return on your R1 000 000 would be 4.2% per year!  At the time the repayment on a bond of R1 000 000 was about R14 000 per month.  No ways did this make sense.

But everybody who bought told everybody else what a good investment it is.  And how stupid you are that you are not buying.  I mean, after all, who would not want to buy an investment that everybody else would kill for?  And when the rental guarantee ran out?  Some of those same people wanted to sell their flats for any price.  It is now about 5 years later and people still battle to sell their flats at R750 000! 

The moral of the story?  Be very careful of the marketing department, they love fools.  Tomorrow I will write something more about the marketing department.  Until then, buy wise …