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April 12, 2006 | permalink
Presented by Trump University

Episode Summary:The teams created in-store promotions for the P'EatZZa, a new sandwich sold in 7-Eleven stores. The promotion that caused the biggest uptick in store sales would bring a win to its team.

Andrea, Synergy's project manager, got off to a rocky start. She disregarded her team members' suggestions and decided to drive their promotion by giving away a "racing hat" with each P’EatZZa sale.

At Gold Rush, project manager Leslie and her team decided to offer a drink cooler as their promotional item. Then members of the team went off to inspect their 7-Eleven stores, where Lee convinced the manager to pull other sandwiches from the shelves to focus attention on the P'EatZZa promotion. The manager also suggested a price of $6.99 for the sandwich/cooler package, but Leslie ignored his advice and chose a price of $7.99 for one P'EatZZa/cooler promo package and $8.99 for two.

The night before the promotions launched, Synergy members stood outside their 7-Eleven store handing out fliers for their promotion. That turned out to be a savvy move because many of those customers returned to the store the next day for the offer. Gold Rush’s members spent the same evening writing trivia questions that they would use to strike up conversations with customers outside the store.

On promotion day, members of Gold Rush tried to entice customers into the store. But their prices - $7.99 for one sandwich, $8.99 for two – drove customers away. In contrast, customers at Synergy's 7-Eleven were flocking to the store to take advantage of the $4 promotional price.

When the results were tallied, Synergy's lower pricing strategy had increased the store's sales by 997 percent on promotion day, vs. Gold Rush's 608 percent. It was another big win for Synergy and another crippling loss for Gold Rush.

Back in the boardroom for the firing, Leslie blamed Lee for the loss. But Mr. Trump fired her because she had insisted on a price point that was too high. Leslie, on her first try as project manager, had gone down in defeat.

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This episode taught vital lessons about product pricing, marketing, and team leadership. Let's take a closer look.

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When Leslie stepped up to manage her team for the first time this week, there were only nine of the original 18 candidates left. That made her failings more visible than they would have been in weeks past. The result? She went right out the door.

Success Lesson

Grab the gold rings early in your career. People will often forgive your mistakes when you are new to a job. Later on when the stakes are higher, you will take far more heat for your mistakes, like Leslie did.

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When Lee tried to make a big sale of sandwiches to just one customer, he was engaging in high-stakes gamesmanship. If he had made that sale, Gold Rush would have won the competition.

Success Lesson

Take critical risks. Just make sure ahead of time that the potential rewards justify the risk of failure. Remember that even though Lee's deal fell through, he still won the respect of Mr. Trump for trying. That proves the point.

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When Synergy handed out promotional flyers the night before their promotion, they took a critical step toward assuring their victory.

Success Lesson

Do the most important thing now. As the author Stephen R. Covey advises, make sure you are doing the most important thing at all times. (Some things are "pressing" while others are "important" – and you have to know which is which.) While Gold Rush members were diddling with trivia questions, Synergy was adding critical percentage points to their winning margin.

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When Leslie refused to lower the price of Gold Rush’s promotion (even on promotion day, when Lee overheard the store manager complain that their price was far too high), she overlooked a fundamental marketing law: Your pricing is usually the most critical factor in your overall marketing plan. If your price doesn’t "speak" to your target consumers, everything else is secondary.

Success Lesson

Listen to people who know. If Leslie had taken the store manager's advice about pricing, Gold Rush would have won. In the marketplace, customers vote with their dollars to decide who wins and who loses.

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What will happen next week? Synergy has now won six times, to Gold Rush's two. But Synergy's wins have shielded certain members of that team, like Andrea, from getting blamed for mistakes and flaws. As the field shrinks in the weeks ahead, they might not be so lucky.