Price-Only Stratagies Are Way Too Expensive

There is a scary belief running rampant through the inexperienced business community that, in the midst of a crisis, branding is too expensive and the only option is to push low price instead of value.

It’s also an odd cultural concept here, because most of the world has figured out that the truly expensive option is to completely forget about customer value while you drive low price. Especially when you come to realize that it isn’t any more expensive to continue branding while offering price.

Let me explain by example.

Not too long ago, I had a conversation with a young marketing manager for one of Bucharest’s foreign-invested, Romanian-managed malls. We were deep in mid-crisis, and the young manager proudly held out his agency’s latest marketing effort - a full color A5 catalog.

It was shiny. It was chock full of ads for nearly every store. It had pretty pictures. It had bright colors. It screamed Low prices! Low prices! Low Prices! Which, in fact, were probably at a par with prices at all the other Malls in Bucharest that had opted for short-term survival at all costs. The catalog also talked hours and undistinguished shop names. (You know them. They are duplicated in nearly every mall from Dubrovnik to Dubai.)

Did I mention that to print and publish it cost Three Hundred Thousand Euros!? Yikes!

And nowhere in the entire catalog of star burst discounts did it ever bother to mention why, besides price, you should come to this mall!

Or come back to this mall. It didn’t say fabulous shopping experience, or more fun, or convenient parking, or great food, or a thousand screen movie-plex, or envious friends or an upstairs zoo (I exaggerate for emphasis. They don’t have a thousand screen movie-plex or an upstairs zoo.)

Did it drive traffic? Possibly. Did it bring anyone back to the mall to shop again when the prices were back to normal? Highly unlikely unless you live in the neighborhood. Did this catalog do a single thing to position the mall as something extraordinary and welcoming any time? Not a bit.

The point is that in a 24 page catalog, there is a lot of room on the edges, in the introductions, in the flags on the corners, to proclaim the reason you will continue to be relevant and important to your customers. This is true of any communication you send to your customers via broadcast, print, sms, or carrier pigeons. If your message comes from the point of view of your brand, it costs no more to send the message.

Whether you are retail, B2B or product, selling only on price destroys loyalty. Your price-only customers will be gone when the bargains are. Off to the next better offer.

Your brand, however, stands for who you are and what you mean to your customers. It explains your essence, and your philosophy. It reassures your customers that you stand for something besides just taking their money. Important things like integrity, honesty, product quality, value, customer service. It’s why they do come back even when the discounts are over.

In tough times like these, survival is key. So you do what you have to in order to keep customers coming in the door. But if your marketing department or any of your agencies is bringing you any piece of communication that doesn’t speak from the essence of your brand, it's too expensive. Send it back for a do-over.

It doesn’t cost you any more to let your brand speak your price advantage in the short-term. And the price of not doing it could close your doors in the longer-term.

Happy Brand New Year.

Have I been yelling at you loudly enough about restarting your Marketing/Branding RIGHT NOW? Well, here I go again.

The news for Romania isn’t all that good. For the past six months I have been hearing from financial friends in New York and Washington that Romania would get through the ‘crisis” better and faster. I sang my optimistic mantra for survival: “Merrill Lynch says we’re one of the best foreign investment countries…tra la.” Now my friends are singing a different tune for here.

Cushman Wakefield agrees and now points foreign investment to Poland and Russia. Construction & Investment Journal says it’s already started. If this continues, then laggard companies here are putting their businesses on the line by waiting to trumpet their value.

I hope you are taking your usual 10 percent of turnover for marketing and doubling it. You need to get the contracting market to remember you. And you need to get existing customers to love you even more -- enough to stick with you.

I’ve been sifting through new consumer behavior information from Western and Eastern Europe, and the US to find what might help you to know for here. Here is what’s relevant:

Be the Downturn’s uplift – Ordinary people suddenly used to freedom of purchasing choice still want to buy luxury , but in smaller things. So they may sacrifice buying a new car or a truckful of IKEA but will treat themselves to higher end wines or better chocolates. Marketers of smaller high end items shouldn’t be taking their products down price or down-market, but should be shifting to higher targets to whom your product looks like a better value than a whole new house.

Be The Second Most Valuable - On the other hand, the recession has restricted the affluent’s ability to indulge in top-of-the-line goods, so lower cost luxury alternatives are popping up to semi-satisfy them. And guess what? They’re buying the second, cheaper tier.

Be willing to Barter - Credit-crunched citizens are swapping, bartering and trading for goods and services. Offering customers the ability to trade instead of pay offers a new way to connect with budgeting customers and can be applied on small or large scales. Be creative in the offers.

If they won’t buy it, they might rent it. - This is a huge business opportunity if you can turn your business plan in a new direction. Renting offers a trial before buying, a taste of something unaffordable, or even, not that anyone here would do this, the ability to fake status.

Unservice - Self-serve establishments save money by giving customers control. Forward-thinking business are putting some of their labor into the hands of customers, not only saving companies money, but also empowering customers by giving them a sense of independence and creative control. Among demographics that value customization and autonomy, unservice is a win-win for all

Make it a great Brand new year.

Seven 2010 Brand Success Trends

In a country where there is not yet a “normal”, dictating evaluations based on probable circumstances is impossible.

At this moment, Romania is entirely experimental.

Romanian branding is little more than guesswork. Universities teach out of date ideas borrowed from other cultures. Inexperienced graduates apply foreign principals that won’t work here - because here is evolving differently.

At year’s end it is the usual practice to review spectacular successes and phenomenal failures. As though the successful needed any more accolades or the fallen need further humiliation. But now, here, that won’t offer any useful insights.

So let me instead offer up interesting indicators for 2010. These are spotted trends that I do believe have branding relevance here.

1. Price Is Down. Value is Up. Romanians have recently had the euphoria of enough money and shelves full of what to buy. It’s an addicting habit that can’t survive the Crisis. Not that Romanians have stopped shopping. But the new discovery is getting their money’s worth.

2. “Try Anything. Buy Anything” is so over.

As too many generically equivalent products flood the market, the Brand Values communicated will serve as a consumer shortcut. What customers think about your brand will out-weigh nearly everything else in making value-purchase decisions. These choices will become their future standards.

3. “What’s So Different” will win. It will no longer be enough just to be on the shelves.Being meaningfully, positively different and communicating that difference will be the difference between live brands and closed doors.

4. If it isn’t in the product, don’t put it in the brand. Too many brands, in the hands of inexperienced marketing departments, have made claims that can’t be supported. As piata-savvy Romanians apply these skills in hypermarkets, discernable brand values must actually exist. Just because I said so, will in the future, just work with two year olds, not consumers.

5. Don’t Brand Global. Brand Local. Too many foreign companies are still shipping in their worldwide strategies. Romania is just learning consumerism. They don’t know yet how they are supposed to react. So any branding that doesn’t revise for the local experience and inexperience is risking it all on a questionable bet.

6. The “Tweet” and Twitter Can Kill The Brand. As Romanians embrace social networking and flock to FaceBook, the neighbors’ recommendation is replaced with online experience-sharing. Both Value and Hype are quickly communicated. If your product’s Brand Promise doesn’t measure up, fix the product before you invade the internet.

7. Everybody Says “I Love You.” There was a time, now over, when tugging at emotions would win. Now consumers only want to know who to believe. Who makes a good product? Who delivers on what they say? Who satisfies my family’s needs? And who can be trusted tomorrow?Set the emotional approaches aside and brand on value.

Only seven? Surely there are more!

Of course there are. But, with limited space, start with these. We’ll add new ones through the year. For now, examine your company practices and promises against these seven trends.

2010 could be a phenomenal set-up to success if the company is prepared, purposeful and trustworthy. Romanians are smarter than you probably give them credit for. They will see through exaggerations, misrepresentations and boasting. They have had years of practice seeing through to the real truth.

Brands Last. Recessions Don’t

By Shelly Roberts, FireBrand

Being successful in good times is easy. Being successful in crisis is opportunity!

If you are an Investor, CEO, CMO, GM, Managing or Marketing Director you’re probably sick of hearing agencies scream “Spend! Now!" figuring they are like every down-revenue crew desperately trying to boost their own income. I’m not dumb enough to say that isn’t true. But it isn’t the only truth.

Your agencies are begging you to “Spend!” “Now!” because they are absolutely right. “Crisis central” is your best opportunity to make a company’s success spectacular!

Let’s start with some hard numbers. Not mine. McGraw Hill research’s.

U.S. companies that maintained or increased advertising budgets during the 1981-82 recession averaged Significantly Higher Sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising.

Impressive. It gets better.

By 1985, sales of companies that were Aggressive Recession Advertisers and Branders climbed 256% over those that didn't keep up.

Need more? Meldrum & Fewsmith research showed conclusively that “Advertising Aggressively during Recessions not only boosted sales, but also increased profits and overall market share.”

This is a foreign concept in a country that grew its retail success by just having a product and a shelf to put it on. In times like these, the bad news is that that isn’t enough any more.

But if you, unlike your competitors, pump up the volume and quality of your messages instead of hiding the money under the company mattress till times get good, you can set the foundation for being the category standard in recovery.

In hard times, people want to know who they can trust. Your branding tells them that it’s your company. Of course they want bargains, but they’ve learned quality, and they want to stay as close to it as they can afford to.

They want reassurance that they aren’t getting cheated or cheapened. That’s your branding’s job. If you stop reassuring them, they’ll forget you, or learn to trust someone who is using their branding to tell the right story.

Where’s the money going to come from? Where it always does. Do these three steps first to bankroll your branding:

1. Find the waste in your factory and cut it. Be brutal. You’ll be much more efficient later anyway. It’s a good excuse to refine your process.

2. Lose your loser product lines Let line expansions go. Go back to basics.

3. Concentrate on your core business which is where most of the profit is anyway.

And then

4. Let your market know that you’re committed to delivering quality. through your branding.

There is a famous US candy bar maker that chose a unique way to survive a downturn. Rather than cheapen ingredients and cut prices, they made the same quality bar smaller. They used their advertising to reinforce their brand value by telling customers what they were doing. They told people who loved their quality they wouldn’t offer an inferior product at a cheaper price. They were brilliantly honest with their market. They showed that the company wasn’t going to compromise. They stayed true to their brand, communicated the brand position loudly and often. They survived that recession, and Hershey is still the best loved chocolate bar in the US.

In coming columns I’ll help you end the Price vs Brand war, put a brand message into every communication, suggest things to ask for from media, suggest places you never thought to use to brand, tell you what you’ve been doing wrong, and generally discuss savvy ways to climb out of the crisis.

________________

Shelly Roberts is the Founding Partner and Managing Director of FireBrand, branding consultancy helping companies refine their marketing processes for maximum effect. She is a former Executive Creative Director for D’Arcy Advertising, Romania and ECD for Saatchi &Saatchi US.

Let's start at the very beginning. This is FireBrand's first blog entry, so we'll offer you some very basic but critically important information about how to dig your company out of the "crisis" and thrive in the aftermath recovery.

-Shelly Roberts

Managing Director - FireBrand

www.firebrandro.com

FiREBRAND's 10 MOST EFFECTIVE

RULES FOR BRANDING

IN ANY ECOMONY

1. CREATE ONE MESSAGE

It’s hard enough to get one brand message to stay in consumers’ minds, much less two or three if you change your mind, are unsure of your position, or just get bored with what you’ve heard over and over from your agencies. Stay with the same message for a year.

2. SPEAK PLAIN AND BE UNDERSTOOD

There is no guarantee that the jargon in your industry is understood by everyone. What they do understand is good, plain conversational language. Jargon changes but branding messages are meant to last. Complicated, “sophisticated” language may not be understood by your market.

3. STRIVE FOR HUMAN-NESS

Great brands achieve a high level of human-ness. They speak to you and your needs as an individual, not as a part of a market.

4. HELP YOUR MARKET CREATE YOUR BRAND

Your market has already made some decisions about you. Use the strongest part of what people already believe about you to underline their good feelings. It’s more powerful. And it’s cheaper.

5. SELL PRICE AND BRAND AT THE SAME TIME

Everyone is trying to make a profit now. That only breeds price-driven customers who will desert you when they find better prices. Include brand/value concepts in every price-driven communication to keep them loyal.

6. EXAMINE THE BOUNCE-BACK

You know what messages you send. But what counts in branding is what your customers and potential customers receive. Ask them. Learn and make necessary adjustments. Get the research done before you waste even one branding dollar.

7. INCLUDE A HEALTHY PR COMPONENT

Brands are built on what people are saying about you. Not just about what you are saying about yourself. While PR often seems like an extra to use only when you have big budgets, correctly guided PR can create the buzz that creates the belief.

8. CASCADE THE MESSAGE THROUGH YOUR ORGANIZATION

Start with your Board of Directors and work down to the lowest paid employee. If they understand the message, so will your market. In addition, they will become ambassadors under the flag you want the company to be flying

9. GREAT BRANDING WILL KILL A BAD PRODUCT

QUICKER THAN A COMPANY SCANDAL OR A TAMPERED PRODUCT.

Calling attention to an imperfect product will just let more people know they don’t want to buy it again, much faster. Balance your branding with your highest quality product or service. Customers aren’t easily fooled.

10. WAITING UNTIL THINGS GET BETTER

WILL ONLY MAKE THINGS WORSE!

Your company can’t survive without doing some marketing. The sooner you get back into the game, the better your chances of winning. It doesn’t cost any more to keep your message On Brand. But if you wait too long, competitors can take the advantage.

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FireBrand is set up to assist mid- to-large sized companies in honing their marketing/communications/branding processes for maximum effectiveness.

FireBrand is not an ad or branding agency. Rather, it guides companies through the communications process. We teach marketing departments how better to create and execute effective plans, how to select the most ideal partner agencies, how to put Simple-To-Understand “Best Practices” into place long after FireBrand is gone. And, most importantly now, how to keep the branding alive when so much focus has to be on creating profit.