Most of us have heard of the 4 Ps of marketing theory, and there’s no doubt that price, product, place and promotion are the keys to making sales and making money.
But price also plays a role in establishing, leveraging and protecting your brand, and sometimes this can be in conflict with the sales imperative. That’s a rather roundabout way of saying ‘think carefully about cutting prices in the short term if it’s going to hurt your brand, and therefore your business, in the long term’.
Prestige brands don’t run price-based promotions, except in very special circumstances, because running too many sales erodes their hard-won brand equity and thus their prestige. And even if you’re not yet in the prestige class, all the evidence suggests that price promotions don’t increase profitability, particularly for fast moving consumer goods.
If people know sales are common, they buy and stockpile each time a sale comes around, so your regulars never pay full price.
Sales may buy loyalty (who wouldn’t love a product they can always get for less than its RRP?) but they don’t help the image of your brand, and of any present or future products that carry that brand. I’ve heard of a few wineries that have gone out and bought their wines sitting in retailer sales bins for the simple reason that it’s not a good look sitting in sales bins!
There’s no simple solution, and there will be times when a carefully planned price promotion has its place, but in general entrenched pricing down is not the answer to dealing with the tough times during an economic downturn.
That’s where brand architecture can come into play. When times are tough, customers may feel the need to forgo things they normally like and consider well worth the money, simply because they don’t have the money or can’t justify spending it.
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So you be the one to provide the alternative. I’ve seen some really clever examples of company’s creating sub-brands that provide less expensive alternatives but with the same guarantee of quality, service and value for money. It is possible to have a hierarchy of prestige brands, because prestige isn’t all about price.
Fashion labels, in particular, do this sort of thing when they want to pitch to a new demographic or offer a new line at a different price point without damaging the parent brand or causing confusion. But it works at a purely economic level too.
A restaurant in Adelaide did it cleverly a few years ago when it opened a more casual café-style eatery right next door with a name that clearly revealed its parentage. It gave regulars the chance to eat a little more cheaply, while still feeling connected to the parent brand.
It’s not a simple option; there’s a fair bit of planning and effort involved. But developing a portfolio of brands is an innovative way to protect a brand image, rather than risk damaging it.
Have any questions regarding your brand? Feel free to send me an email at firstname.lastname@example.org