Last week I considered how difficult it has become to build a brand by creating a unique product or a differentiated positioning. The holy grail of product superiority has been made even more elusive by globalised manufacturing processes that bring products to market more swiftly; and the heyday of advertisers telling customers how they should view their brands has been swept away by the inexorable rise of social media. People now set more store by the views and recommendations of their peer group. This week I want to explore why the other two Ps, Price and Place, have become less influential tools for the brand manager.
Can you build a brand on a low price platform?
As a trainee adman I was taught that price was uncertain ground on which to build a brand position. Low price promises are dependent on cost of goods, market demand and subject to frequent out-flanking by competitors. Brands that offer low price risk painting themselves into a corner from where they can only escape by improving the quality of their product. Tesco founder, Jack Cohen (nicknamed ‘Slasher Jack’) built a retail legend on the simple strategy of ‘pile it high, sell it cheap’. While low prices may have helped in the early years, Tesco’s domination of the UK retail trade was achieved by diversifying its offer, expanding its retail presence and implementing one of the most successful customer loyalty schemes the UK has ever seen. In recent years Tesco has been outmanoeuvred on low price by new discount retailers and has had to reinvent its offer. Meanwhile, the likes of Aldi and Lidl have been using Price as a tactical tool to gain entry to the lucrative UK market. Longer term their brand strategy is almost certainly to move the brands away from the perception of low price (as suggested by Lidl's new ad campaign "Big on quality, Lidl on price"). Almost one in three Aldi & Lidl shoppers are now "upper middle" or "middle class", lured by award-winning wines and high quality products including lobster, sirloin steak and smoked salmon. The move to mainstream has already begun.
People know the price of everything and the value of nothing
High price has also been a platform on which brands have sought to differentiate themselves. Luxury brands (Rolex, Louis Vuitton, Harrods, Bentley) can charge a premium because they have created a product perception of quality and exclusivity which justifies the higher price. But building a brand proposition based solely on premium price is not easy.
Beer is one of the most brand-driven categories of FMCG. A recent blind tasting of lagers highlighted how consumers struggle to tell them apart on taste alone. "Results suggest that brand loyalty in this market is likely to be driven largely by marketing and packaging, and not by the underlying sensory properties of the competing products" is how the researchers put it. In 1982 Frank Lowe’s agency introduced one of the best known and longest-running ad campaigns for a lager - the ‘reassuringly expensive’ campaign for Stella Artois. The campaign set out to make price the guarantee of quality rather than the result of quality. ('It's expensive therefore it must be good; as opposed to its good so it's expensive'). The campaign ran for 25 years and spawned many famous ads. But price alone could not sustain the brand as it too was outflanked by more expensive lagers with more exotic provenance (Belgium, Canada, Japan, Thailand).
The truth is that value (the combination of product features, benefits and worth) rather than price is the key determinant of how a brand is perceived.
Place – a marketing tool rather than a brand strategy
Jerome McCarthy’s fourth P, Place, described the importance of effective distribution in the marketing mix. But, like Price, Place has only a supporting role in building a strong brand. For many brands the objective is to make their products as accessible as possible. Once this meant chasing shelf-space now it includes cyberspace. (By 2016 online's share of the retail market in the UK was forecast to reach 16.8% meaning one pound in every six spent is spent online). Other brands chose a selective or exclusive approach to Place limiting the opportunities to buy a brand and thus adding to its sense of rarity. (Think Christmas runs on Hatchimals, Tamagotchis, Tracy Islands, Furbies and Sylvanian families as well as luxury brands available only in retailers that match their brand aspirations.)
Distribution strategies have also presaged the rise of peer group reviews and social group endorsement as marketing tools. In 1948 Tupperware introduced its ‘Party Plan’ approach to distributing its products. Housewives were recruited to display, demonstrate and sell products to their social circle from the comfort of their own home. (Avon, Amway, Neal’s Yard, Herbalife have all used a similar approach). Over the years the format has evolved in order to drive growth. Key to Tupperware's recent success is the transformation of their events from polite gathering to 'immersive experience'. Tupperware parties are now just as likely to include a Mexican themed event and be held in ‘an experience studio’. The emphasis is no longer on simply putting the product in front of the customer but immersing the prospect in a deeper brand experience. Tupperware has also recognised that a recommendation from a friend is always likely to be more persuasive than one from a company.
It’s the experience, stupid
For Tupperware and increasingly for all brand managers it is the experience that counts. Product, promotion, price and place all have a part to play, but the influence they have in shaping a brand is more than matched by the people and processes that make up the physical experience customers enjoy. Dyson may have invented and patented the bagless vacuum cleaner but you can now buy a similar product from over a dozen different manufacturers. So they have turned their focus to providing first class customer experience and product support to retain their market edge (even opening a Dyson shop in Oxford Street). Similarly Apple have created an in-store customer experience that is second-to-none in order to maintain the sense of product superiority. Brands encourage loyalty by developing the customer experience.