Brands send powerful messages through how they price. Price can be influential in portraying a brand as affordable and ‘on the side of the customer’, or exclusive and just for the few. It can generate responses ranging from the thrill of a bargain to the indignation of a price tag that seems far too steep.
As Martin Bishop explained here, the pricing mechanisms that generate those emotions are increasingly varied, ranging from the ‘lock-them-in’ attraction of unbundled fares for those lured by what it says on the tag to the dynamic pricing of hotels and Uber that re-sets worth based on current demand.
Economists tend to view pricing as an expression of supply and demand, with scarcity increasing price and over-supply pushing prices down. While those dynamics are true for commodities, they don’t always apply to brands. And that’s because brands look beyond market logistics for proof of value. They draw on powerful attributes like perception, aesthetic and story to move the brand’s price beyond what the market would otherwise ask. In fact, through its choice of pricing, a brand sends three important signals to its target markets.
1. Access – price makes a product or service rare or plentiful, regardless of the actual production cost. That, in turn, decides who even looks and who doesn’t.
In keeping with its luxury technology status, Apple prices its products high. In so doing, it not only confines its buyers to those who are passionate about the brand, it also reinforces that Apple products are not for everyone. Walmart does the opposite. By dropping its prices to the point where it now matches online retailers, the brand reinforces the value of buying physically, directly addressing the showrooming issues that plague retailers elsewhere. The clear intention is to lift foot traffic. In this context, price lays out the welcome mat.
This piece from Neil Glassman draws a distinction that I think has escaped many of us between conversation and recommendation. As the author himself says, he thought of social media as a platform to directly scale up word of mouth (WOM) marketing. But the synergy that looks so obvious doesn’t happen. In fact, says Glassman, compared to the effectiveness of what takes place offline, surprisingly little WOM is generated on social media.
My sense is that while there is plenty of talk being pushed into the media, that content is then not, for the most part, being transmitted-on (or more specifically picked up) in the way that it is when WOM is in full flight.
Glassman himself hints at why. People, he says, participate in social media to interact with friends and like-minded strangers about things that interest them. Social media marketers, on the other hand, engage with their customers hoping to encourage them to spread the word. The first interaction pivots on “us” – about the things that “we” share, which means ownership exists. The second is about turning “mine” into “yours”. It’s about encouraging people to take ownership.
Glassman continues, “It appears that as much as social media has changed our networked world, it hosts only a small bit of the conversations about brands, products and companies. Not what social media marketers talking amongst themselves would expect.”
It’s tempting to believe that every brand must be vastly different and that every opportunity to push the boundaries should be taken if the brand is to win. But is there a case for normality that we’re missing here? Should, as Jay Bauer has suggested, brands stop trying to be amazing and just get on with being useful?
There’s a certain power in being mundane – in the sense that an everyday brand is exactly that. It has habit and predictability built into its very being. And as Riley Gibson points out, there’s a proof factor in that regularity that so many brands overlook in their bid to find the next big bang. He cites two great examples. The first, based on work that Professor Laura Kornish has done on consumer interactions, shows that “Sometimes it’s far more valuable to find patterns in what people are requesting than to find that one, big *I never thought of that* idea.” The second, based on studying how teens see their TV and internet usage, showed that “Sometimes, products are far ahead of their time because they assume a level of comfort that isn’t yet there in the consumer. That’s where the insights of the collective can be used to help us question everything.”
In both cases, the brands in question risked missing the small opportunities in their bid to find the great leap forward. What regularity offers is enough recurring events to form patterns and discover a moment for inflection that consumers may recognize but not necessarily know how to get past.
The learning here: that brands looking to improve their offering should first look to improve how and when the product is used and how else and where else it could be used. Easily. Quick win changes that may seem mundane, even unnecessary, to your brand’s technical and product people can add up to important improvements for consumers.
There is no consensus around when the formal discipline of marketing actually began. For British marketers it is common to cite 18th Century businessman and potter Josiah Wedgwood as the inventor of modern marketing. More accurately, most scholars point to America where the first marketing courses were offered back in 1905 and where the first marketing textbook was published a year later.
Irrespective of the exact date, it’s clear that marketing is now more than a century old. Age confers many advantages – not least acceptance. Thirty years on, I can still remember the look on my beloved English teacher’s face when I told him I was off to Lancaster University to study Marketing and not Oxbridge to read English. “Marketing!” he exclaimed with the horrified look one might use on being told of an intended career as a heroin dealer or African warlord. “Marketing!”
Those days are thankfully over. But gentrifying marketing confers other risks. As our discipline ages and the concepts of marketing become established and embedded into the lexicon of everyday life, we risk forgetting what their original definitions meant and how we were supposed to apply them. Let me give you three very real examples.
Exclusive. It’s a word so beloved of modern marketing it has become paradoxically widespread. Traditionally the term has come to be associated with anything that carries a premium price. Now, you can buy exclusive ice creams or children’s toys or doorknobs (as I discovered last weekend). It’s all patent nonsense, of course. An exclusive brand is not simply one that fancies itself as such or one that attempts to charge more than its rivals. To be truly exclusive a brand must only appeal to a tiny minority of the market and then steadfastly reject all others. To be exclusive, at least in its original meaning, is to say to vast swathes of the market: ‘I reject you from my brand and will do everything in my power to keep you out.’ Exclusivity demands that the traditional four Ps of marketing are not harnessed to generally maximize sales across the whole market but rather as a weapon that turns off, shuts down and closes out most potential buyers. There are very few genuinely exclusive brands left in the world but Ferrari is certainly one of them. I say that not because of its high prices or high quality, but because its most recent offering – LaFerrari – was only available to customers who already owned at least five previous models. That’s exclusivity for you.
There are some brands we are stuck on, others we’re stuck with. Brands we’re stuck on are those where we’ve developed a relationship out of our own free will (Apple, Starbucks, Zappos). Brands we’re stuck with are those where we’ve become trapped through contracts (phone carriers, cable companies), switching costs (banks, software) or incentives (airlines via their loyalty programs).
If consumer loyalty is measured by repeat purchases alone, both sets of brands look pretty similar. But throw in some measures around sentiment and you’ll see a clear difference between the loved and the unloved. Consumers’ feelings about the two types of brands couldn’t be more different.
As marketers it’s important that we know what kind of consumer loyalty we are getting and act accordingly. Brands that are loved can tap into the wells of existing consumer passion and spread that love around. If you ask passionate consumers for their help, they will give it and become even more engaged as a result.
Brands that are not loved need to be more careful especially when it comes to their relationship with their consumers and how to engage with them. These consumers, given the opportunity, are more likely to vent their frustrations than show support. Marketing activities for these brands are often more about damage control and placating consumers so they don’t try and escape. That can come in the form of reselling the benefits that locked the consumers in to begin with (See all the great places you can go with these miles you’ve earned), building even higher walls to make sure the captive consumers don’t get out (Now, triple miles with every flight), breaking down the walls of the competitors (Switch today and we’ll pay the penalty fees) or adding cognitive dissonance by pointing out some good things that they do (Here’s how we’ve given back to the community).