As technology and globalized business models continue to deliver efficiencies and new opportunities, every sector will face disruptive pricing that in effect re-costs what the market would otherwise pay. Many of those movements will naturally be downward; others will lift the entry point. Amazon has effectively reframed the cost of books; Samsung and others are resetting the cost of owning a tablet; Tesla has redefined what an electric car is and also the cost of owning one.
But in response to competitor moves, so many brands make pricing changes without making changes to the brand at the same time. They simply react. As a result, their brand either ‘loses value’ or ‘becomes more expensive’ for no good reason – or at least none that the consumer can see. By simply shifting what Tim Smith has referred to as the “value exchange” without repositioning the premise by which they compete, these brands have in fact deteriorated both: there is less sense of value; and there is therefore less sense of exchange. Consumers are either getting more or less value than they were getting – for no reason that has been clearly articulated to them.
Rebranding your price is a useful strategy for brands who find themselves needing to adjust their pricing in competitive landscapes and who have the ability to improve, adjust or diversify their offering quickly so that brand, value and pricing align. It works because it effectively links what you’re asking with what you’re offering and what your consumers value.
If you are going to price up, you will of course need to use what you have access to in terms of innovations and value-adds to make the purchase feel more valuable. Or if pricing down, look for ways to actively make your brand more attractive to more people. Because as Seth Godin so rightly points out, “Every great brand (even those with low prices) is known for something other than how cheap they are.”
The flipside of a marketplace where brands encourage people to buy for emotive reasons is that brands also need to counter consumers’ personal reasons not to buy.
Some of these reasons may be legacy. Some may seem to be convenient self-interest. Others may look like they’re based on ignorance, bias, selfishness. They probably don’t make sense to you.
That’s important because…actually, it’s not. It’s not important at all.
The problem that matters is not your opinion of why your buyer won’t buy – it’s the fact that they have this opinion, that it’s rational to them and they have every reason to keep thinking it until they don’t want to anymore.
Chances are you won’t talk people into liking your brand. The most effective way to deal with an “unreasonable” objection is to counter with a riveting motive.
Most people think that means price. But simply dropping your price is no silver bullet. It doesn’t make you a more likeable brand. It may make you a more attractive brand – in the short term. But only until a better offer emerges.
We like brands for a range of reasons beyond what they cost: what they offer; what they stand for; how they recognize us; what others think of them; how familiar they feel; who they support; where they’re seen…Likeable brands build loyalty and affinity by leveraging how people react. They deliver based on what people value (not necessarily what they need).
“I never worry about action, but only inaction.” ~ Winston Churchill
There’s a simple, human reason why behaviors happen time and time again. We are creatures of habit and familiarity. It is much more comforting to keep hammering away at what we know than it is to stop, reappraise the problem and completely redesign the playbook.
Relentless speed and ubiquitous impatience have spawned an approach to strategy based on “not enough time”. The underpinning philosophy is that there are either not enough minutes in the day to do the thinking, or even if these can be found, the strategy will be outmoded by the time the company gets to implement it.
Wrong. It will almost certainly take far less time to strategize the road ahead than it took to get into trouble. And it will cost a whole lot less than reacting to another bad snap decision.
However, those who hate change can always fall back on a simple tactic. If in doubt, raise more doubt…
“What if it doesn’t work?”
“But it’s not working now.”
“OK, what if it makes it worse?”
We’ve all been in those meetings.
The context for cultures is changing.
In four vital ways.
Firstly – the relationship between customers and companies is shifting as social media dissolves the traditional divide between the parties. Specifically social has shifted the goalposts in terms of familiarity. Facebook, Google and Twitter have brought consumers closer to brands than ever before. And as people shift their relationships with brands, the processes that link customers with brands and their cultures are also changing. Those relationships are becoming much more interactive and increasingly they’re taking place in real time.
Actually, the underlying relationship is changing in an even more fundamental way still. Increasingly brands are transforming from individual purchase decisions to shared values or belief systems and brands are bonding with their customers on that basis. That shift has major implications for how brands organize and run their cultures. Looking forward, brands cannot expect to simply market products. And a culture cannot simply expect to service that market and the brand’s customers. A brand, its culture and its customers now not only need to concur on a distinctive belief system, but also to interact and build trust and loyalty as a community on that basis.
Secondly, and in parallel with the above, consumers now want to deal with brands that fundamentally understand them and interact with them as human beings. Really, it’s those interactions and the experiences generated by those interactions that increasingly make brands valuable. It’s then that customers decide whether they want to form a relationship with you, or they’re “just looking thanks”. If you’re a high-touch brand, it’s actually the people that make touchpoints magical.
Because of that, the role of the people within a brand is also retrending. Specifically, as quality relationships become the key decider for customers, the emphasis for people inside a culture shifts to establishing and building what they have in common with customers rather than what they are looking to get their customers to do. And as a result, it’s inevitable in my opinion that people working for a brand will transit from makers, guardians and sellers to socializers and curators.
In economics, signalling focuses on the ability of one party to effectively convey information about itself to another party. That was relatively easy pre-Internet. Brands simply pushed claims into the marketplace through a range of set-play media actions and waited for consumers to react. The ability of a signal to reach an audience rested almost entirely on the message itself and the media budget.
As we move now from a world in which asymmetric information has prevailed to one in which perfect information, or at least more transparent information, is closer to the norm, marketers are grappling with a landscape where they must balance a new abundance of signalling platforms with a maddening overload of market noise. To be heard above the din, they must think through not just what they signal and how, but also why and to what effect.
As Allen Adamson has said: “Branding is about signals – the signals people use to determine what you stand for as a brand. Signals create associations.” Brands that simply telegraph what others are saying will only add to the background volume – making it harder for any signal to stand out. Extending Adamson’s observation, lack of signal creates disassociation, a brand that people are not inclined to feel part of, or even to be seen with. The price of noise is commoditization. And as the noise increases, profile fades and brands drown.
There’s clear correlation to me between market leadership and signal leadership. The brands that are listened to are the brands that consumers turn to for guidance. According to this article in strategy + business, market leaders that lose their preeminent position have only a short time in which to regain the top spot – before they risk slipping back into the field. That timeframe it seems can be counted in quarters rather than years.