In an economy like we’ve experienced lately, some advertisers turn to price reductions as a defense. For the short sighted it’s a short term solution. It can also be their brand’s long-term demise. You see, there are numerous reasons to brand, not the least of which is value. First, the notion that brand name products fetch higher prices is true, even in hard times. An article a few years ago in The Los Angeles Times quoted a Sr. VP, account guy at BBDO as saying that the number one brand has a 10% price premium over the number two—40% over the store or generic brand. As well, companies with a strong brand image are more valuable.
Executives at Coke were quoted in Fortune Magazine as saying that if Coke was obliterated off the face of the earth, every stick and brick were destroyed, Coke could go to the bank and borrow literally billions of dollars, based purely on the value of its brand. Further more, companies with good brand recognition attract the best employees. Imagine graduating from engineering school and having two offers – one from Joe’s Toilet and Ballcock Works and another from Moen. Which job are you going to take – maybe even for less money? Right, Moen. Our point here is that if you have a strong brand you can reduce prices for short periods and still regain your position.
(Nobody thinks Neiman Marcus is going out of business when it has a sale.) The less notable brand, however, may quickly become a commodity.
OK, it’s easy for Coke and Moen to demand higher prices and better shelf space; after all, they’ve had decades to establish themselves. But what about the smaller business-to-business advertiser? Nothing is different. A brand is a brand. Its value is something that all advertising agencies are expected to grow. We tell every prospect “we will make you famous for your advertising.” If we fail, their products are susceptible to becoming commodities because that is what all resellers want them to be. Here’s a perfect example: a manufacturer of premium pruning tools decided they wanted to sell through the big box channels. (Lowe’s, Home Depot, etc.) They present their line presentation and after a review, they are accepted. Great! Then they learn how little shelf space they’ll be given, with no headers or merchandising because the big box dictates the packaging and the price they’ll pay. But wait, says the tool manufacturer, we’re a well-known brand in the professional tools category—all the landscapers know us. “So what,” says the big box, this is retail and you’re a commodity here—and your only measurement of value is price.
Ouch!
Next in for their presentation are Scott’s, the well-known seed and fertilizer company. Scott’s says to the big box: we’ll need more shelf space because we’re pushing a new seed. And we have new shelf talkers and signage and we’ll need end-caps, too, for our promotions. Oh, and here’s our pricing strategy. The big box says: You got it! Why? Because everyone knows you cannot be a home improvement store without Miracle Grow on the shelf – that’s the value of the Scott’s brand.
So where does an advertiser start to build a brand name? At the beginning. The definition of a brand is “A claim of distinction.” So start with a discovery process to unearth your unique distinctions. We call our proven process “Turning the Telescope™.” It is what it is—a long, hard look inward. We search the company’s history, its founders, people, products, culture, innovations and so on until we’ve distilled everything down to what we call the Brand Franchise—the three to five unique selling points that no one else has. We’ve started sessions with the client telling us “Good luck, there’s no better example of a commodity than us.” Then, several hours later, we leave with the discovery of a great brand – it happens every time. And not for just big guys. Car dealers, health clubs, public golf courses, homebuilders, local banks, colleges, architects, law firms, widget manufacturers, you name it, everyone has a unique essence just waiting to be discovered.
Once the discovery is made, we begin the branding process. We advertise and promote the brand’s newly discovered and deliverable distinction – constantly and consistently. And we rarely ask them to spend more. But every dollar is spent communicating that distinction. Before long, the buyer at the big box says, “Yes, we’re aware of your brand of widget. If it is really everything we’ve heard it is, we’ll make room for you.”
Bingo!
Value.
No comments:
Post a Comment