The recession hath wreaked thunder and lightning on marketers across the land, but like cockroaches we scattered to adapt to the new playbook, surviving to fight another day. Earlier in the decade we were all experts on premiums and exclusivity... pushing them into any and every category, be it bringing cachet to formally pedestrian purchases like coffee and toothpaste, or pushing the limits of prestige in arenas like automotive and new home construction. Everybody had to be premium, or dabble in it anyway.
And now? Well, prestige is passe. Today's mantra is value... delivering reliable value to the consumer in ways that don't implode your profit margin. Value value value! And what is value? I don't know, just slash prices man! Cut cut cut. I want to see prices crashing to the earth like so many pieces of lint from an overly laundered t-shirt! Now let's see some slashin'!
It's time for a definition: What exactly is this value of which I speak? Greenwood's definition: Overdelivering at a given price point. Now I know what you're thinking... thank you, Captain Obvious! But seriously, it's broad precisely because value is such a wide playing field, encompassing ... well, just about all of commerce actually. Think of value as a line in the sand, separating treasure from garbage in nearly every category at every price point. And slashing your price is sometimes the most inefficient means of delivering it to your consumers.
I'll use a competitor of mine to make my point, since they're in the news lately -- we'll just call them Anonymous. Now Anonymous mass markets an affordable food product with fair-to-good quality, so one would think they'd be well-positioned to succeed in a horrendous economy. But Anonymous decided to double down in recent months by introducing -- heck, showcasing -- a discount menu of sorts, with pricing starting at as little as $5.
Now I don't have access to Anonymous' marketing research, but if you put a gun to my head and forced me to guess what their consumers were left thinking, I'd say they walked away thinking that their food was worth about 5 bucks -- meaning, it wasn't very good. And I'd also guess that their quality and value scores have fallen through the floor as a result. And given their recent announcement that Q3 comparable store sales plummeted a staggering 13% versus a year ago, I'm guessing they now suspect this was a bad strategy. If so, they're right.
Slashing prices is sometimes the worst way to communicate value. It might drive a short-term sales spike, but much like a sugar high it'll probably leave you in the end with little more than a headache.
Now don't get me wrong, price is a critical component of value -- fundamental to the consumer equation actually. In fact if Einstein, himself, were here and into marketing he might even draw up an equation like this:
Ok, no he wouldn't. But I'm no Einstein, so it's ok for me to do it. The idea here is you can go after the numerator ("stuff") or denominator ("price") -- the problem with the latter route is that most consumers use price as a tool for determining value, so, generally speaking, not only are you actually undermining your fundamental value equation by slashing prices, in most cases you'll lower your revenue by taking in fewer dollars per transaction. Furthermore, what happens when the economy improves? Think customers will conveniently forget what you charged them prior to the recovery? It will take years of brand building to earn back your pricing power.
And while I'm at it, hasn't value always basically been in style? Has there ever been a period of time where consumers will willingly throw their money down a rathole without a reasonable return on their dollars? Oh sure, what consumers seek and prioritize does indeed change with the times -- but whether it's exclusivity or quality or experience or authenticity, consumers are always looking for a great value equation. Ritz Carlton is a great value brand. So is Trader Joes, H&M, McDonalds, Hertz, you can go down the list, but these are all brands that overdeliver on the dollar, and that is relevant in any economy.
Alright, so my point? Well I have 2 points.
Point #1: Value is always in style. A great brand delivers great value, always and forever. They're almost the same thing. Maybe they are the same thing actually. You should always strive to be a value brand regardless of the macroeconomic environment.
Point #2: If you want to be known for delivering great value, focus on the top of the equation. Deliver more stuff for the dollar. And this is where you marketers have to earn your salaries... the focus needs to be squarely on the intersection between the things your organization does well and the things consumers care about. Again, channeling my best Einstein:
Now I know this is a tad simplistic, but the fact is a well-positioned brand should provide a straight-forward roadmap for finding your right stuff in any climate. On the other hand a poorly positioned brand with little in the way of credible and desirable differentiation will handcuff a marketer attempting this exercise, and like any good commodity leave little outside of price with which to compete. But wasn't that plain ol' Branding 101 in the era before value became the latest buzz word?
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