Tuesday, August 30, 2011

Premium Branding Strategy Can Win in the Mass Market

Downward pricing pressure from recession-weary consumers and the retail trade is increasingly forcing manufacturers of brands to fight a battle of competitive pricing.  Mass merchandisers, dollar stores and discounters are, themselves, fighting a battle to capture a larger share of the consumer pocketbook from traditional food stores, and mid-tier department stores.  Private label quality is up and providing additional competitive pressure to brands while delivering healthy margins to the trade.  Brands that chose to adapt slowly to these pricing changes risk severe loss of distribution in mass channels.  Welcome to the new world of brand marketing. 

Brand management was designed during a time in which the population of baby boomers was fueling growth across most channels and companies were building an approach to organize their efforts around the concept of the “brand” rather than the “product line”.  Brand management and marketing departments adapted well to this evolution and put many tools in place to better understand consumer demographics, usage trends and psychological underpinnings of brand purchase and loyalty.  However, we certainly are in a new marketing age due to the recession and acceleration of downward pricing pressure, leaving many a marketing manager living in a surreal world where brand loyalty measures fall, discounting grows and profits for the retailer and manufacturer suffer.

However, there are still a few arrows left in the brand marketer’s quiver.  Consumer insight, correctly applied, can lead to a win-win profit proposition.  Lets look at one such interesting insight – namely, the very shopper that shops bargain prices for school supplies, candy, and vacuum bags at Walmart, is same person that buys an expensive espresso maker, a pair of Bostonian shoes, a hybrid car, micro brew beer, and an expensive 1960s electric guitar (oh wait, that’s me). In other words, paying top dollar for what they care about.  Brands they are passionate about.  A step up in those categories, bottom dollar for the rest.  

So what about those categories that are not quite so sexy.  Household products, dinner entrees, tooth paste, you know, everyday stuff.  Same idea.  Consumers pay a premium for that indispensible product that has the next generation must-have innovation or the premium positioning (Did you know Tag Hauer, the luxury watch maker, is coming out with a cell phone that retails for several thousand dollars?).  Crackers and chips are everyday, but when friends are over, only that imported wafer will do, for some.  Pay $1 more; no problem.  How can that be? We are in a recession.  True, but not for the things we love or reflect our tastes and passions.  We make up for our little indulgences by doing with less of that of which we are not passionate.  You can see the obvious issue for the brand that elicits no passion.   

There is a place in almost every category for the mass premium.  Take the classic case of pasta sauce, being battled out by Ragu and Prego for years, until Four Brothers, Barilla, etc. created another tier.  Now examples are everywhere.  Cheese at the store - plain and imported; coffee – Kenya blends or plain Folgers; beer – domestic, imported, or micro brew; wine – cheap, moderate, expensive. 

The discount retailer does a service providing life’s necessities at the best price possible in these times.  Fortunately, there is still a consumer who will pay for something nicer, more exciting, and enticing.  You, as marketer, must find that niche, understand the expectations and neccesary benefits to please that true category lover, and create that next tier, the premium within the mass.  It is the place that gives your brand a profitable, fighting chance on the downward pricing spiral.

The Premium Mass Solution

A Consumer Insight


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Food Packaging said...

Brands live or die on the shelf when consumers get down to the business of making a choice. At that critical moment, your packaging needs to deliver. It’s the one thing that consumers recall, consistently, long after all other elements of the marketing mix have faded away – and sometimes, when marketing budgets are tight or cut altogether, it’s all you have.

Food Packaging