Excellent piece by Jonah Bloom of Ad Age. And boy, oh boy, are we suddenly hearing a great deal about storytelling these days! This has really been at the heart of our message for years. Tell a good story, deliver a great product and experience and stop competing on pricing. People will pay more for a great story with a great delivery!
The recent launch of Budweiser Select was partly designed to take advantage of the (very "last year") carb craze, but in name, image, packaging and taste claims it clearly also has some aspirations to premium status. So, you might think the marketing folks at Anheuser-Busch would see this as an opportunity to test a higher price point, right? Wrong. Bud Select is priced “at parity” with regular Bud.
Lost faith
It’s a sad but familiar marketing tale. A-B is just one of a host of marketing powers that seem to have lost faith in their brand-building ability, preferring to pile it high and keep it cheap. In the obsessive quest for share, even the biggest names -- Miller, Kraft, General Mills and Coke -- have become so addicted to low prices that some of their great brands are now little more than commodities.Now, with their core products maxed out in the mass market, they have to strain every muscle to get incremental sales. Worse still, their margins have been squeezed by these low-pricing policies -- some imposed by Wal-Mart -- making it tougher to find funds to invest in the innovation and brand-building needed to reverse the commoditization trend.
Investing in quality
They are in a deep, steep hole, and it would be foolish to suggest there’s an easy route out. It will require real guts for these marketers to take the vital steps: reconstructing their core brands to add value for the consumer and reflecting those efforts in higher prices (even at the expense of share); and investing big bucks in higher quality, pricier products, (even if it means taking money from core products).To steel their nerves, or force their hands, perhaps they should visit a Starbucks. The coffee giant is, boringly, often celebrated for its customer-centricity, but it takes guts, as well as a good customer experience, to charge $3.59 for a large latte.
The new quality seekers
Even more significantly for mass marketers, Starbucks’ success speaks to the existence of millions of people willing to pay higher prices for a better product married to a better story. Starbucks has 33 million regulars, like me, who are not only willing to spend several dollars on a dose of caffeine, but also shell out $6.75 (before tax and soda) on a Chipotle Grill burrito, $12 on a vodka-based cocktail, or $150 on a pair of jeans. Millions of affluent consumers who seek quality not quantity -- they already feel they have too much stuff -- and will pay a premium for it.
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