How to Guide for Marketers

Would you ever pay more for a bottle of water than you would for beer?

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This past week, I was in Shanghai, China and found the price of a bottle of Evian and Fiji water about ten times the prices of local bottled water (Nestle). And when I went into the Beer section, the water was still twice the price of a Budweiser beer (produced locally). You can also buy Coke or Gatorade much cheaper.

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The prices above  are in Chinese Yuan (1 CYN = 0.15 USD), with the US Dollar equivalent being just under $2.00 US for the Evian or Fuji water, and then only 21 cents US for the Nestle water. The Budweiser is only $1 USD and the Coke is about 50 cents US. Given any worries about “don’t drink the water”, you might easily be willing to pay for the Evian. Or just grab a few Budweiser’s and not worry so much about the water.

China is in a state of dramatic change

The economy of China has been going through vast changes and you see it live on the streets of Shanghai. The contrast of the modern sky scrappers of downtown Shanghai, with the small street neighborhoods with laundry hung out on the phone lines. The increasing number of Mercedes driving past old school three wheel bikes carrying layer upon layer of boxes for delivery. High end restaurants contrasting against live chickens being killed and bagged for dinner that night. The small boutique 100 square foot stores and the 80,000 square foot Carrefour Super Markets.

While China has benefited from global trade, making Apple computers and Nike shoes to be sold around the world, the government uses protectionist practices to ensure high transfer pricing to ensure local goods benefit.

A brand like Evian, with water from the French Alps can not maintain that positioning if they begin producing in a factory just outside Shanghai. In the Carrefour, they have three specific aisles for “Imported” goods, all recognizable Western brands, but all with dramatic price premiums to the local products. This aisle might appeal to the high number of expats living in China as well as the growing Chinese upper middle class. The rest of the grocery store has 10-20% global brands interwoven among the shelves of local goods. This sets up two specific strategies, produce locally (for instance Nestle) and compete directly with the local goods, or stay in the “Imported” and use the super-premium pricing as a strategy to set yourself apart.

I remember being in France in the early 1990s, where I found myself walking all over Paris for about 4-5 hours on a 35 Celsius day. I finally came across a store selling Diet Coke and it was the equivalent of $6. I was in shock, but my thirst overcame my Scottish blood and I guzzled down the most expensive Diet Coke of my life. Later on, my wife ordered a glass of wine for $3. One more reminder that if you eat and drink like the locals, you will be much better off.

Global Pricing Management Systems

Global pricing models get very complicated. With a desire to do well in every local market, you must consider regional and global pricing to ensure you avoid any grey-market activity. Most of the big global brands are using pricing corridors by region to ensure local pricing stays local. Here are five things when considering your pricing as you enter new markets.

  1. Define your Pricing Strategy in alignment with your business strategy and business objectives and based on a deep understanding of your own competitive position, customer insight and cost-to-serve. When starting to look at your pricing, here is what you should be considering.
    • Market Price: If you are confused, pricing studies that look at various options to identify the price elasticity. In general, the more loved a brand, a combination of interesting or important are more price inelastic. One water scare and Evian could charge $5 per bottle, without seeing a change in the volume would make it an inelastic price.
    • Value Price: A brand has good value if the price is deemed “fair”. For a marketer, the mid point hits when the perceived price and perceived value match up. If the price is too high, there is a risk of losing customers/volume. If the price is too low, there is a risk of not realizing the full profitability on the brand.
    • Strategic Price: the pricing strategy can actually impact the positioning as much as it just reflects the positioning. A super premium brand like Evian can make the consumer believe it must be a super premium if it really can command that value.
    • Short vs. Long-term Revenue Pricing: Marketers can get caught up in the addiction to pricing promotions. Once you get up to 30-50% sold on deal, the actual price begins to have little meaning for the consumer.
    • Portfolio Pricing (Price Points): One option for a brand entering a local market who wants to maintain the price of their global brand would be to create a specific local brand with a local price. This would allow you to own both the super-premium and the value priced brands, with the consumer never knowing you own them both.
  2. Operationalize Pricing Strategy in marketing activities and generate all required input for Price Execution.  Here are the factors you should be considering when you operationalize your pricing into the new markets.
    • Competitor Responses
    • Not-in-Kind (NIK) Replacements
    • Reduce/Increase attractiveness of business
    • Keep out competition
    • Setting Visible Market prices
    • Customer Reaction Product Pricing Cannibalization
  3. Implement Pricing Strategy and Price Determination framework into daily sales activities and transactional processing. As you evaluate the impact of your pricing in the market, here are the factors you should be looking at.
    • Buying Power
    • Supplier Power
    • Place in the Value Chain
    • Price Elasticity
    • Global vs. Local Supply and Demand
    • Capacity
    • Substitute products
  4. Define pricing capabilities and skill sets, establish pricing organization and assure consideration of legal requirements
  5. Enable pricing capability by monitoring and provision of tools, systems and processes related to pricing in an integrated manner

Pricing Waterfall

It is good discipline for brands to map out and manage their pricing waterfall. This provides a good control tool as you can track the waterfall over time and identify problems you are encountering. Here’s an example of the dimension involved in a pricing waterfall, helping move you from a desired price to a profitable price.

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So would you pay a 90% price premium for the Evian? I did. 

Here’s a presentation we use for the deep dive analytical thinking that can help you determine your pricing.

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management. 

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution. 

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911.You can also find us on Twitter @belovedbrands. 

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How to Guide for Marketers

In advertising, what comes first: the MEDIA choice or the CREATIVE idea?

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Of course the consumer always comes first. However, as you begin the advertising process, Brand Leaders need to figure out whether the creative determines the media choice you make or the media choice helps frame the creative. When I started in marketing, way back in the mid 90s, life was a little simpler because the media and the creative were both under one agency roof. The meetings were simple: you’d see your various TV script options, give some feedback and then the room would go silent and the account person would say “now let’s look at the media plan” and the media person would take you through a 15 page presentation on where else the idea of your TV script could go. You would see some magazine, OOH and even some sampling idea. Back then, there was no internet advertising yet.

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Then one day, our media folks from our agency were spun off, had a new name, moved offices and had a new President. It now just meant we had two presentations and the Brand Leader now had to make sense of things and try to piece it together. About a year into that new relationship, I was sitting there confused and asked the question: “So what comes first, the media choice or the creative idea?” The room went silent for about 5 minutes. Then of course both sides talked over each other, both saying it was them that came first.  

All Marketing Execution has to do something to the brand–getting the consumer to think, act or feel differently about your brand. Media is an investment against your strategy and creative is an expression of your strategy. Both media and creative are only useful if they connect with consumers. Great advertising must connect through very insightful creative that expresses the brand’s positioning and told in a way that matters to those who care the most. Great advertising must be placed within the consumers’ life where it will capture their attention and motivate them in the expressed desired way to meet the strategy. So really, the consumer comes first and strategy comes second. Media and creative need to work to jointly capture the consumer and deliver the strategy.  

With separate agencies, the problem now rests with Brand Leaders to figure it out. While one could theoretically argue that if the Creative Idea of the advertising is so big, it should work in every medium. That’s just not always true in reality. Some ideas just work better in certain mediums. Yet the media people could also theoretically argue that if you go for the most efficient and effective media option, the media will do the work for you. That’s also not true. The best overall advertising should work focus on what has the most impact and what has the highest efficiency.  

Here’s a solution for Brand Leaders 

The three questions you always need to keep in your head at all times: 1) where is your consumer 2) where is your brand and 3) how does the creative idea work? 

1.  Where is your consumer?

You should really understand who your consumer is, and who they are not. You need to make sure you understand the insights about them, because it’s those insights within your creative that allow you to connect with them. They’ll say “they get me”. You should always be mapping out a day in the life of your consumer. Get in their shoes and say “what does my consumer’s day look like and how will my message fit or interrupt their life?” Take a “be where they are approach” to your media. 

2.  Where is the Brand?

First thing you have to do is consider where your brand is on the Brand Love Curve where brands go from Indifferent to Like It to Love It and all the way to Beloved. At INDIFFERENT, it’s about announcement style such as mass media, LIKE IT becomes about separating yourself from the competition while LOVE IT and BELOVED you’ll start to see the growing importance of event marketing to core users or social media as a badge of honor to share with others.

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3.  How does the Creative work? (The ABC’S)

The best advertising should draw ATTENTION, be about the BRAND, COMMUNICATE the main message and STICK in the consumers head long beyond the ad.

  • Attention: You have to get noticed in a crowded world of advertising. Consumers see 7,000 brand messages per day, and will likely only engage in a few. If your brand doesn’t draw attention naturally, then you’ll have to force it into the limelight.
  • Branding: Ads that tell the story of the relationship between the consumer and the brand will link best. Even more powerful are ads that are from the consumers view of the brand. It’s not how much branding there is, but how close the brand fits to the climax of the ad.
  • Communication: Tapping into the truths of the consumer and the brand, helps you to tell the brand’s life story. Keep your story easy to understand. Communication is not just about what you say, but how you say it—because that says just as much.
  • Stickiness: Sticky ads help to build a consistent brand/consumer experience over time. In the end, brands are really about “consistency” of the promise you want to own. Brands have exist in the minds of the consumer. 
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In the reality of advertising, not every ad execution will be able to do all four of the ABC’S.  When I’m in the creative room, I try to think about which of the two ABC’S are the most critical to my strategy. If it is a new product, I want all four, but I have to have: Attention and Communication. If the brand is in a competitive battle I have to have Brand and Communication.  If the brand is a leader and beloved, I need to make sure the advertising is about the Brand and that it Sticks.   

What I recommend you do:

In a sense, you have to work the creative and media together. But that’s impossible. So what I do is hold off on making any media decisions until you see the creative idea and how it is expressed in a few media options. With all the potential media options now available, I ask for 3 executions for each creative option:

        1. Video version
        2. Billboard 
        3. Long Copy Print

Sounds simple, but here’s the logic. With those 3, I can now imagine how the advertising might work across all possible media options. 

  • The “Video” allows me to imagine how the creative would work for traditional 30-second TV ad, a 60-second movie theatre ad, 2 or 3 minute viral video for sharing or even a video you could put on a website.
  • The “Billboard” allows me to imagine how it would work with traditional media options such as out-of-home billboard, bus shelter, in-store poster, packaging copy and the back cover of a magazine.  Or if we want to look at digital, it could be a digital billboard, Facebook photo, website cover.
  • The “Long Print” allows me to imagine what how it might work with a print ad, side panel of packaging, brochures, public relations story-line,  social media feed or even a blog on your website.  

With 3 simple asks against each creative idea, it covers off most of the traditional media options, even covering the digital media. So now as the Brand Leader goes to their Media Agency, they will know how the creative idea would work against any of their recommendations. 

Obviously, we always recommend that you focus. So we’ll likely recommend a lead traditional media and a lead digital and lead social option. You need to make the most out of your limited resources of dollars, time, people and partnerships. However, if we want a creative idea to last 5 years, seeing it work across this many media options gives me a comfort that should I need that option, I know the creative idea will work.

The media math from a client’s view

While the media agency owns the media math that blows your mind, here is some simple client side media math. As clients, we have to make the most of our budgets. 

  • Your production budget should be around 5-10% of your overall advertising plan. If you have small budgets, that may creep up to 20%, but that’s it. Every time you do a new piece of creative, the production dollars go up and the media dollars go down. I’d recommend you focus on one main traditional media and have only one secondary option. This keeps your spend focused. 
  • When it comes to social media, keep in mind there is no free media options. Instead of financial capital, you are now exhausting people capital. Just like the traditional options, I would recommend one lead social media and one secondary focus. Do not try to be all things to all people.  
  • The other reason to focus is to ensure you do great executions and not just “ok”.  Pick the media that maximizes the power of the creative. Don’t exhaust the team by spreading them against too many activities.   
  • Allow 80 to 90% of your media spend be on the highly effective highly efficient media plan. That means 10-20% of your media spend can now go against high IMPACT creative ideas that you know will break through.  

Work with both the creative and media at the same time, figuring out what gives the highest return on your investment

 

To see a training presentation on getting Better Marketing Execution: 

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management.

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands.

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Beloved Brands Explained

Consumer Insights are secrets that we discover and use to our brand’s advantage

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There is a difference in selling to someone and motivating someone to buy.

When you just sell, you start with the product and you don’t really care who you sell to. Whoever comes through the door, you start talking to them about the features of the product and look to close the deal.
Motivating someone to buy starts with the consumer not the product. Instead of selling to anyone, you have to target those consumers who are already motivated by what you do. You have to matter the most to those who already care the most. You have to understand them, to match your brand up to their needs, wants and desires.

You have to get in the consumer’s shoes, observe, listen and understand their favorite parts of the day. You have to know their fears, motivations, frustrations and desires. Learn their secrets, that only they know, even if they can’t explain. Learn to use their voice. Build that little secret into your message, using their language, so they’ll know you are talking to them. We call this little secret the consumer insight. When portrayed with the brand’s message, whether on packaging, an advertisement or at the purchase moment, the consumer insight is the first thing that consumers connect with. When consumers see the insight portrayed, we make them think: “That’s exactly how I feel. I thought I was the only one who felt like that.” This is what engages consumers and triggers their motivation and desire to purchase. The consumers think we must be talking to them, even if it looks like we are talking to millions.Strategic Thinking 2016.062

Consumer Insights are secrets that we discover and use to our brand’s advantage

It is not easy to explain a secret to a person who doesn’t even know how to explain their own secret. Try it with a friend and you will fail miserably. Imagine how hard it is to find that secret and portray it back to an entire group of consumers. Safe to say, consumer insights are hard to find.

The dictionary definition of the word Insight is “seeing below the surface”. To get deeper, when you come across a data point, you have to keep looking, listening asking yourself “so what does that mean for the consumer” until you have an “AHA moment”. You can start with the observations, trends, market facts and research data, but only when you start asking the right questions do you get closer to where you can summarize the insight. Look and listen for the consumer’s beliefs, attitudes and behaviors that help explain how they think, feel or act in relationship to your brand or category. Because the facts are merely on the surface, you have to dig, or you will miss out on the depth of the explanation of the underlying feelings within the consumers that caused the data. Think beyond the specific category insights and think about life insights or even societal trends that could impact changing behaviour.

Good insights get in the SHOES of your consumer and use their VOICE. We force every insight to be written starting with the word “I” to get the Marketer into the shoes of the consumer and force them to put the insight in quotes to use their voice.

Here are two examples of how using Consumer Insights drove business results.

  • Working in the quit smoking business, our starting point was: “Studies show that people try to quit cold turkey 7x before reaching for a smoking aid to help them quit.” That’s not insightful. That’s just a lack of deep thinking. Only when we watched, listened and dug deeper could we feel the consumers pain. When you hold a 2 hour focus group with smokers and tell them “you can’t smoke for 2 hours and we’re going to talk about smoking the entire time” you can see them getting crankier and crankier in the second hour. What we learned is smokers are actually scared to quit, because they knew they’d either fail or lose friends. The new insight we came up with was: “I know I should quit. I’ve tried to quit so many times, it’s ridiculous. I’m not myself, I’m grouchy, irritable and feel out of control. Quitting Smoking Sucks.” When we share this secret with a smoker and they say “yup, that’s exactly how I feel”. The ad they made was a Flight Attendant losing her mind trying to quit smoking, and was the highest tested ad in the company’s history.
  • Working with a bank who was trying to gain a competitive advantage by staying open late, our starting point was this fact: “Recent research shows if a Bank were to open till 8pm, that customers would use the bank 3.4x more each month and with added transactions that would mean $26 more for each customer, and nearly $32 Million in revenue overall.” That’s not insightful. That’s just a lack of deep thinking. Consumers would resent a bank if they knew they were only opening late so they can make more money from them. When we started to think like the consumer, we landed on this insight: “I am so busy driving my kids around, I can never get to the bank during banking hours. I wish there was a bank that worked around my life, rather than me working around the banks’ life.” When we share this secret with a busy mom, she says “that’s exactly how I feel”. The ad they made with this insight had a woman doing a head stand on a yoga pillow with the caption “I do my banking between yoga and taking my kids to soccer practice”. The ad was the highest performing ad in the bank’s history.

Knowing the secrets of your consumers is a very powerful asset. An insight should ONLY connect with the audience you are talking to. I hate when people say “we don’t want to alienate others”. The best brand communication should be like whispering an inside-joke that only you and your friend get. Yes, when we target, we actually do want to alienate others. That’s the only way we will truly connect. Your ability to harness those secrets into creating insights that are arresting or intriguing, fuels the creative spirit as you tell your brand’s story, launch new innovation and move the consumer through to the purchase moment.
After all, there is one source of revenue, not the product you sell, but the consumers who buy. In a tough competitive market, your ability to harness the secrets of your consumers that only you know, is a huge potential competitive advantage.

Done right, if you can make consumers want to buy, you will never have to sell.

Here is the Nicoderm ad based on the consumer insight:

 

We run brand training workshops on everything connected to marketing. Here’s our workshop on Brand Positioning:  

 

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management. We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands. To learn more about Marketing, continue to visit beloved-brands.com where you will have access to stories on everything connected to brand management. 

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