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

Posted on 2 CommentsPosted in How to Guide for Marketers

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.

Analytics 2016 Extract.001
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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 generating more Love for your brand will make You More Money

Posted on Leave a commentPosted in Beloved Brands Explained
Love = Power = Profit

This message is for the Brand Leaders who many times stick to the straight rational management of a brand.  I grew up in the CPG Brand Management world.  And today I’m about to tell you a message that you likely hear all the time from your agency:  you should be more emotional with your brand!   I preface it by saying I’m one of you (client), not one of them (agency).  It’s very common among clients to think that way because we get frustrated that the agency doesn’t deliver what we want.  From my experience, many Brand Leaders still say:  “Give me a very straight forward ad that delivers the message we know will work”.  When an agency starts to push for us to be more emotional, we immediately think they are just trying to win an award.  

I guess I wished I listened to my agency.  But I just wish the agency went a layer deeper and connected going emotional with making more money and then they would have gotten my attention more. Hey Agencies:  Try telling your client this next time:  We should be more emotional because then you’ll make more money.  If you could generate more love for your brand, that would give you more power in the market and that power would  help you to drive more profits.

love = power = profit

Here’s the theory part on how the more love you create, the more power you command and the more money you make.  Brands sit somewhere on the hypothetical Brand Love curve, going from Indifferent to Like It to Love It and finally becoming a Beloved Brand.  Brands can connect with the consumer through 5 sources:  how strong is the promise, how good is their story, how focused is their strategy, how do they keep the brand fresh through innovation and how do they turn all this into an experience beyond the product.  It is the Brand’s connectivity and love that generates power for your brand–a power with the very consumers who love it, versus the channels who carry it, the competitors who fight you, possible new entrants trying to de-throne you, influencers who recommend you, suppliers, the employees and the media.   Having power enables your brand to generate higher profits in 8 ways, through price points, trading up/down, product costs, marketing costs, stealing other users, getting users to use more, entering new categories or creating new ways to use for the brand.


There are 5 Ways to Generate more Love for your Brand
  1. The brand’s promise sets up the positioning, as you focus on a key target with one main benefit you offer.  Brands need to be either better, different or cheaper.  Or else not around for very long.  “Me-too” brands have a short window before being squeezed out.  How relevant, simple and compelling the brand positioning is impacts the potential love for the brand.  Apple goes above just their product with a promise of simplicity that allows everyone to experience the future through technology.
  2. The most beloved brands create an experience that over-delivers the promise.  How your culture and organization are set up can make or break that experience.  Hiring the best people, creating service values that employees can deliver against and having processes that eliminate service leakage.  The culture attacks the brand’s weaknesses and fixes them before the competition can attack.  With a Beloved Brand, the culture and brand become one.  I love the Starbucks experience that has been created with coffee as the base, but they have gone so deeper to enable magical moments for their consumer.
  3. Brands also make focused strategic choices that start with identifying where the brand is on the Brand Love Curve going from Indifferent to Like It to Love It and all the way to Beloved status.   Marketing is not just activity, but rather focused activity–a focused target, a focused message, focused strategic choices, focused activities always with an ROI mindset.  Where you are on the curve might help you make strategic and tactical choices such as media, innovation and service levels.  Find those who are most motivated to buy what you do best.  I love how Volvo is so singularly focused on the safety message since 1954.   Yes they have leather seats and a great radio, but the message is always safety first.
  4. The most beloved brands have a freshness of innovation, staying one-step ahead of the consumers.  The idea of the brand helps acting as an internal beacon to help frame the R&D.  Every new product has to back that idea.  At Apple, every new product must deliver simplicity and at Volvo, the innovation must deliver the safety promise.
  5. Beloved brands can tell the brand story through great advertising in paid media, through earned media either in the mainstream press or through social media.  Beloved Brands use each of these media choices to connect with consumers and have a bit of magic to their work.  John Lewis out of the UK, is an employee-owned store growing double digits right through the recession because of their commitment behind amazing story telling around the simple message of the gift of giving.

There are 12 ways to turn the Love to Generate Power for your Brand

A brands connection between consumer is a power.  And that power translated itself into 12 forces of a power that a Beloved Brand wields, (show below).

A Beloved Brand with a loyal group of followers has so much more power–starting with a power over the very consumers that love them.   These consumers feel more than they think–they are e-rational responding to emotional cues in the brand.   They’ll pay a premium, line up in the rain for new products and follow the brand to new categories.   Look at the power Starbucks has with their base of consumers, making their Starbucks moment one of their favorite rituals of the day and how consumers have now added sandwiches and wraps to those rituals.  All day long, Starbucks has a line up of people ready for one of their favorite moments of their day.

Using Porter’s 5 forces, we can see that the love also gives Beloved Brands power over channels, substitutes, new entrants, or suppliers.   People rather switch stores than switch brands.  Apple has even created their own stores, which generate the highest sales per square foot of any retailer.  These brand fans are outspoken against competitors and suppliers will do what it takes to be part of the brand.  In Apple’s case, Intel has given them the lead on new chip technology.

Beloved Brands have a power over employees that want to be part of the brand and the culture of the organization that all these brand fans are proud to project.  People at Starbucks love working there and wear that green apron with a sense of pride.  Brand fans know the culture on day 1 and do what it takes to preserve it.

Beloved Brands have a power over the media whether that’s paid, earned, social or search media.  Apple generates over a billion dollars of free media via the mainstream media and social media.  Competitors complain about Apple getting a positive media bias–they are right, they do.  Even for paid media,beloved brands get better placement, cheaper rates and they’ll be the first call for an Integration or big event such as the Super Bowl or the Olympics.   Nike did such a great job with social media during the London Olympics that people thought they were the main shoe sponsor–when it was Adidas.

Beloved Brands have a power over key influencers whether it’s doctors recommending Lipitor, restaurant critics giving a positive review for the most beloved restaurant in town  or Best Buy sales people selling a Samsung TV.  They each become fans of the brand and build emotion into their recommendation.  They become more outspoken in their views of the brand. And finally beloved the Beloved Brand makes its way into conversation at the lunch table or on someone’s Facebook page.  The brand fans are everywhere, ready to pounce, ready to defend and ready to say “hey, you should buy the iPhone”.  The conversation comes with influence as crowds follow crowds.  This conversation has a second power, which creates a badge value.  People know it will generate a conversation and are so proud to show it off.  After all, they are in the club. All twelve of these forces combine to generate further power for the brand.

How to use the Love and Power to generate more Profits for your brand

With all the love and power the Beloved Brand has generated for itself, now is the time to translate that into growth, profit and value. The Beloved Brand has an Inelastic Price.  The loyal brand fans pay a 20-30% price premium and the weakened channels cave to give deeper margins.  We will see how inelastic Apple’s price points are with the new iPad Mini.   Consumers are willing to trade up to the best model.  The more engaged employees begin to generate an even better brand experience.  For instance at Starbucks, employees know the names of their most loyal of customers.  Blind taste tests show consumers prefer the cheaper McDonald’s coffee but still pay 4x as much for a Starbucks.  So is it still coffee you’re buying?

A well-run Beloved Brand can use their efficiency to lower their cost structure.  Not only can they use their growth to drive economies of scale, but suppliers will cut their cost just to be on the roster of a Beloved Brand.  They will benefit from the free media through earned, social and search media.  They may even find government offer subsidies to be in the community or partners willing to lower their costs to be part of the brand.  For instance, a real estate owner would likely give lower costs and better locations to McDonald’s than an indifferent brand.  Apple get a billion dollars worth of free media, with launches covered on CNN for 2 weeks prior the launch and carried live like it’s a news event.

Beloved Brands have momentum they can turn into share gains.   Crowds draw crowds which spreads the base of the loyal consumers.  Putting the Disney name on a movie generates a crowd at the door on day 1.  Competitors can’t compete–lower margins means less investment back into the brand.  It’s hard for them to fight the Beloved Brand on the emotional basis leaving them to a niche that’s currently unfulfilled.  Walk past an Apple store 15 minutes before it’s open and you’ll see a crowd waiting to get in–even when there are no new products.

Beloved Brands can enter into new categories knowing their loyal consumers will follow  because they buy into the Idea of the Brand.  The idea is no longer tied to the product or service but rather how it makes you feel about yourself.  Nike is all about winning, whether that’s in running shoes, athletic gear or even golf equipment.  When Starbucks went for pastries and sandwiches the consumer quickly followed.


Beloved = Power = Growth = Profit


To read more about how the love for a brand creates more power and profits:


email-Logo copyABOUT BELOVED BRANDS INC.:  At Beloved Brands, we are only focused on making brands better and making brand leaders better.Our motivation is that we love knowing we were part of helping someone to unleash their full potential.  We promise to challenge you to Think Different.  gr bbi picWe believe the thinking that got you here, will not get you where you want to go.  Our President and Chief Marketing Officer, Graham Robertson is a brand leader at heart, who loves everything about brands.  He comes with 20 years of experience at companies such as Johnson and Johnson, Pfizer Consumer, General Mills and Coke, where he was always able to find and drive growth.  Graham has won numerous new product and advertising awards. Graham brings his experience to your table, strong on leadership and facilitation at very high levels and training of Brand Leaders around the world.  To reach out directly, email me at graham@beloved-brands.com 

At Beloved Brands, we love to see Brand Leaders reach their full potential.  Here are the most popular article “How to” articles.  We can offer specific training programs dedicated to each topic.  Click on any of these most read articles:

Ask Beloved Brands to help you uncover the love and power on your brand or ask how we can help train you to be a better brand leader.

The new burger war: 5 Guys vs In-N-Out

Posted on 8 CommentsPosted in Beloved Brands in the Market


When I was a kid, after my hockey practices, my mom and I used to go to Burger King. It became a tradition. What did i like the best? It was nice and quiet, compared to the crowded noisy McDonald’s right across the street. No lines, no one taking up great seat locations and almost zen. Today, there’s a new Burger War brewing: 5 Guys versus In-N-Out Burger. Who will win? This is a Brand site, so we look at this through the eyes of marketers and consumers, not food critiques.

Who has the better burger?

I know there’s lots of debate out there. Let’s dispel the myth here: they are almost the same burger. They take a high quality ground chuck, and squish it firmly onto the grill which locks in the flavor and creates a juicy burger. It’s a much higher quality meat than McDonald’s and much juicier in the end due to the cooking technique. The only difference is 5 Guys burger feels like the burger actually breaks apart more which could make it feel less fast-food and In-N-Out feels very neatly stacked. VERDICT:  Tie

Fries versus shakes

UnknownIf the burger is a relative tie, then what else you got. 5 Guys wins on fries and In-N-Out wins on Shakes.  I’m a big fries fan, and 5 Guys does have pretty darn good addicting fries. They give you enough that you likely won’t finish them.  The In-N-Out fries (except for Animal Fries) are a little bit nondescript and boring. In terms of shakes, the In-N-Out shakes are legendary, whereas 5 Guys is completely missing out by not even having a shake. Verdict:  Tie, pick your poison and likely only have it once in a while.  


Who has better atmosphere?

I have to say, neither is very cool at all.  In-N-Out had the plastic feel of a McDonald’s, with booths that are too small to fit those that can eat a double-double. The hats on the employees are cute, giving it a 50’s diner feel. And 5 Guys atmosphere feels like a Costco. Dusty floors, crappy little tables and chairs. Plus, do we really need 50 signs per restaurant telling us how great you are. What you’re doing is opening up the door to local establishments finding a niche against both of these with a cooler pub-like atmosphere. Verdict:  one bad tie.

So the overall product is a tie.  

Where does In-N-Out Burger win?

Clearly as I’ve heard from the fans, In-N-Out does a great job engaging with their consumers.  The secret menu and the secret sauce, the traditions of the double-double and the “animal fries” all help create a “club” filled with brand fans who will take on anyone that knocks their brand.  There’s a slight difference in who each attracts.  In-N-Out’s menu items are generally less expensive — the chain is most popular with young men ages 18 to 24 with an income of less than $70,000 a year, according to NPD. By contrast, Five Guys patrons are generally 25 to 50 years old, with an income of more than $100,000. In-N-Out seems to have a more engaged consumer base that it can leverage as 5 Guys is now into the Southern California market ready to do battle right in the backyard of In-N-Out.

Where does 5 Guys win?

5 Guys has been much more aggressive. They have pursued winning on reviews and lists that can help drive awareness for the brand. In 2010, they won the Zagat best burger. They’ve aggressively gone after celebrities such as Shaq and Obama. And most of all, they are winning on location, location and even more location.  At this point, In-N-Out is stuck as a West Coast brand, in California, Arizona and Nevada with only 280 locations. And 5 Guys is everywhere, with 1000+ locations, fairly national and even in Canada.  They are clearly following the McDonald’s real estate strategy by trying to be everywhere. The other area where 5 Guys wins is pricing.  I’m a marketer, so the more price you can command the better. For relatively the same burger, 5 Guys charges twice what In-N-Out charges. In this current stagnant economy, people are proving they’d rather pay for an amazing quality burger than a cheap steak. It feels like In-N-Out is leaving money on the table with the prices that are just slightly above the McDonald’s price points.

So who will win?  

At this point the clear winner will be 5 Guys. Just like McDonald’s versus Burger King in the original burger war, it’s not as much about the burger itself but about the aggressive pursuit of real estate. Unless In-N-Out wakes up, takes all that brand love they’ve generated among their fans and they go on an 5-year big expansion, they’ll be relegated to a regional brand we only visit on our road trips to California.

5 Guys is quickly becoming the upscale version of McDonald’s

To read more about how the love for a brand creates more power and profits:


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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