As I scan through my daily dose of Marketing Charts, I found some interesting data on how companies that lower the price of their products or services may risk damaging long-term brand perception. According to “Big Price Cuts Linked to Long-Term Brand Damage” story, 64% of consumers assume that “the product is extremely popular,” if a brand does not lower its price during economic downturn and another 64% say they assume that “the product is already a good value.”
While some may argue that branding is overrated (which I disagree), the truth of the matter is perception is reality especially in marketing. Branding is a form of marketing by reinforcing the idea or concept while creating awareness simultaneously to generate brand recognition in the minds of the consumers. That acknowledgment of a brand often gets associated with the impression resulting in some form of emotional driver that leads to curiosity, desire, and interest. Obviously if you do a good job on branding, you’ll create positive emotions just like creating buzz so you appear as if you’re “everywhere.” However; good publicity bad publicity at the end it’s all publicity, it gets the word out and adds to the story – more opportunity to be talked about, linked, and circulated.
The most important step for branding is turning marketing into sales, it could be selling a product or selling an idea to get buyers to follow the call-to-action into the sales cycle. It is a propaganda with a cause in a wide spectrum of context. What marketers must realize is that the reality has to fit with what’s been advertised, the hype must come down to earth at some point. Great sales people can sell ice to an Eskimo but at some point the Eskimo will discover that there is nothing special about that ice, fool me once shame on you; fool me twice shame on the Eskimo . Great products do sell itself but branding and marketing act as the enabler allowing room for errors and price flexibility (margins).
This is why consumers are willing to pay 30-60% more on a Lexus over a Toyota even though it is basically the same car. Although it wasn’t the original intend when Toyota launched the Lexus brand, it was so well received and marketed that now Lexus is being sold as, well, Lexus in Japan! With the success of Lexus, comes Scion, another brand targeting the youth market, Toyota knows their market and does a good job of connecting their product with their customers. Brand positioning is extremely important, knowing your customer and deliver what your promise can have a lasting impact for a brand.
A brand is as powerful as consumers are willing to pay, and price cuts should be utilized as a long-term strategic move not a short-term financial solution. Another great example on Apple: when all other PC/notebook manufacturers are launching the hot-selling new netbooks left and right, Apple refuse to come out with a low-end low priced laptop to compete. Instead it lowered the price of its higher-end laptop sticking to their core value aligning to the brand equity they’ve carved out for themselves. They are consistent with their product positioning which generates great value for the brand while keeping current customers happy.
Everyone wants to be unique – you are what you consume, from the food you eat to the car you drive, the clothes you wear to the hair you style, it’s real if you believe it.