Archive for the ‘Value’ Category
Tuesday, June 23rd, 2009
Received wisdom has always suggested that strong brands will withstand a recession. The argument goes that in a recession there is a flight to safety and strong brands represent safety.
An interesting study carried out amongst consumers in the US suggests exactly the opposite. A half of all the people who had previously been loyal to a brand appear to have reduced their loyalty or defected during 2008. They are switching to the value brands offered by major supermarkets.
This raises the question, “will the same thing happen in business to business markets?”.
There is a possibility that it will not – at least not in quite the same way. Supermarket brands have now become some of the most trusted in their own right. For a number of years there has been a general migration to supermarket brands as people have recognised that the products in the supermarket packaging are quite probably made by the same companies that make premium brand products that cost 30% more.
Things are slightly different in industrial markets. The closest you get to the “supermarket brand” in industrial markets is usually referred to as a generic brand, a Chinese brand, an Eastern European brand etc. In fact, the word “reputation” is used just as often as brand.
However, it would be foolish and naive to think that business to business buyers and specifiers are slavishly buying products from their favoured suppliers at any price, without looking around. In the heady days before the recession it was not untypical to research a market and find that only 20% of companies were “price buyers”. Today it would be unusual to find less than 30% price buyers in any business to business market. The shift to value is occurring everywhere.
Brands left to ponder price of loyalty
By Andrew Edgecliffe-Johnson in New York
Published: June 22 2009 03:00
Big brands’ best customers have been defecting in droves since the beginning of the US recession, according to a study. By this year, more than half of a typical US brand’s most loyal shoppers in 2007 had switched to rival products.
A two-year analysis of 685 grocery and pharmacy-stocked brands, using data from 32m consumers’ supermarket loyalty cards, found that in 2008 the average brand lost a third of its formerly highly loyal customers.
The study will alarm packaged goods groups, as the most loyal customers – those choosing one brand for more than 70 per cent of their purchases in a category – should also be their most lucrative.
"Defection is top of mind for brand managers now because they’re the most profitable customers," said Eric Anderson, associate professor of marketing at Kellogg School of Management, Northwestern University.
"Price and promotion have become so salient at retail, that what we thought was the loyal customer can be moved with discounts," he added.
Past recessions have seen similar defections from top-tier national brands to stores’ private-label goods, Mr Anderson said. Academic research showed that customers could be quickly persuaded to switch by a cheaper price but took far longer to switch back.
The study was conducted by the CMO Council, which represents chief marketing officers, and Catalina Marketing’s Pointer Media Network, which has equipment in 25,000 stores analysing buying behaviour.
Catalina can provide a two-year anonymous purchasing history on individual customers. Brand managers and retailers who had seen the data had been startled by it, said Todd Morris, senior vice-president at Catalina.
"They’ve always known there was churn but could never put their finger on how big the issue is."
The study comes as marketers are leaning more heavily on research and on targeted advertising, as they seek to improve on the "spray and pray" approach of mass media marketing formats, such as 30-second television advertisements.
The Financial Times Limited 2009
Posted in
B2B Marketing, Branding, Business To Business, Customer Retention, Economic Downturn, Value |
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Monday, April 20th, 2009
A fair number of articles that have been published lately slam the current over-use by marketers of the word ‘value’. Critics claim that ‘value’ is at risk of becoming synonymous with ‘reduced’, ‘cut-price’ and plain old ‘cheap’. Value should also be associated with quality. A product that offers true value is more than just an attractive price; it should meet a customer’s real needs, and go that extra mile.
Customers are tending to watch what they spend at present, but if all companies are offering ‘value’ by simply reducing their prices, they will all end up competing on a level playing field.
Look to differentiate your product or service in some way. Offer some evidence and reassurance to your customers that they are buying something that really does offer value for money.
For example, auto manufacturer Hyundai is winning plaudits at the moment for its Hyundai Assurance program. With this program, anyone that buys a new car is guaranteed that if they lose their job, Hyundai will make their payments for 3 months. If they are still facing financial difficulties after that 3-month period, they can return the car (*subject to various conditions, of course – but you get the idea). In this way, the company is acknowledging the current economic climate and the fears of some of its potential customers, and offering them greater benefits and extra value.
Posted in
Customer Value Proposition, Differentiation, Quality, Service, Value |
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Monday, March 9th, 2009
One of the most important and yet one of the most badly carried out tasks by business to business marketers is the development of a good customer value proposition.
The term customer value proposition or CVP is one of those dreadful inventions of the last decade. In the past we had products and services with unique selling propositions or USPs but that didn’t seem to be simple enough for our developing profession.
The problem with customer value propositions is that most people can’t help themselves when they create them. They feel honour bound to list each and every feature and benefit of the offer and, as a result, they weaken the appeal to the person they are aimed at. Instead of the proposition being clear, it becomes fuzzy and listless. Too many features and benefits are too much for recipients to cope with.
What has happened to the big hairy idea — the single proposition that makes an offer different, desirable and defensible? In the following article by Mike Southon, and published in the Financial Times over the weekend, he describes how to create an elevator pitch (a CVP by any other name) and instead of using the three Ds (distinctive, desirable and defensible) , he suggests the 5 Ps (pain, premise, people, proof and purpose). Arguably it is a more complicated version of the “3 D formula” but there are some good points for us to ponder on.
Floored by an elevator pitch
By Mike Southon
Financial Times: March 7 2009
One of the most enjoyable parts of my job is appearing at events involving an "elevator pitch" competition, where hopeful entrepreneurs extol the virtues of their business idea in the time it would take to travel a few floors in a lift with someone.
The first thing I explain is that the elevator does not get stuck for several hours – you have to keep your pitch short and simple.
The worst culprits for bad pitching are inventors, engineers and technologists who feel that they have to cram as many features as possible into their three minutes.
In sales, there is the concept of "golden nuggets", where as many as 50 amazing features of your product are crammed into literature by your marketing team. The problem is that most customers have very short attention spans and can only remember three things about your product. As soon as you mention the fourth golden nugget, the first, and probably most important one, drops out of their memory.
By the time you get to nugget number 50, all the most compelling ones have long since gone, and the prospective customer has also lost the will to live.
The objective in delivering an elevator pitch is not to secure an order there and then. The best you can hope for is to stimulate enough interest to receive another 15 minutes and a business card.
So the methodology for a good elevator pitch is simple, and centres around five ‘P’s: pain, premise, people, proof and purpose.
The most important question for a would-be entrepreneur is: Where is the pain? You should also ask: What is the pain or problem that you plan to solve?
The larger the pain, the more likely people are to give you money to take it away. Pain can come in many forms, but if your product or service saves time and money, that is a good start.
Next, you have to explain in simple terms the premise of your business. Exactly what is it you do? For this, you need to be literal and not descend into sloganeering. "We transform people’s lives" is laudable but vague. "We are an excellent training company, specialising in communication skills" is much more to the point.
If you feel this is too obvious, I suggest you visit a trade show and work out what each company does, just from the text on the display stands. The worst are deliberately vague in the hope your curiosity will be aroused, encouraging you to approach the stand to find out what they do. Unfortunately, most people will not bother.
The other Ps of pitching are very straightforward.
You need to talk about your people because entrepreneurship is a team game. Every investor says they look for a credible team rather than a good idea, and every customer says they buy from people not companies.
Proof is the hardest element to provide. Why should anyone buy from you and not your competitors? The best proof is examples of your happy customers, in the form of relevant case studies.
Finally, you must provide your purpose, and the most important purpose of any business is to make money.
Potential investors will be looking for a return on their investment, and prospective customers will only want to know that you run a sensible and profitable business, to ensure reliable and consistent delivery of your products and services.
This should provide the basics for delivering a good elevator pitch. For more details, Chris O’Leary has written an excellent book, Elevator Pitch Essentials.
Posted in
B2B Marketing, Brand Strategy, CVP, Corporate Positioning, Customer Value Proposition, Marketing, USP, Value |
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