What’s the biggest business benefit of fame?
Pricing.
As Bon Scott of AC/DC used to sing, “It’s a long way to the top if you want to rock and roll.” But once you’re at the top, you can charge a lot more for tickets.
As you know, the global economy took a big hit back in 2008.
The Harvard Business Review noticed that people who were not affected by the recession were becoming increasingly sensitive to pricing. People were choosing to save money by switching to white label or own-label brands, even though they didn't necessarily need to.
HBR called it discretionary thrift, and they predicted it would continue long after the recession was over.
They were correct.
So what can you do about it?
Source: foodtechbiz
Imagine you’re the CMO of McCain Foods UK. The year is 2014, and you’re part of a multinational company that turns potatoes into frozen potato products — french fries, tater tots, Smiles. etc.
McCain is the category leader in the UK, but just barely.
You’re getting hammered on two fronts: The increasing quality (or perceived quality) of own-label brands and the rise of discount grocers like Aldi. As a premium brand, you don’t have distribution deals with them.
You’re losing physical availability and market share. And you’re losing share of search, which is a pretty good proxy for mental availability or fame.
So you do what a lot of brands do when they find themselves falling behind — you shore up short-term sales by offering deeper and increasingly frequent discounts. But you don’t feel great about it.
Because you know nothing good happens when you offer deeper and increasingly frequent discounts. Sales might recover a bit, but margins begin to erode and profits go down. So does the strength of your brand.
You find yourself at a crossroads. As the CMO do you …
A.) Double down on promotions and discounts?
Or …
B.) Invest in long-term brand building in order to reduce price sensitivity and regain market share?
Because you’re a brilliant marketer, you choose option B. You go all in on brand.
The goals of your campaign will be to:
Increase volume sales (get retail grocers to buy more)
Get discounting under control
Increase profitability
You still need a campaign platform, a big idea to anchor your campaign and drive comms over the long term.
You look at the 2014 food scene in the UK. It’s aspirational. The leading foodies are celebrity chefs, some with Michelin stars. But that’s not how real people eat.
Real life isn’t Michelin star meals every night … or any night. Real life is messy, chaotic, diverse, fun.
So you decide to cast real families in your ads because you want these real families to be seen and celebrated.
Your tagline: “McCain. We are family.” And you create ads like this:
Of course, you don’t stop there.
You decide on a 60/40 long to short split of your comms budget.
You put your money into linear TV, VOD and streaming so you can tell these stories with much better reach. You do OOH and digital as well. Again, it’s both long and short.
Your brand ads focus on the core product, which drives your salespeople up a tree. Don’t worry, they’ll come around.
And you keep at it for 10 years.
So what does this do for your pricing power and market share?
Gross profit up 56%
Average price per kg up 48%
Price sensitivity fell by 47% (this is very good)
Sales value up 56%
Perception of quality up 50%
Revenue outpaced inflation
McCain significantly outperformed the rest of the category. And the brand remained strong through Brexit, COVID, unprecedented inflation and a sunflower oil shortage because of the war in Ukraine. Also, the price of potatoes doubled over that 10 years.
So what does this mean for you — the real you living and working in 2024?
Building brand fame is one of the best ways to defend against economic uncertainty.
You can’t discount your way out of trouble. You might get a temporary boost in sales, but it’s nearly always at the expense of margins and profits.
If your brand makes people feel good, your brand becomes the better choice. And people are willing to pay more for it.
Building a strong brand takes time … even when you’re the market leader. McCain’s “We Are Family” campaign has been going on for a decade.
Every brand is different. Every category is different. Every business problem is unique. You’re probably not a market leader in the frozen potato products category, but making your brand famous is always the goal.
Speaking of famous … we are officially in the swirl and chaos of the holiday season, so next time we’ll talk about some of our favorite holiday ads.
See you then.
Sources!