Even premium buyers like a good deal
One of the marketing dilemmas premium brands face in today’s economy is how much they should discount, if at all, in light of maintaining brand perception/value. A recent article in Advertising Age (you’ll need an account to access this article) warns that extended discounts can erode a brand’s value, yet last month Google searches for coupons surpassed the number of searches for “Britney Spears.” Feedback from our Premium Brand Panel also indicates that, even among purchasers of premium brands, consumers are hungry for a good deal. Even households with high incomes ($100,000+) are clipping coupons and making shopping lists based on coupons and sale items.
Premium brands should beware: hard times are driving many to try lower-cost alternatives, and this comes as no surpise to anyone. The magic lies in knowing how often and how much to put “on deal.” According to our Premium Brand Panel, there are certain products and/or brands that consumers are unquestionably willing to pay more for. Even loyal consumers love getting a good deal on those premium brands, stockpiling their personal inventory, capitalizing on a temporary promotion, and promoting the brand both virally and by word of mouth. There are two things premium brands should focus on to grow their market share in this challenging economy:
- Reward the faithful —The occasional discount for your loyal customers says “Thank You” in an engaging way. Even brands that never go on deal should consider reaching out to their current customer base and reward them with a meaningful discount or offer. The cost may be something you’re not used to incurring, but it’s less expensive to keep a customer than it is to acquire a new one. Besides, the enthusiasm and word of mouth publicity just might offset the cost of the deal with increased purchasing or long-term loyalty. This is especially effective if your brand can reach out to customers at the household level in a promotion that isn’t for the masses. Also, the occasional discount may keep your regulars from trying other low-cost alternatives when times are tough.
- Reach the aspirational —Believe it or not, current economic conditions are allowing many cost-conscious shoppers to try premium products they might not otherwise consider. A $5 gallon of milk, for example, might never be in the consideration set of many shoppers without a coupon. Yet, if the consumer is used to paying $3, a $2 coupon might be what it takes to incent trial. If the $5 milk is really that much better than the $3 alternative, then an opportunity to grow share has been created with a $2 coupon. The premium brands that will win once the economy turns around are the ones who reach out now to grow their consumer base rather than sit back and watch sales and share diminish, chalking it up to economic bad times.
The biggest challenge in the above recommendations lies in knowing how little you can get by with doing, and not over-doing or over-spending on a good idea. Consider carefully what’s relevant and what low-cost mechanisms you can use to reach the appropriate audiences.