(A quick groveling note to any retail buyers I work with who may be reading: this cartoon was entirely inspired by anecdotes from other people (my competitors actually). So, please, please, pretty please don't discontinue my products. OK, Partner?)
Now that the fearful groveling is out of the way, I've been thinking a lot about retail in the context of the credit crunch lately. Consumers are obviously looking to brands and retailers for solutions.
This is tough, because I'd classify many retailer/manufacturer "relationships" as transactional, not really relationships at all. And those transactions can be pretty combative. It's often centered on the negotiation: each side trying to grab a larger slice of the pie. It's rarely driven by growing the collective pie, which takes creativity on both sides.
I recently came across this telling vignette on the "Tug of War Brewing Over Food Prices." It gives a glimpse of the standard back-and-forth between retailers and manufacturers.
This is true in the best of times. But, it's particularly true when times are tough. Which, ironically, is when there is the greatest need for creative new thinking. Brands and retailers need to rethink their role for consumers.
In a recession, "lowering price" is not the only solution. You can also look to "increase value".
My favorite manufacturer/retail collaboration on "increasing value" is still the innocent big knit promotion at Sainsbury's, which I've blogged about before and is just starting to hit shelves again. Increases value to both innocent and Sainsbury's (and helps a nice cause to boot). Win win win (as you'll see from this short video featuring my friend Andrew learning to knit).
On a related note, I'm speaking at a conference in a couple weeks on marketing in a credit crunch. If you happen to have any other suggestions or ideas on ways to "increase value", rather than just "lower price", please leave a comment on this post. I'll send out a free book for the most useful post received by next Monday, November 10th.
Junior says
Smart and funny
hey you should work in advertising ha
Heidi Reimer-Epp [Botanical PaperWorks] says
Hey Tom, I was interested to read about your seminar on marketing during a credit crunch. We’re seeing our clients choose “plantable paper” (paper that you can plant and grow flowers from) for their marketing campaigns. The piece (coaster, bookmark, postcard, etc) becomes a message carrier and a gift of flowers, so instead of throwing the piece away, the recipient is saving it, bringing it home, planting it and enjoying the flowers, all over the course of several months.
This is in no ways intended to be an advertisement! I just wanted to share my experience with adding value to a marketing piece.
Thanks for your blog which is both funny and thought-provoking.
lisaa says
Great job, I like the irony and “second degree” of your design.désolé pour mon anglais…
lisaa says
Great job, I like the irony and “second degree” of your design.désolé pour mon anglais…
Leah says
Been hearing a lot about “bright-siding”. So, in these times we must look on the bright side of things. Can’t afford to go out anymore so the bright side is spending more time at home with the family. A series of recent Target ads in the US are a great example of this notion.
So the question a brand might ask (if brands could talk) is…. where is the bright side for my brand, in what ways might I as the brand provide bright side suggestions. May actually successfully reframe the value question (how to add value) in a way that is easier to answer. Ever notice that asking ‘how to add value’ is one of those questions that can completely shut down a conversation. Good luck– post your presentation.
John says
Agreed – if you compete on price then you’re implcitly saying that there’s nothing valuable about your product/service that you are willing to defend by charging a higher price than your competitors.
Two obvious and not particularly original strategies (as opposed to tactics) are
1) to align you company with something you stand for so that your customers are no just getting the benefit of you product/service they are also reassured that their tightened budget is also making a contribution to a better world in some sense by dint of how your company behaves and runs itself. Innocent do this in spades of course with theire charitable foundation and their recyclable packaging.
2) By not reducing your price, you’re charging more than the competition, so you must focus on providing more than they do. Product+ if you will. The trick of course is to add this benefit in a way that is not costly to you. It might be better customer service response or added extras to your service that the competition might charge for. And, of course, by being better than your competition’s offering you ultimately reap the rewards of positive word of mouth when customers are delighted by the discovery that you’re not penny-pinching for the sake of it in the way your competition might be.
Rich says
Tom, we’ve done some great work with Larry Ackerman at the Identity Circle around the importance of “identity” in the role of value-creation. You can check out more at http://www.theidentitycircle.com
Love your work!
Tom Fishburne says
Thanks, everyone, for sharing your thoughts. Very, very useful perspective all around.
I love the concept of “bright-siding” and hadn’t heard that expression before. I’ll definitely fit that into my talk next week. So, a book goes to Leah. Thanks again.
I’ll post the slides after the talk.
hamburgler says
will they be serving Big Macs for lunch?
Megan says
With the current state of the economy, consumer behavior is likely to change. Consumers will spend more time at home, how will this affect their consumption patterns, and in turn what will that do to a brand’s distribution strategy. For example, Innocent is available at many fast casual restaurants in Europe in the refrigerated beverage selection, if consumers are patronizing restaurants less and less does it make more sense for Innocent to pump up distribution in grocery?
Susan says
Tom — Clients keep asking us to help them with ways to “increase value” or looking for what they can as a “value-add” for customers. In light of all the economic changes, I’m wondering how consumers now define “value” (aside from saving a buck). What does value mean to them?