Archive for September, 2022

Ensuring that the price is right

Monday, September 26th, 2022

Pricing is a marketing issue, especially as cost of living crisis mounts.

“We should not talk down the power of advertising in the wider marketing mix. When a brand buys advertising, it sends a message: that it wants to be noticed and win approval, that it wants to generate desire and drive behaviour.” Gideon Spanier, Campaign editor in chief.

Of course, one other thing that advertising does is drive a price differential versus other, less desirable, brands.  And in the cost of living crisis, it is crucial that marketing has influence, a significant one, on pricing.

The great Jeremy Bullmore once cautioned the audience of marketers at a MediaCom conference against focussing too tightly on the core target market for any brand.  In the face of a step change in the availability of data to calculate pinpoint precision of targeting ads at those, and only at those, in the market to buy a brand (in this case a luxury car) in the next 3 months he said: “If brand x only ever targeted people in the market to buy the car in the next quarter, there would soon be far fewer of them.  Because one of the reasons that you pay the premium to buy that luxury car is to be the envy of all of those who cannot afford to do so.”

Luxury cars has been an outlier category, in as much as the performance of most modern cars is satisfactory.  The electric car marketplace is shaking up this norm but in the past the premium lay largely in the prestige of the brand, of the marque and this was highly influenced by great advertising and of course entertainment in general (Bond and Aston Martin for example).  To use the category recently cited by Tom Darlington, there is less brand premiumisation for instance for a toilet cleaning product, but still advertising drives brand recognition and memory structures and therefore should allow a premium in terms of pricing.

As the guru of effectiveness, Jane Christian, managing partner at MediaCom, puts it: “we see strong brands benefit from inelastic pricing”.  In other words when prices go up by 1% you might expect to see sales drop by a proportionate amount.  She goes on to say: “if the brand is strong enough, then there may be only a minimal or even zero drop in sales.”

Here then is one effect of growing demand in the right way and driving value for the business. McKinsey estimate that raising prices by 1% without losing sales can, on average, boost operating profits by over 8%.

Pricing systems are therefore crucial, and Artificial Intelligence advances are stepchanging their effectiveness.  The Economist reported recently that the latest AI charged models “can spot patterns and relationships between multiple items.” The models scrape social media sentiment and product reviews. 

We can look forward to a marketplace for many products where pricing is more volatile than we have experienced in the past.  Some consumer segments may find this challenging – those who hunt for a bargain will have to put more homework in; those who just don’t like to be ripped off may have to do the same.  And this in itself may affect brand perception.  If you have a reputation as a brand that is good value for money, your pricing choices may need some marketing input on top of the AI.

There are 48 ways to transform creativity. Here’s the 7th. Go outside.

Tuesday, September 13th, 2022

Going outside is a transition, a transformation.  And readily available when anyone is stuck for ideas. Going outside can be the start of a new adventure.

There are, of course, more than one way to go outside: you can go through a door, step outside of your social or work bubble, dive into the natural world, exit your comfort zone, experience a liminal space. 

The exemplary of going through a doorway in many UK childhoods is when Dr Who steps outside the Tardis and a new adventure begins accompanied of course by the  Vwoorp Vwoorp sound of the Dr Who Tardis landing.  The sound triggers excitement of knowing that a new adventure is beginning each time the Doctor steps outside the Tardis.  (Always a bit disappointing if they just ended up in modern day Britain, even if the daleks were attacking. Such a letdown and inexplicable until you understand the production budget had run out.)

Going through a doorway can signify the start of a new way of looking at things for us all.  Inside is control and organisation.  Outside there may be chaos, randomness.  Inside is known, outside is unknown.

In the workplace we all need to step outside the office bubble.  All great advertising strategists are curious about other people’s lives.  The ad agency bubble cliché where creatives are accused of producing work for other people like themselves, for an audience of Soho House members, exists for a reason.  Often a list of awards will showcase work that pleases peers more than it excites the public.  But great work transcends this to speak to the consumers’ lives and understand what they genuinely care about.

You can’t plan for that in a capital city bubble.  You have to dive into the lives of the prospective audience, get outside of the office, and go where they hang out, where they live, and immerse yourself in what they care about.  A rundown highstreet will tell you more about buyers of many products than going to an office everyday.  The “Back to the office” evangelists need to take note that time spent in a café in a suburb might be more insightful and inspirational than filling in post it notes with Sharpies.  Yes, teams need to cluster, but not necessarily in WC1 or EC2.  Go outside of your normal office space.

Get outside into some nature. Research studies have proved the impact of green spaces on mental health.  If you can take your challenges or problems that need solving with creativity outside and sit with them there then you should find the outside helps your thinking to flow.

Go outside your comfort zone.  This doesn’t have to be extreme, it doesn’t have to be stressful.  It is necessary for growth.  Psychologists have a term for healthy development and growth.   Vygotsky’s concept of the “Zone of Proximal Development” posits that human potential is theoretically limitless; but the practical limits of human potential depend upon quality social interactions and residential environment. This ZPD is “the distance between the actual developmental level as determined by independent problem solving and the level of potential development as determined through problem solving under adult guidance (for children) or in collaboration with more capable peers”. In other words, its not about being brave, you don’t need to sky dive.  But do reach out to colleagues and mentors for help in stretching into the mildly uncomfortable zone.  Go beyond your immediate capabilities.  The rewards are immense.

My recent experience in entering (and winning) a worldwide creative competition is one example of this.  You will know your own boundaries, for some, its challenging their conservatism, for others its changing jobs, partners or learning a new skill, hobby or making new friends.   

Go outside the space you are in.  The very act of going through a doorway or a portal, being in a liminal space, is renowned in story telling as magical.  It’s a transitional moment, the gateway from one state to another.  Richard Rohr, an American Franciscan monk and writer describes this space as “where we are betwixt and between the familiar and the completely unknown.  There alone is our old world left behind, while we are not yet sure of the new existence.  There alone is our old world left behind, while we are not yet sure of the new existence.  That’s a good space where genuine newness can begin.”

Liminal spaces can be uncomfortable.  But many people believe that you cannot begin afresh until you have separated from the old, in jobs, in relationships and in self care.  In the nothingness of liminal space you can recreate a new version of yourself.  Surely one of the greatest acts of creativity of all.