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Brand survival and profit
Fundamentally, a brand’s continuity
depends on its ability to sustain itself
over the longer term. This means
that the profit it attracts by virtue of
building its equity must be utilized in
ensuring its sustenance. Therefore,
almost all marketing activity
centered around the four Ps of
marketing (Price, Place, Promotion,
Packaging) carefully balances the
resultant outcome on the fifth P – Profitability.
A brand’s profitability can be
influenced by a variety of internal
and extraneous factors but it is
invariably linked to its pricing.
Pricing is central to a brand’s
marketing strategy: it cannot operate
in isolation of other marketing
activities and it is a primary driver of
brand profit.
Shoppers: making sense of what they say
It is critical to understand how the
ultimate arbiters of brand / marketing
success, namely consumers
and shoppers, view themselves.
ACNielsen ShopperTrends, a study
conducted across 50 countries,
identifies what shoppers seek from
retailers and understands their
shopping behaviour in conjunction
with retailer brand equity.
By intersecting what consumers
claim they want from retailers,
with what actually influences their
shopping behaviour, it is easier to
pinpoint consumers’ propensity
towards spiralling prices in the midst
of an increasingly aggressive and
price-focused trade environment.
Surprisingly, the difference
between the factors that shoppers
state are important versus what
ShopperTrends has found to be
important indicates that ‘low prices’,
though claimed by shoppers to be
a key determinant in driving choice,
is relatively less so. Factors such as
‘Easy to find’, ‘Well stocked’, ‘Wide
range and variety’ and ‘Selection of
quality brands and products’ are just
as likely to be true drivers of shopper
choice. ‘Low prices’, on the other
hand, is seen to be a statement that
is ‘said, but not meant’.
This conclusively proves that
shoppers see competitive prices as
a necessary or ‘hygiene’ condition
amongst retailers and that ‘better
prices’ per se is not necessarily a
strong differentiator. This is because other retail characteristics are also
important, and can help a retailer
support a price premium versus
the hard discounter. Factors such
as range, availability, convenience,
and quality, too, can have a bearing
on a shopper’s ‘exercised’ choice.
Additionally, brand owners can use
their brands and their marketing
investments to help retailers achieve
differentiation in these areas.
Nevertheless, pricing is an integral
part of creating value, sustaining
shopper loyalty and ensuring brand
profitability. It is for this reason
that pricing strategy assumes the
importance it commands and must
follow a specific and deliberate
process before it takes its final form.
This process calls for management
decisions on product, pricing,
distribution, promotion and personal selling, and in some instances, even
customer service. This definition
implies that pricing is central to
profitable brand marketing!
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