For consumers, deciding which
product to buy is not a simple
matter of systematically determining
which one will best meet their
needs. If it were, the brand landscape
would look considerably different.
Instead, most unknowingly employ a
complex “voodoo” calculus that includes
what they think they need or want (not
the same thing), and a variety of related
issues including ergonomics, features,
performance, price, and brand value.
Of those, brand value is likely the
least understood, as well as the most
important.
In the past, consumer electronics
leader brands like Sony, Panasonic, Pioneer,
Kenwood and others too numerous
to name, benefited tremendously
from having more brand value than
those on an even longer list of alternative
brands. How would you guess that
A-list looks today?
CE seemingly has a death wish mentality
about competing on price. Don’t
get me wrong; I understand the power
of lower prices. But I also know there
comes a point when
a price is so low that
consumers believe
it may be an indication
of a lesser product,
reflecting poorly
on the manufacturer
as well as the retailer
who sells it.
Logically, manufacturers
should
be responsible for
building their own
brand value while retailers should merchandise
and sell product. I agree, although
the cause-and-effect relationship
in the never-ending struggle
between the two for profit shows an
unintended consequence.
Retailers long lobbied for, and in
many cases received, the right to discount
face of invoice (DFI) with the coop
and other marketing-related incentives
offered by manufacturers. Great,
but unfortunately far too many took
that right to their bottom lines, which
meant less money spent in support of
the brand. And while it could be argued
that the manufacturer just needs
to find more money elsewhere to support
their brand, that wasn’t possible
before and certainly isn’t today.
Ladies and gentlemen, the chickens
have come home to roost.
We are in an industry that has placed
far too much emphasis on price at the
expense of all the other important
product attributes that go into the purchase
decision process, none more so
than brand value.
So just exactly how valuable is brand
value? Expert consensus suggests that
consumers base 20 percent of their purchase
decision on brand. Or you could
look at brand consultancy Interbrand,
which publishes an annual Top 100
global brand value index. Among other
things, it estimates the value of each Top
100 brand on the open market. In 2009,
No. 100 was Campbell’s, worth an estimated
$3.1 billion. No. 1? Coca-Cola,
with an estimated value of
$68.7 billion
.
The next time you think about lowering
price to increase sales, think again.
Chances are you already sell far below
what most consumers expect, and are
willing to pay, for brands you need only
tell more about to make the sale.
William Matthies is the CEO of Coyote
Insight (www.coyoteinsight.com)
and can be reached at [email protected] or at (714) 726-
2901. Visit Business Wisdom at http://businesswisdom101.blogspot.com
