I enjoyed a great discussion with my Principles of Marketing students yesterday about using price as a marketing strategy tool to fight competition. The case of Burger King going after McDonald’s dominance in the breakfast category was our topic. BK is offering a breakfast muffin sandwich for $1. A commercial for the product makes it clear that its inspiration is McDonald’s Egg McMuffin, but the point of difference is a $1 price. “It’s not original, but it’s super affordable” is the message.
To my surprise, the focus of the discussion quickly turned from using the Breakfast Muffin sandwich as a flanker brand to what is wrong with Burger King. The students’ lament: if you want a more profitable brand and higher market share, fix the brand experience. Several students shared stories of service failure they experienced at BK. One student said she called the corporate office to complain and gave my name saying that “you need to call my marketing professor so he can tell you how to fix Burger King!” I’m waiting on that call… not!
The issues raised by students in our discussion were a perfect segue to introducing the role of marketing communication. It is communication that supports the other elements of marketing strategy, but it must work in concert with other marketing mix elements. BK hired one of the hottest shops in the ad industry, Crispin Porter + Bogusky, and the agency has delivered great work. However, as one of my students in another class pointed out, you can put lipstick on a pig, but it is still a pig. The same goes for building a great brand. Advertising and promotion is part of the equation for success, but creative campaigns cannot hide inferior product design, bad pricing strategy, or poor customer service.
For consumers today, brand relationships are often built on experiences. If you deliver a bad experience, why should you expect customers to be willing to repeat it? There are simply too many options to have to endure experiences that do not meet expectations. No one expects BK to begin white cloth table service, but giving customers a consistent experience positively reinforces the brand in their minds. It is an impact greater than a king with an enormous plastic head or a $1 breakfast sandwich could ever hope to make.
Procter & Gamble is a giant in many product categories, but one that it has all but surrendered is food products. The company that once marketed Duncan Hines cake mixes and Jif peanut butter now has Pringles snack foods as its lone food brand. So, why launch a web site that lets visitors acquire recipes, post mobile shopping lists, and get information from expert chefs? That is exactly what P&G has done with its site dinnertool.com. The marketing platform dinnertool.com creates for P&G will be used to promote its products used in the kitchen for cleaning.
It would be simple for a company like P&G to build a site that pushes its own brands. Such a site would be a value-added resource for consumers, but it is all about selling products for the sponsor. Dinnertool.com is about selling products, too, but the approach taken is more subtle. Busy professionals and families can benefit from the information shared on dinnertool.com. And, the site sign-up process allows users to opt-in to receive coupons for products. Given that coupon redemption has increased substantially during the recession, the coupons will add additional value to users’ experience with dinnertool.com.
Are there ways your company can be an information resource for customers like P&G is doing with dinnertool.com? An initiative like this will probably not lead to record sales immediately (or ever). Becoming an information resource for customers is all about engagement and relationship building. Much like a friend would share outstanding recipes and tips for the kitchen, dinnertool.com is P&G’s way of friending consumers online. If you become an information resource for your customers, are you not acting like a friend? And, if your friends need to buy the type of product you sell, they may be inclined to buy from their friend.
“New P&G Site Helps With Dinner – And the Cleanup”
Customers shopping online increasingly look to product reviews written by customers when making buying decisions. These unfiltered comments give a balanced view of a product or retailer’s strengths and weaknesses. Such information would make a retailer cringe, one might think. But, that is not the case. Product reviews allow shoppers to make a more complete assessment about different brands before making a purchase. Shoppers are too savvy to think that a web site that has nothing but positive remarks reflects the views of every customer. Likewise, if a small number of customers have negative comments or views about a product, most shoppers recognize if negative ratings are outweighed by positive comments.
The value of giving customers a voice may be understood, but smaller businesses could be reluctant to add a review feature to their web site out concerns over costs. In the CNNMoney.com article linked below, the company featured in the piece added a user review feature to its web site for about $80 a month. The benefits of implementing a reviews feature are numerous. It gives prospective customers information to help make a decision while on your web site, the importance of which cannot be overstated. It encourages customers to talk about your brand. If they will write a review on your web site, will they engage in similar conversations in other places, both online and offline?
Perhaps most important is that giving customers a voice through a reviews feature is an excellent marketing research tool. What do customers like about your products? What negative experiences are they having? Equipped with feedback from a user review page, marketers can manage customer satisfaction efforts and address problems they may have never known existed otherwise.
CNNMoney.com – “Even Bad Reviews Boost Sales”
My birthday was on the 1st day of this month, and, like any other event, I cannot help but notice the marketing activity that surrounded it. Marketers capture a great deal of personal data about their customers, but it seems the occasion of one’s birthday is an event that is often a missed marketing opportunity. If a business really wants to have a “relationship” with customers, why not treat customers as we would people we know and offer birthday greetings and maybe even a present?
I received birthday greetings via e-mail from a few brands with which I have a permission-based marketing relationship. A $5 discount from a deli, a free beverage from Starbucks, and birthday greetings (but no freebies) from Coca-Cola. Two “old fashioned” communications stand out, though. One was a birthday card from the realtor who helped us buy a house in 2000. He sends a birthday card with a $2 bill enclosed each year on my birthday, my wife’s birthday, and the birthdays of our three children. To date, the realtor’s investment in our family is approaching $100, but the goodwill and positive-word-of-mouth that gesture creates is more powerful than any ad he could place in a newspaper. Also, I received a mailing from a pizza restaurant, Bellacino’s, containing three coupons for my birthday. Two of the three coupons were buy one, get one offers (creating revenue), while the third coupon was for a free sandwich.
What’s the big deal, you might ask, given that promotions like these are seen frequently. In the case of the coupons mailed by Bellacino’s, the result is pulling me into the store three times this month (the coupons are good for September only), which is probably three more times than I would have gone had I not received the coupons. More importantly, Bellacino’s will be a brand I will consider in the future when considering dining out options, giving it much stronger consideration than in the past. While the delivery method could be made more efficient by using e-mail over direct mail, the intended effect was achieved.
Birthdays represent an opportunity to bond with customers. If you are not capturing birthday dates from customers, take the time to ask, especially if you are collecting other customer data already. Then, seize the opportunity of a customer’s special day by delivering a birthday greeting message and an incentive to do business with you. The result might be a happy birthday enjoyed by all!
Frequency and loyalty programs are effective for increasing customer loyalty. Rewards in the form of discounted or free products are an incentive for repeat or increased purchases. A side benefit of such programs is if customers are buying from you that means they are probably not buying from your competitors!
Reward-based programs are nice, but let’s face it- they have strings attached. “I’ll give you a free sub sandwich if you buy 10 subs from me” means there will be no free lunch for the customer! Have you ever given customers a reward for their business with absolutely no conditions attached- a gift? Sprint has launched a program in which it is partnering with approximately 500 theaters in the U.S., setting up kiosks that will dispense coupons for concessions upgrades. Sprint customers can enter codes from their phones at the kiosks to get coupons that can be used on the spot at a cinema’s concession stand.
Is an up-sell to a large popcorn or soda enough to keep a customer loyal to Sprint? Probably not. The relationship still likely hinges on quality service, reasonable rate plans, and effective customer support. But, the cinema coupon campaign is a great way to treat customers inexpensively. Also, it allows Sprint to engage customers via their wireless devices, reinforcing the brand relationship.
It may be unlikely that a customer would switch to Sprint because he or she can get coupons for discounted concessions at the theater (customer acquisition is not the goal of this campaign, anyway). But, Sprint customers will enjoy a treat at the movies complements of their wireless company, while non-customers will be exposed to the Sprint-branded kiosks and wonder “how can I get those coupons?”
The New York Times – “Lights, Camera, Action for Concession Coupons”
Job layoffs, frozen or reduced wages, and uncertainty about the future direction of the economy have led consumers to undertake a belt tightening of a magnitude rarely seen in the United States. Consumers have cut out many discretionary purchases and traded down to lower priced options for other purchases. This coping behavior may be the appropriate response to the current situation, but what happens when better times return? Will penny pinching be replaced by free spending ways many people had pre-recession?
According to an article in Advertising Age, marketers fear that the pull back on spending could last long past the end of the recession. Once we realize we can exist with spending less on certain products and eliminating other products altogether from our lives, little incentive exists to revert back to previous buying behavior.
If this prediction comes to fruition, marketers will be forced to make significant changes to their approach to customer relationships. Leveraging customer relationships by pursuing up selling and cross selling opportunities will not hold the potential that it once had. Instead, marketers should examine how customers connect with their brands. What attracts customers to the company or brand in the first place? What is it that you do that customers like or appreciate? It is not limited to your products or services. Community involvement, cause support, and social responsibility initiatives are relational connection points people have with your business. The aim of differentiation to achieve premium pricing might be replaced with differentiating to strengthen relationships and relevance with customers.
Link: Ad Age – “Marketers Fear Frugality May Just Be Here to Stay”