Saturday, 19 February 2011

The price is wrong

I was pleased to hear this week that at least one of the irritating radio ads that assaults my ears here in Germany will soon be no more. The D-I-Y chain Praktiker is going to knock its price positioning on the head to go for something a little more sophisticated in terms of branding. Just how sophisticated this will be, given that it will involve the ubiquitous Boris Becker and building up values of Simplicity, Trustworthiness and Good Value, is yet to be seen, but at least the retailer has seen sense about positioning yourself on price alone.

For years, Praktiker has used the slogan "Hier spricht der Preis" ("Here speaks the price") with a high audibility radio campaign promising "20% off everything except pet food."

The thing is, these days, who believes or needs price advertising? In these days of online comparison, the true answer to where you'll pick up your latest Bosch power tool for the best price is less than a second away. And then, no-one has ever bought anything on price alone - we automatically do that complex balancing act in our heads of time, effort, hassle and reward for the money paid - the personal value to me. This can be very different to answering a battery of questions on whether Retailer X is generally "good value for money" - yes, Retailer X is generally better value and if I was going there anyway for other stuff...but I like my little local guy round the corner and fancied a chin-wag with him today plus I know he'll give me good follow-up service if the thing blows up...

And, while every segmentation study will throw up a segment of people who are driven by price, the point is that these people are deal-loyal, not brand loyal. When a cheaper tariff, or whatever, comes along, they'll jump ship instantly. In the long run, especially in fields such as energy, business models that position themselves on lowest price are simply not sustainable.

When it comes to the price, the discount price and nothing but the price, as far as building a brand goes - the price is wrong.

No comments: