Warc Blog

Marketers emphasise value

23 April 2013
SEATTLE: Marketers in the US are looking to redefine value and shift consumers' focus away from price to embrace other factors, including convenience, quality and technology.

"Marketers have clearly contributed to how consumers perceive value," Kevin Keller, professor of marketing at Dartmouth College's Tuck School of Business, told Advertising Age.

This strategy, however, requires "reframing the conversation" and developing an approach that highlights a product's benefits as well as its price. 

Procter & Gamble's Tide Pods repackaged its detergent to offer one-pack-per-load pellets. Despite being sold at a premium price, it became a $500m product within a year, according to figures from IRI.

Greek yoghurt is similarly more expensive than the standard variety but is the only product that is growing in this category, as consumers appreciate its higher quality and texture.

"Value didn't mean cheap, consumers felt it made their lives better," said Larry Levin, executive vice president of consumer insights at IRI.

Ford Motor Co has reported that more than half its customers regarded the Sync in-car technology system as a reason for buying. This hands-free communications system, which allows drivers to perform a variety of voice-enabled activities, including controlling music and making calls, was adding $4,000 to the average transaction price.

Some companies, however, have continued to focus on price. McDonald's chief executive, Don Thompson, warned that it was sacrificing margin in order to better compete for cost-conscious consumers.

The chain is looking to mix value and premium items, Thompson explained. In the US, "we continue to complement Dollar Menu value news with a focus on core favourites and innovative new products". 

In Europe, he added, "we're focused on building market share by reinforcing our value platform to offer compelling affordable products across all day parts and multiple price tiers."

A survey of McDonald's US franchisees by Janney Capital Markets, however, revealed some frustration with the emphasis on the Dollar Menu.

One respondent, for example, complained the firm was  "couponing like there's no tomorrow", while another noted that "every quarter we sell a smaller percentage of our menu at full (and profitable) price".


Data sourced from Advertising Age, Wall Street Journal, Seeking Alpha, Chicago Tribune; additional content by Warc staff

 
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