Peter Walshe, Global Account Director, Millward Brown
I am sure that when you filled up your car recently you could not quite believe how much it cost. So maybe you drive a little slower? Or choose a cheaper filling station? Or simply resign yourself to the cost. Needs must. I know that it did not stop me buying a much needed replacement set of tennis shoes the week after. I bought quality (K-Swiss) because I know they will last.
I did think for a moment of putting the purchase off for a month, but the enticing prospect of beating my tennis rival Robert this month was too great a temptation. And I couldn't bring myself not to buy Colgate toothpaste or Gillette shaving gel because I know they are really great products and saving a few pence on inferior products is just not worth it.
Each purchase decision was compartmentalised and a trade-off of the value I derived. The bigger purchases demanded a little thought, whilst the more everyday were hardly conscious and definitely led by my experience and knowledge of the brand. A good experience that 'sticks' to a brand reinforces the brand promise, making the decision about whether to buy next time far more certain and even means that you are more likely to recommend it to someone else. This is dependent of course on whether it still provides you with 'value'.
This means that the purchase is not just about price . It is about value. And value is determined by the desire that a brand elicits. If desire is greater than the price barrier then the potential transaction represents value.
Recent research from Millward Brown's BrandZ brand equity database (the Value-D analysis) clearly shows this trade-off in action and gives guidance in positioning your brand to capitalise on its price advantage (if it has one) or how to maximise profitability if it commands sufficient desire.
We know times are tough, but if brands just trade on price they are effectively signalling that they are not worth it in the first place and so risk undermining their value.
Some brands have the enviable position of having a large positive 'gap' between Desire and Price. Amazon, Colgate and Walmart are good examples of brands rated well on Price (reasonable priced) but highly desirable. They are 'Great Value'.
Others are rated as being high priced but still have a large positive gap with very high desire and so justify their premium. Starbucks, Sony and Pampers fall into this group.
Then there are those who manage to balance their price and desire and so are potentially maximising their profit without putting off consumers. Brands that do this well in some markets are Heineken, American Express and British Airways.
Brands in the Millward Brown Top 100 Most Valuable Brands of 2010 are also leveraging their desire. They are, on average, hugely more desirable than most brands (a score of 111 against an average of 100, when 105+ is a significantly better score). But crucially they command a price premium and are rated as being slightly more expensive (a score of 103). What this means is that they are 'worth it' and as a result are some of the most successful and profitable brands in the World.
No wonder the price of petrol, however annoying, only reinforces a sense of value rather than driving me to buy the cheapest.
(Value-D can be obtained via any WPP Operating Company for their clients or potential clients and is a special analysis from the BrandZ Study created and run by Millward Brown.)