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Wednesday, June 3, 2009

NY Times: Trying to Pitch Products to the Savers

THE biggest challenge confronting marketers is how to deal with the Meineke mind-set consumers have adopted as a result of the recession.

The syndrome is named after the discounter that for years ran a campaign featuring fed-up car owners declaring, “I’m not going to pay a lot for this muffler!” What was an annoying slogan has morphed into a mantra as shoppers insist now they are not going to pay a lot for (insert product here, from soup to soap to shoes).

The reluctance of consumers to spend — coupled with a sudden sharp rise in the savings rate — has left even the savviest marketers scrambling to reconsider their strategies.

For instance, the Procter & Gamble Company, the nation’s largest advertiser, announced last month that it would adopt a “surgical” approach to reducing prices in categories in which Procter brands are being perceived as costing too much compared with competitive products.

At the same time, Procter will also try to keep shoppers paying full price for the bulk of its brands by presenting them as more innovative or offering better value. Commercials for Tide detergent discuss how it is not as diluted as lower-priced alternatives and spots for Bounty call it more absorbent than a “bargain brand” of paper towels.

“Value means different things to different people,” said Herb Walter, consumer packaged-goods and retail advisory partner at the Washington office of PricewaterhouseCoopers. “You almost have to think about it in the plural instead of the singular.”

One type of consumer behavior that is becoming more prevalent, Mr. Walter said, is “paying closer attention to the spread of price points in a category — premium, midprice, lower — and more selectively choosing a price point.”

“If it’s Johnny’s birthday and you’ve got the relatives coming, you may splurge a bit” on food and beverage brands, he added, “but if you’re buying midweek for the family, you may buy a more value-oriented product.”

PricewaterhouseCoopers, along with the Grocery Manufacturers Association, plan to issue a report on Wednesday on the financial performance of marketers of consumer packaged goods. The report concludes that the industry is weathering the recession better than others because of a focus on delivering value along with innovation.

Value “is not just about price,” said Clayton Wai-Poi, senior brand manager for Kraft Singles cheese slices at Kraft Foods in Northfield, Ill.

As a result, “the role Kraft Singles can play in meeting mom’s needs in the current climate” extends beyond ads that describe how a meal of a grilled cheese sandwich and a bowl of Campbell’s tomato soup can “warm hearts without stretching budgets,” Mr. Wai-Poi said.

There are also promotions sponsored by Kraft Singles with partners like the Walt Disney Company and Minor League Baseball, he added, that are centered on affordable family entertainment.

And at Procter & Gamble, a line featuring new products that cost $42 to $62 each — a far cry from the price of a bar of Ivory soap — is getting a value designation because, ads assert, it performs like product lines costing much more.

The line is called Olay Professional Pro-X, part of the Olay skin-care brand. A print campaign from Saatchi & Saatchi in New York, part of the Publicis Groupe, that is scheduled to begin in July for the Intensive Wrinkle Protocol — a regimen kit of three products — will carry this headline: “As effective at wrinkle reduction as what the doctor prescribed. At half the price.”

The Pro-X items cost two or three times as much as the products in another Olay line, Total Effects, which cost about $20 to $25 apiece.

“It is getting into higher price points,” said Tim Bunch, Olay Pro-X brand manager at Procter in Cincinnati. So “if you’re going to lay down that type of money,” he added, “it ought to be for a brand you believe in.”

“With Olay, we’ve built that trust with women through the decades,” Mr. Bunch said. “A big element of value is standing behind your product, especially in beauty where so much is smoke and mirrors.”

Since the line was introduced in January, “consumers have really responded,” he added, to the point where Procter executives now “project Olay Professional will be the largest skin-care launch in North America in year-one dollar sales.”

Helping achieve those results, Mr. Bunch said, is an image for the Olay brand as one that “speaks straightforward and direct to consumers.”

“We tell them what we believe the truth is,” he added, which includes an acknowledgment that not all women will achieve the same results after using Olay products.

“If you don’t see it for yourself, I would rather you find a product better suited to your needs,” Mr. Bunch said, and return the Olay items for a refund.

Hmmmm. That calls to mind the scene from the classic movie “Miracle on 34th Street” when the Santa Claus at Macy’s (Edmund Gwenn) informs a skeptical shopper (Thelma Ritter) that the fire engine she wants to buy her son, which Macy’s does not have, can be found at another store.

“The only important thing is to make the children happy,” Mr. Gwenn says. “Who sells the toy doesn’t make any difference. Don’t you feel that way?”

Ms. Ritter replies: “Who, me? Oh, yeah, sure. Only I didn’t know Macy’s did.”

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