Opinion: The Marketing Society Forum - Is any brand ever a winner when it comes to price wars?
A view from Staff

Opinion: The Marketing Society Forum - Is any brand ever a winner when it comes to price wars?

Tesco's U-turn on its promise to pay customers double the difference between its prices and Asda's - while blaming consumers for abusing the scheme -...

MAYBE Clare Field, Marketing director, Aunt Bessie's

If price guarantees help ensure that consumers get best value, then brands can be winners.

This is built around the idea that as a brand, you had better not enter into a price war unless you are certain that you are the lowest-cost operator and will continue to be so. Many significant brands have been built on the back of a lowest-price offer - consider Bic (ballpoint pens, lighters, razors), Wal-Mart and McDonald's.

Lowest price and best value are not the same thing. Again, this is bread and butter for branded marketing. Defining your proposition based on true consumer insight, and positioning it at the right value for the offer, in the context of the competition, is all fundamental stuff to be found in any marketing textbook.

The right product at the right value is a win-win-win for consumer, retailer and brand owner.

However, it should also be noted that it is never wise get into a kicking contest against a man with a wooden leg.

NO

Mark Fells, Marketing director, UK & Ireland, Lastminute.com

In grocery retail, where the dynamics revolve around driving footfall and basket size, the answer might seem to be yes. The multiples have created a consumer relationship in which they have to do battle on price.

That dynamic has been playing out for years and while it might drive footfall in the short term, in the long term a fight on price alone does little for creating loyalty. It is clear that the multiples are trying to secure 'best value' as a brand attribute, and using keen prices on comparable items to get to that perception.

In categories like the ones in which Lastminute.com operates, value has an even greater role to play than price alone. Our customers trust us as a brand and trust the products we offer. For them, it's not always about saving money, but about the value of the story they get out of their purchase and the memories that will last a lifetime.

Price will always be important, but the old adage that value is vital still stands for me.

YES

Kristof Fahy, Group brand and marketing director, William Hill

Price-led brands are often winners in price wars. When price is what your business is built on, from operational margins through to your customer perception, then you can be a winner.

Asda 'owns' price within the supermarket space and has consistently hammered out that message for years. Why Tesco wanted to take it on on its home turf I have no idea. Withdrawing the offer puts Tesco in a potentially worse position than when it started - was it unable to deliver double the difference; was the effect on already tight margins something the business couldn't accept?

However, for most brands, price is the simplest, quickest and easiest thing for the competition to match. A price advantage can last just seconds and provide nothing more than a temporary headline. A longer-term, sustainable positioning that customers can experience across a brand delivers sustainable returns, as Tesco should know given its excellent work in developing its own positioning.

NO

Linda Plant, Vice-president of marketing, Radisson Edwardian Group

Price wars sound dramatic, but tend to be nothing more then a skirmish.

Consumers love a BOGOF or any kind of deal where they walk away from the brand smiling, but these aren't true price wars - they're really about value and shifting volume. Neither the consumer relationship nor the profitability that underpins the brand's service levels is damaged.

Sometimes a brand comes along and completely transforms the whole value model. Budget airlines and fashion stores wave the price banner, but again this is really about value and a completely fresh proposition for consumers, and nothing to do with a 'price war'.

Real hard-nosed price wars are rare, and it's obvious why - they are vicious games of corporate chicken. Sometimes money may be made, but brands are almost always dragged downwards.

 

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