So Levi’s is in a mess. Are we surprised? No, users of the Mills
Corporate Adometer(TM) model (Campaign, 19 February) would have spotted
that the ’Kevin the hamster’ ad series was a portent of things to
I mention this not to take pleasure in Levi’s difficulties but because
one of the qualities of Levi’s advertising (pre-Kevin, anyway) was its
effect on price. Did people balk at paying pounds 40-50 for a pair of
Of course not. The advertising convinced us we should pay that much.
One of the functions of advertising is to create and then sustain a
premium-price positioning. And there’s nothing wrong with that. But in
the wider world there is a change of mood of which advertisers must
beware. The Chancellor, Gordon Brown, wants the European Commission to
look at price disparities across Europe. The Office of Fair Trading is
close to publishing its report on supermarket pricing practices. In
short, anti-profiteering - and there are plenty of votes to be had in
that line - is now the mood of the moment.
As The Guardian showed last week, there is at least a case to
According to its reporters, in the UK a BMW costs 10 per cent more than
in France and almost 20 per cent more than in Germany. Similar
disparities are evident in other products: perfume, Nokia phones, Sony
TVs, Timberland boots and Beefeater gin. And by sourcing through the
grey market, the likes of Asda and Tesco have exposed the massive
mark-ups used by brands such as Nike, Adidas, Tommy Hilfiger and,
Of course, this is a complex business.
Retailers blame the brand owners, and vice versa. There are many factors
involved - currency, distribution, economies of scale in purchasing, a
low-inflation climate in which price rises are difficult to push through
and so on.
But there is also an advertising issue. Almost without exception,
advertising for the products mentioned above is designed, often but not
always in an implicit way, to create a premium-price positioning.
And why not? For some consumers, the benefit is the price - we buy in
order to demonstrate taste, prestige, status and so on - rather than in
the product itself. The price and the advertising work together to leave
us with a feel-good emotion. UK ads for BMW don’t say it, but they are
all about exclusivity through price. Ads for Stella Artois do say it:
Are they profiteering? Or does price equal quality? Well, since
consumers are buying more BMWs and cans of Stella, it must be the
latter. Nonetheless, if the EC and OFT reports leave the public with the
perception they are being ripped off - and it’s irrelevant whether it’s
by the retailer or brand owner - then advertisers and their agencies
will have to pick their way through a potential minefield. On one side
lies the spectre of price control legislation, on the other, public
scepticism. At best, premium-priced products will have to market
themselves in a climate of suspicion.
At worst, they’ll all have to do a VW and find a way to produce
brand-led price advertising. And as we all know, that’s hard to do.