DOES PRICE ADVERTISING KILL BRANDS? Consumers often see price and quality as being inversely related. So how do you advertise a product that’s cheap as well as good? Richard Cook reports

Advertising agency creatives have had an ambivalent relationship with money over the years. In a personal sense, they rather like it. Professionally, though, it’s a completely different story.

Advertising agency creatives have had an ambivalent relationship

with money over the years. In a personal sense, they rather like it.

Professionally, though, it’s a completely different story.

Professionally, the merest mention of money is enough to send shivers

down a creative’s spine. To most creatives, mentioning money in ads

means one of two things: they are in the realms of dodgy ads for

desperate furniture retailers, or they are flogging cut-price


Whichever of these it may be, they don’t want to be there; they really

don’t want to be there. They want to be building brands and creating

household names, not pointing out that for this week only baked beans

are five pence at a supermarket near you.

But things are not that simple any more. The success of a campaign like

the Volkswagen Polo, or the Tesco Dotty films has been achieved by

combining a strong brand positioning with a hefty price and value

component. Mentioning money in ads doesn’t always make you an apologist

for aggressive, in-your-face price advertising.

’At Asda we come at it the other way,’ Richard Hytner, the chief

executive of Asda’s agency, Publicis, explains. ’Our ’permanently low

price’ proposition is at the heart of everything we do. But we also

highlight added-value propositions at the stores in addition to these

straightforward price offers to try to strengthen the overall brand

equity. Gerald Ratner showed that you can’t just get by on cheap and

cheerful these days. There has to be some substance to the brand.’

But evidence suggests that it’s a good deal more difficult to add a

price element to a campaign that started out with a brand-building

agenda, even though this is precisely what customers are increasingly


’The conventional way out of the problem has been to shoot a lovely

brand-building film and then, almost as an afterthought, bung out a

couple of print ads that say ’forget what our beautifully shot film

suggested - actually we’re really cheap too’,’ Rooney Carruthers, WCRS’s

joint creative director, explains. He managed to build value-for-money

and low-price components into his agency’s powerful brand-building work

for Orange.

’To do both in one campaign is really hard - VW Polo is trading off its

heritage, so it has an in-built advantage. But if you look at something

like the Sky TV work, the pricing becomes too intrusive.’

That British consumers have become more sensitive to price over the last

decade is indisputable, not least in the grocery sector. The inexorable

rise in popularity of own-brand goods bears testimony to that fact.

According to a survey by the retail research consultancy, Verdict, 52

per cent of all consumers now believe that own-brand products are at

least as good as branded goods, while own-brand products last year had a

turnover of pounds 1.3 billion at the four largest supermarket groups

alone. Sainsbury’s own-label products, excluding fresh foods, are

responsible for 55 per cent of its turnover.

But the fact of the matter is that the UK grocery market has

historically been weighted in favour of business over the consumer.

Whereas across most of the continent privately owned store chains

operate on net profit margins of 2-3 per cent - figures very similar to

the margins of US discount retailers like Walmart - the UK is dominated

by quoted companies with net margins in excess of 5 per cent. In the

past, mainstream UK supermarkets like Tesco and Sainsbury’s have,

naturally enough, preferred to concentrate their marketing efforts on

more aspirational consumers, who buy higher margin products.

It’s a difference that hasn’t been lost on a variety of European

discount chains like Aldi, Lidl and Netto which have already established

a niche at the lower end of the UK market. Nor has it been lost on the

Monopolies and Mergers Commission, which is now poised to investigate

pricing and profit levels in the UK’s pounds 80 billion grocery


The problem is that the majority of British consumers actually show

little desire for purely price-led retailers. The evidence is that they

like their competitive pricing to be wrapped up in a convenient veneer

of brand quality.

’When European consumers see products, even products they are familiar

with, presented in cardboard boxes at ridiculously cheap prices, they

think they are getting a good deal,’ Robert Clark, an independent retail

analyst, explains. ’When UK consumers see the same thing, they wonder

what’s wrong with it. The fact is, nothing is. In Germany, Aldi’s

own-brand coffee outsells Nescafe. In the UK, middle-class housewives

still turn their noses up at it. But I think that is changing, and not

just in grocery retailing. Consumers are becoming more price conscious

generally, and retailers are having to change their marketing

proposition to take account of that fact.’

In fact, according to a survey by Mintel International last year, only

18 per cent of consumers felt that discount retailers sold low-quality

goods. Mintel concluded that at least 30 per cent of consumers were

confirmed bargain hunters.

’There is little doubt that grocery shoppers are now more price

conscious,’ Charlotte Poulsen, the senior planner on Tesco at Lowe

Howard-Spink, explains.

’But British retailers have invested heavily in brand campaigns and it

is very difficult to do a price proposition within a brand campaign. A

straightforward price offer tends to erode whatever brand equity you

have built up.’

Certainly that seems to be what happened at Sainsbury’s, which for years

used the glossy ’good food costs less ...’ advertising to position the

brand as an upmarket value offering. As its TV commercials became ever

more lavish and aspirational - culminating in the recipe cards films

which featured celebrities from Ian McShane to Jane Asher - the non-TV

element of the campaign stepped up the focus on the store group’s price


The new John Cleese TV value campaign, however, represented a shift in

emphasis, and not a successful one. Blamed, in part, by the Sainsbury’s

chief executive, Dino Adriano, for disappointing trading, it reinforced

the belief that what price-hungry consumers really want from advertisers

is at least the appearance of value. It helped show that appeals to

price on their own simply erode brand values.

’The Dotty campaign for Tesco was designed to be extremely flexible in

terms of the value element,’ Poulsen explains. ’The different executions

pick up on different things, one of which is price, even if it’s not

pure price.

’Before Christmas, for example, we ran one execution aimed simply at

emphasising the value of leeks and cabbages. But then we talk of value,

not just price. Our prime vehicle for short-term price offers are the

Derek the Dodo TV executions. But as soon as you start mentioning price

and not value, you also start to move away from brand advertising.

People admire the VW Polo ads for combining both, but in truth they are

trading on a brand advertising heritage.’

The VW Polo campaign has had remarkable success in transforming

perceptions of a model that had suffered, along with the rest of the

range, as Volkswagen prices had moved out of synch with those of their

competitors. Partly this was as a result of discounting by the other

marques, but largely it was because of the vagaries of currency

fluctuation. According to the post-campaign analysis performed by

Millward Brown, the advertising achieved three main objectives: it

managed to ’communicate model desirability’; it ’improved the model

desirability’; and, importantly, it ’communicated that these models

weren’t beyond most people’s pockets’.

In spontaneous awareness measurement, 86 per cent of respondents

produced some variant of the words ’affordable’, or ’value for money’ in

their response, while 93 per cent agreed, when prompted, that the ad

’was saying that VW makes affordable cars’.

When the campaign responses were indexed against competitive models and

compared with the last major advertising push in 1995, the figures made

even clearer reading. For the first time, the Polo is regarded as better

value for money than its immediate competitors, according to the

Millward Brown studies.

’I think price has two main functions in advertising,’ BMP’s joint chief

executive officer, Ross Barr, explains. ’You either use it to advertise

a low price on a known brand or you try to create a new impression of

your prices.

’If what you are trying to do is suggest that something is both

desirable and cheap, those two things can work against each other, while

the fact is that any sort of price promotion has a detrimental effect on

your brand.

In the Polo advertising we actually phased out the use of figures in the

ads and concentrated on the brand improvements and on suggesting the

value that the car represented.

’British Gas was another campaign in which we wanted to combine price

and brand advertising. The trick was to keep a friendly approachability

to the brand and to make the prices part of that.’

It’s not just high-spending sectors like cars or big supermarket chains

that have successfully combined price and brand advertising. The

strategy has worked for commodity items as well. The Times embarked on a

price-cutting policy four years ago with a campaign that began in

straightforward price-conscious fashion before adding a brand element


’It is possible to do both jobs in one ad but the point is that such an

ad very rarely works in isolation,’ Toby Constantine, the marketing

director of The Times, explains. ’The Ian Wright ad we did was our most

successful in terms of conveying both brand and price attributes. But it

stood out because we had simply bludgeoned awareness of the

value-for-money aspect of the 30p Times in our ads for several years.

Advertising insiders will doubtless say we’ve destroyed the brand

heritage, but I don’t see any evidence of that. What we have done

through a combination of the price offer and the branding elements of

the campaign is change the perception of the paper. It’s no longer seen

as the old-fashioned bible of the City. It’s now seen as much more

modern and accessible, and that’s not all down to the pricing point.

It’s down to a combination of the two factors.’


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