26 May 2024 09:33

Advertising & Marketing

Building value for budget brands

After the quality of a product or a service, affordability is usually the most important point of emphasis in marketing messages. A savvy marketer will be able to manipulate people’s perceptions of value in order to maximize the income stream from a brand at a specific price point – or find ways to make the brand feel more affordable without lowering margins.

Ryanair, the leading low-cost airline in Europe, has built its strength on its ruthless pursuit of low cost. At the same time, it still manages to be more profitable than many of the well-established airlines.

Aldi, one of the pioneers of discount retailing, is both a popular and highly valuable brand not just in its category but among all German brands, as this year’s BrandZ ranking illustrates.

Both of these brands are strong examples of ways that “low price” can underpin a brand’s identity. There is always a market for low-priced brands, but to make money, these brands must drive volume and fine-tune their business models so they can remain low-cost providers.

For most brands, manipulating price is a double edged-sword. Cutting prices will drive more volume, but at the same time this will encourage people to look for more discounts in the future. For a brand that has not built its reputation on low prices, cutting prices to compete can be a dangerous route to take.

Even for brands such as Ryanair and Aldi, which thrive because of their low pricing, it is wise to communicate about more than price, and link price to meaningful differentiation from the competition.

Of course, for many brands, there is little opportunity for significant, tangible differentiation. The marketer then needs to create that differentiation, either by highlighting an aspect of the brand experience, or by creating an emotional halo around the brand. Ideally, they will do both at once.

There are few brands that are so well known that they can assume people have a perfect understanding of the experience on offer. Even when the brand is well known, its emotional and rational appeal needs to reflect the brand’s purpose and history.

“That’s all very well,” some will say, “but the brand I am responsible for is not Apple, Louis Vuitton or Maserati.” The answer to this: That may be so, but the same rules apply.

Think of Ryanair, Aldi and many other budget brands, and look at how their brand building has been managed over the years and across many different markets.

People value things that they find meaningful. But in most cases, the price tag is the thing they pay most attention to. So pricing is a key part of meaningful differentiation. Importantly, however, the understanding of the brand’s meaning must be shared across all corporate and agency stakeholders in order to create an experience that exemplifies its purpose – just as we see at both Ryanair and Aldi.

A clear, succinct statement of what makes the brand meaningfully different in the minds of its consumers is the standard against which all actions should be judged. Grow your brand’s meaning to grow its financial value – regardless of what the price tag on your product says.


Written by Bernd Buechner, Managing Director, Germany Kantar Millward Brown

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