Competing on value not price

Proportion
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We all love bargains. That’s why retailers are constantly promoting sales online or in-store. Years ago there used to be only the after Christmas sales, when people camped in the street to be first in line. Now there are the pre-sale sales, the almost closing down sales, the Black Friday sales and the ‘I’ve noticed you clicking on this site lately’ special sales. Our appetite for a bargain, especially for discretionary purchases, is undiminished. Otherwise Sharon wouldn’t have followed the clickbait and bought a ceramic pineapple for her goldfish tank.

But inflation, COVID and global supply chain issues are starting to make an impact on household budgets and Australians are looking for cheaper alternatives in their weekly grocery shopping. What are the implications for your corporate partners?

A survey of 1,036 Australian adults aged 18 and over, April 21-26, by digital marketing agency The Trade Desk and YouGov shows eight in ten people have already made changes to purchasing habits.

More than two-thirds (68%) are expecting the pressure on households to get worse in the year ahead. 44% reported they will be actively looking to buy from cheaper brands or stores whenever possible. This is part of a worldwide trend where the value of a product and their budget are now more important to consumers when shopping for household items.

This adds up to a nightmare scenario for corporate retailers. They have a price sensitive customer base at the same time as costs of the inputs and ingredients are rising. Price wars are never a sustainable strategy for any brand. They need ways to demonstrate the value of a product and make it stand out from the competition. That’s where a partnership with your non-profit comes to the rescue.

Cause related marketing was wildly popular a few decades ago but has faded into the background a little as deeper social purpose has taken root. But there is still room for cause marketing in the partnership mix, especially as brands are desperate to switch the conversation from price to value. Partnerships can take the form of purchase triggered donations eg $1 donation from each pack or cause related products, where a new product is created. For example, Coles created a ‘Mum’s Sause’ range especially for the partnership with the Sydney’s Children’s Hospital. If you’d like to be the solution to a retailer’s competitive challenges, then consider these key tips.

Make sure there is values alignment

Partner with a brand that matches with your values and core mission. It’s going to resonate more strongly with the consumer and you won’t have to spend time explaining why you’re in the partnership. That’s why Patagonia, the outdoor apparel brand, supports community organisations working in climate and the preservation of the natural environment.

Ensure it’s an authentic commitment

Beware of corporates that flip and flop with their choice of partner. If they’re supporting cancer one year and wildlife the next, it’s likely that they’re looking for a tactical uplift rather than a long-term commitment. The Body Shop have a reputation for being authentic and willing to tackle some more controversial issues, including HIV and sex trafficking. Their choice of community partners are linked by their activist approach to issues rather than an opportunistic piggyback on a fashionable issue. Remember Pepsi and Kendall Jenner?

Make the donation and goals transparent

The Coles Mum’s Sause range clearly states that 50cents from every jar will go to the Sydney Children’s Hospital to support their Ending Homesickness program. Consumers are wary of vague commitments to charities that don’t explicitly lay out how much money actually goes to the cause. If your corporate partner won’t be transparent about this, it undermines the promise to the consumer and could reflect badly on your association with the brand.

Get a minimum commitment

This is a step that non-profits often miss. When they talk about ‘raising awareness’ I always think that a corporate has got something for nothing. Your brand and reputation are valuable, so don’t sell it short. Get a minimum cash commitment as the entry price to align with your goodwill and reputation. If they won’t give that commitment, then consider whether they’re the right partner for you.

The economic environment is become more volatile and less predictable for corporates. A partnership with your non-profit could help change consumer focus from price to value. It could be the lifeline for a corporate struggling for customer loyalty when budgets are getting tight.

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