Tag Archives for target

Is “price” underleveraged in your marketing organization?

SAN FRANCISCO - OCTOBER 14: A price tag is se...
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Recently, I have been speaking to lead marketers about growth — how they define it and what they are doing to achieve it. Through 13 interviews, not one lead marketer has mentioned pricing as a way to increase revenue or profits. Is price no longer a marketing function in corporations?

According to a McKinsey study, a 1% increase in realized price delivers the greatest improvement – a healthy 10% increase in operating profits. This is exactly why marketers need to be thinking about pricing strategies and price management disciplines. As an example, one industry that is ripe for a price increase is the aftermarket auto parts business like Carquest and Autozone. With sales of new cars at all time lows, people are trying to extend the life of the car they have.   I recently spent $95 dollars to replace the battery on my car and would have easily paid another $5. It is these types of small increases that drop all of that incremental $5 to the bottom line.

Other price strategies exists, such as bundling or understanding “basket of goods”. When my wife and I go into Target we can not, for some reason, leave without  spending ~$50. That is no accident. Are they the cheapest on everything? No, but we continue to pay because my wife believes certain categories of products are price competitively and we just can’t help ourselves buying other products due to convenience.

The Bottom Line:

Price is a big lever! Learn how to employ it and manage it.  For further justification in how this works even in a down market please read my friend Sid’s post.

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Differentiate or be commoditized

This is the second in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

True differentiation is increasingly hard with faster moving markets and better-educated shoppers. This means the task of constantly exploring whether your products and services stand out in the mind of the consumer is critical.

How will you differentiate for the long-term?

Forecasting the “death of the American Brand” as one CMO said, forces you to think about the private label explosion and house brand strength by the likes of Target and big chains. These house brands are successful because very little separates them from the old standards.

This trend is happening in everything from CPG to Computers to Insurance. Dell rode the wave as it commoditized the PC market, which now tries to find a sure footing again. Even service markets like insurance are seeing this trend as GEICO and Progressive lead the charge to commoditize auto insurance and drive down prices — even large cost-ridden competitors are following them in this practice.

In this tough economic market, for many the first reaction is to discount or attempt to push value and rationale messaging, but marketers need to understand the long-term impact. It is time to reassess the market and understand current strategic impacts to make decisions and trade-offs on how your company can differentiate in a unique way.

Mirror post at cmgpartners.com/blog

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Target gets advertising in a down-turn

I had to share this ad that a colleague was raving about — thanks Erin!

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The Bottom Line:

Target in this commercial holds true to their “Expect More. Pay less.” tagline. I am really impressed with the positive emotional message of how this value consciousness, we all are facing with the economy, can be an adventure of experience. Really classy and elegant versus the other brands out their hammering the rational side of savings. Target has something here we all can learn from.