Literature for the business leader published by SchmidPreissler International Strategy Consultants, The Lion’s House, D-83703 Gmund am Tegernsee, schmidpreissler@schmidpreissler.de, www.schmidpreissler.de

 

 

 
 

SchmidPreissler Brand Equity+Performance©  Programm

 
 

Issue: 05/200

Next Issue: Week 27/2008

 

 

Excerpt of further issues topics: Brand Equity and Brand Strategy, Brand Equity and Brand Diffusion, Brand Equity and Company Success, Brand Equity and Sales and Acquisition of Brands or Companies, Brand Equity and Marketing Investment

 

 

 

 

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Danger Spot Price for Brand Equity

In the past few years we have become painfully aware that a series of big brands have begun to falter through a variety of influences and have lost their appeal as brand personality. The danger spots are manifold.

Absolute price discipline constitutes the biggest challenge in brand leadership. The temptation and/or the pressure due to special rebates, special offers, bargains, special sales and advertising gifts is more than ever. And if one claims year after year, that German consumers think ‘greed is good’, and ‘hate high prices’ then all there is left to ascertain is that these kind of methods discredit the price/performance ratio. At the same time, greed isn’t attractive at all, as they had tried to suggest to people. It was not without good reason that already apostle Paul identified “greed as the root of all evil”. This realization is still valid today.

Knowing full well that dumping prices reduce any marketing strategy to absurdity, it still does not inhibit many companies from sacrificing their brand to this ‘low price spiral’. The reason is often simple: In economically tough times companies try to increase demand through special offers and teasers in order to keep the decline in sales at a bearable minimum. Needless to say that it is not the turnover that secures the future but the margin, which has to be big enough in the long run in order to be able to finance the necessary investments into the brand.

We have warned time and again of destroying market culture. And market culture will be destroyed when damages are sustained through ongoing price wars, which cannot be repaired anymore in the long run and lead to devastating large-scale fires in the consumer landscape.

Studies have shown that consumers want a good and fair price/performance ratio. And this does not always mean the cheapest price. This self-inflicted price trap can be eluded: Through a quality standard that offers not only the highest level of material quality, but also an enhancement of the shopping experience, where brands can unfold their myth directly at the point of sale and through an optimization of the service performance centered on the brand.

The adherence to strategies oriented on the creation of value, for which the consumer’s orientation on quality persists despite all prophecies of doom, is still necessary even in a bigger economic context. With the commitment to the Lisbon Agenda, Germany has avowed to devote itself to the targets growth, jobs and innovation, in order to improve and increase its international and global competitiveness. With one-sided price orientation this path cannot be handled properly, because creation of value has to be the means to the goal and not the destruction of value. 

 

 

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Editor: Dipl. Vw. Christina Schmid-Preissler - Assistant Editor: Regina Seago

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