Monthly Archives: January 2009

2 retail marketing strategy

Retail Marketing Strategy — Super Sales vs. Super Brands.

It’s discount days in the retail world right now. Everywhere you turn there’s a super sale, an inventory reduction, a holiday clearance event or some other equally banal form of discounting.

retail marketing strategySign of the times, I suppose. With all that pressure from online retailers, brick and mortar store owners are desperate to get people in the door, even if it causes long-term damage to their brand.

But does discounting really hurt your brand?

That’s a question that often leads to heated debates between ad agency folks and their clients. The creatives are quick to condemn anything that involves a price point. But clients want to “move the needle” and “get an immediate ROI” on every advertising dollar. They often claim that any sort of “image” advertising is a waste of time.

Then there’s the agency Account Executive, trying desperately to bring the two sides together in a sort of middle-east peace accord that will save the account for another year. Not a good scenario for a lasting client-agency relationship. But I digress.

The question is, where does discounting fit into your retail marketing strategy? Does it hurt a brand to run a half-off sale?

It depends on the brand.

Before you hire that sign painter to emblazon your front window with “Everything Must Go!”  ask yourself two questions:

  1. Does the sale or promotion complement your brand promise or contradict it?
  2. Who would the sale appeal to? Are you luring only your best customers, or is a a good way to introduce new folks to your brand. And will you ever see those people again?

retail marketing strategyNordstrom has the right answer to both those questions.

When it comes to brand integrity, Nordstrom is the bellwether for the retail industry. It’s a chain known for high prices and bend-over-backward customer service.

Bargains are NOT part of the Nordstrom brand ethos. So yes, frequent discounting would definitely hurt that brand.

If Nordstrom had a Super Bowl sale and a Valentines Day sale and an Easter sale and a Mother’s Day sale like most department stores, consumers would slowly but surely begin to question the entire premise of the business. They’d begin to doubt Nordstrom’s stature as the industry’s service leader and wonder if the chain compromised the quality of the merchandise.

Might as well go to Macy’s.

So here’s how Nordstrom handles discounting without compromising their brand promise: They only have one store-wide sale a year: The Anniversary sale. Plus an annual Men’s Sale and an Annual Women’s Sale.

retail marketing strategyTo manage the inevitable department store inventory challenges and discounting pressure, they opened The Nordstrom Rack. If you like Nordstrom’s outstanding merchandise, but don’t want to pay standard Nordstrom prices for the service, go to the Rack. It’s like a sale all the time. Same stuff, but a totally different shopping experience.

So here’s the final answer: If you have a retail brand that emphasizes customer service and outstanding quality, use discounts very sparingly. Because every sale will send mixed messages to an already skeptical audience.

Contrast that with Wal-Mart. Wal-Mart shoppers aren’t going to Nordstrom for the annual men’s sale. They’re going to Wal-Mart every Saturday where a constant barrage of markdowns is always expected, and perfectly “on brand.”

Wal-Mart’s corporate culture takes frugality to an entirely new level, and it shows up on every isle in every store. Wal-Mart’s brand promise demands big, loud sales, or at least the perception of sale prices all the time. That’s why they have spend more than $800 million a year on advertising… it’s a constant state of “Sale.”

For both Wal-Mart and Nordstrom, the retail marketing strategy delivers on the brand promise. Their sales appeal to core customers as well as those who are looking for a bargain. And there’s a good chance they’ll come back again after the sale.

Unfortunately, most business owners can’t answer the question, “is this sale consistent with your brand promise?” Because they don’t know what their brand promise is. When pressed, they can’t pinpoint what their business is really all about, beyond making their quarterly numbers.

They’ve never thought about it. They’ve never articulated it. And they certainly haven’t communicated it to the public in a clear, compelling, consistent manner. They’re too busy advertising “value.”

The Gallup Organization has done extensive research regarding brand promises and have found that the vast majority are poorly defined and poorly communicated.

retail marketing strategy

Sometimes it takes nerve to resist the “big sale” temptation.

“Rather than attempting to convince a skeptical audience that their brand offers something truly meaningful and distinct, some companies have found it easier just to bribe their prospects (with sales) … Repeat purchases that are driven solely by brand bribery, however, are not the same thing as a brand relationship.”

In other words, sales might increase short-term transactions, but they don’t improve your brand loyalty.

Successful brands like Nordstrom have lasting, loving relationships with their customers, not one-night stands. And the more Amazon pushes its automated, efficient-but-impersonal approach to retail, the more valuable Nordstrom-like service becomes.

So think twice about your retail promotional strategy. If your brand’s promise is to consistently deliver the cheapest goods and services in your category, then go ahead. Run sales every month. But if your brand promise is to deliver value or service or anything else beyond low price, then find another way to drive traffic.

Your brand will be better for it.

marketing strategy BNBranding

 

 

 

For more on how to differentiate your store without resorting to bribery, try this post. 

Or call us! 541-815-0075

4 Truth & Transparency — How one ski area is managing customer’s expectations.

By John Furgurson

Ski area managers live and die by the whims of Mother Nature. Already this winter high winds and heavy ice have toppled trees and wrecked havoc at Mt. Bachelor. Flooded roads cut access to Crystal Mountain. A lift tower at Whistler snapped. A landslide took out a lift at Snoqualmie Pass. And some poor guy at Vail found himself hanging upside down and naked from a chairlift. 

So how do you keep your customers happy through all the drama and mayhem? How do you handle those days that don’t qualify for the chamber of commerce brochure? As Mt. Bachelor has discovered, it’s a matter of managing expectations by educating skiers about mountain operations and reporting the truth in a timely, credible manner. A significant departure from the industry norm.

Ten years ago they could get away with little white lies on the morning ski report. But now cell phones make it hard to pull one over on anyone. The lift ride is plenty of time for skiers to Twitter or send simple, pointed text messages to their friends down in town that either confirm or deny the morning report.

“Is sucks, stay home.”  “It’s Epic. Get up here.” “Fogged in. Can’t see two feet.” With minute-by-minute updates like that, sugar-coated reports from the marketing department just don’t cut it any more.

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Last season Mt. Bachelor suffered a string of PR problems… Unexplained lift closures, safety violations and some questionable policy decisions by the new parent company caused a lot of grumbling in the skiing community. And quite frankly, the Mt. Bachelor brand took a hit. For the first season in 30 years, it slipped to # 2 among Oregon’s ski areas.

So this year a new management team is working hard to improve the overall experience, and that starts by managing expectations.

From what I’ve seen so far, they’re using their website pretty effectively to paint a realistic picture of what it takes to operate a modern ski area on a 9,000-foot Pacific Northwest Volcano. And it’s a lot harder than I ever imagined.

Since the latest storm, they’ve been uploading videos that show what the lift crews are faced with. It’s harder to complain about a lift not opening promptly on time when you’ve seen the manual labor required to do the job… Time lapse photography of an employee climbing up a 40-foot lift tower, tentatively chipping away at ice two feet thick.  Loggers and snow-cat drivers working together to clear 60-foot fir trees from the middle of a run. That’s powerful stuff that I haven’t seen on any other web site or in any other industry.

 

www.youtube.com/watch?v=wlYZUlHzby4

The daily conditions report has also improved dramatically. It’s now updated several times every morning, and it’s written in a first-person, man-on-the-slopes tone. Not only that,  it’s refreshingly truthful. Last week, in the midst of the worst ice storm in 30 years, the author said, “I walked around the base area, and it’s not the kind of day you don’t want to set foot outside. It’s raining hard and it’s below freezing.”

And I love this one from a day in early December when everyone was still praying for the season’s first big dump: “We had nine inches overnight, with high winds. It’s deep in some places, and other spots look just like they did two days ago.”

Now that’s authentic!

The amusement park industry should take note. There’s nothing worse than arriving at a park, with your kids all jacked-up and ready for the latest, greatest roller coaster, only to find the ride closed for some unknown reason.

The golf industry would also benefit from such frank assessments. A detailed superintendant’s report would be tremendously useful in a country club environment where guys have been known to complain about the fairways being TOO perfect. If you show members all the work that goes into keeping all 18 greens rolling at 11 on the stimpmeter, they might not complain as much about miniscule variations in the height of the rough.

But honesty isn’t about shutting up your biggest critics. It’s about cementing a relationship with your best customers and maintaining the goodwill of your brand. Because every time you leave out important information, fudge a bit in a press release, or overstate a marketing claim, you’re chipping away at your credibility. Like ice on a lift tower, eventually it’ll all come crashing down on your head.

 

Curiousity got the best of you? See the unlikely lift ride here: 

www.huffingtonpost.com/2009/01/06/vail-chairlift-accident-l_n_155578.html