Why price-led ads have become 'brand killers'

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By: Wise Marketer Staff |

Posted on November 10, 2010

Why price-led ads have become 'brand killers'

Nowhere in the field of marketing do emotions run hotter or higher than when it comes to the role of low prices highlighted in advertising, according to a new book by Dan Hill, president of research firm Sensory Logic.

The book, entitled 'About Face: The Secrets of Emotionally Effective Advertising' (published by Kogan Page), asserts that boardrooms everywhere are full of executives saying that the company needs to make some money quickly and that the obvious answer is to lower their prices and let the whole world know.

The problem, Hill warns, is that it's a bad idea to lead with price in advertising. Discounting - especially repeatedly - isn't sustainable. One of the key advantages of a sale is the element of surprise. Surprise provides real 'stopping power' in advertising, but it fades rapidly when you use the 'reduced price' trick over and over again.

And surprise is not really an emotion: it's actually what Hill calls a 'pre-emotion'. It's brief (usually less than one second in duration) and is followed either by a verdict, which is either a positive "wow!" or a negative "yikes!"

Either way, repeating low pricing leads to expectations of future low prices, consumer desensitization, and the impossibility of creating a "wow!" response again (if ever).

Disgusting pricing? Interestingly, consumer research has also shown that seeing any kind of price tag causes a sense of disgust. Instinctively, people don't like giving up their money.

Consequently, creating more feelings of delight regarding an offer, and generating an allure that exceeds feelings of disgust about surrendering cash, makes for a more positive purchasing experience.

The problem is that a low-price strategy isn't about the offer's intrinsic value; it's merely a desperate attempt to lower people's disgust levels and, ultimately, given desensitization, it is a losing game.

It's not a numbers game A focus on prices is always about numbers, statistics, and carries people from a right-brain emotional involvement in advertising to left-brain analytics. That's a bad trade-off, given that everyone feels before they think. Studies of the IPA's database of 880 marketing campaigns have found that emotionally-oriented campaigns generate twice as much profitability as traditional, hard-sell, rationally-oriented campaigns.

And price-leading advertising creates quality problems for the offer, too. Let's consider the well known "value = quality / price" equation. There, price at least gives the illusion of being a benchmark for inferring the quality of the offer.

So what will a lower price do? It might help to shape perceptions that the floating, undetermined quality of the new offer is actually quite low, or that an existing offer was never worth what people have been accustomed to paying. Put another way, cheap doesn't feel good.

Encouraging consumers to take a price-oriented, statistical, rational approach to purchase decisions can have disastrous, unintended consequences. That's because, contrary to popular belief, consumers' emotions provide valuable insight. They steer people, given the conservative estimate that 95% of people's thought activity isn't fully conscious, and so these insights are both intuitive and operating in the realm of emotion. To cut us off from the wisdom of our emotions has led many a consumer to make a purchase decision they soon regret.

The brand loyalty risk With a price-led strategy, brand loyalty is at real risk because loyalty is often based on feelings. How is a loyal user supposed to feel when they see the price is lower for everyone, and not just them? And the brand loses twice over because existing customers pay less for goods they were already buying (and may not even buy again at full price). And, for new customers who bought a deal, their loyalty is usually less real than the profit margin sacrificed.

Finally, a brand "on sale" is a brand with an integrity problem. A key way in which consumers judge the trustworthiness of both people and companies is the degree to which they behave consistently. With price-led advertising, a company's identity becomes fuzzy. Suddenly, you're either a discount brand or you're signaling a lack of confidence that is not very attractive.

At the same time, leading with price suggests you have nothing else to say, or show, in your advertising. Putting forward the price as your main selling point doesn't mean anything to the consumer, and the marketing battle ends up being fought in terms of price and distribution. Worse still, customer loyalty ceases to be a barrier to competitors.

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