4 Ways to Raise Pricing and Delight Customers

Most companies loathe or mismanage the harsh reality that pricing increases are often necessary to offset inflation, even with the most diligent cost control.     Often, this is a painful across the board price percentage increase on all units, on largely unchanged products and services.     Here are five great ways to drive price increases that consumers will willingly accept, and, even enhance loyalty to your company.tide_pods
1.   Innovate to improve the customer’s user experienceTide Pods is a brilliant innovation that makes washing clothes more convenient, portable, and less messy.    The idea is grounded in solving problems and consumer irritants in the category    Tide virtually reinvented laundry detergent from the customer’s perspective of easily, and properly doing a load of laundry.    Pricing impact:   +10-15% increase per load, plus a more space efficient configuration, which reduces distribution expenses.

2.  Resize to meet changing consumer preferences –   As consumers are trying to reduce their consumption of soft drinks and/or improve their portion control, Coke has come to their rescue with their new, appealing 7 1/2 ounce cans, ostensibly for consumers to choose versus 12 ounce cans.   150114_EM_PayMoreLessSoda And consumers are delighted; sales volume is up 9% according to the Wall Street Journal, while paying nearly double – yes double – the price per ounce for these cute cans.     Yes, this is an exaggerated, albeit successful example, but the bigger point is that Coke is re-evaluating serving sizes from a consumer perspective and looking at pricing on a price per ounce vs. price per unit basis.
3.   Innovate for new usage occasions –  Similarly, Crystal Light did this brilliantly by adding smaller On-The-Go packages, specifically designed to enhance the staple 8 oz.Crystal Light brand water bottle, again at a +100% price premium versus their traditional make a gallon at home package.    Lest you forget to buy these in the supermarket, they are brilliantly merchandised in convenience stores and gyms, right at your (now enhanced) water bottle point of purchase.

4.  Adjust product mix and package sizes –  Cereal and snack companies master the ability to change their product size mix and selectively reduce the amount of product in certain packages.     This can often mask direct comparisons versus the previous product line up and  pricing.    Further, you can strategically promote your more profitable package sizes more frequently, again, driving an effective price increase that is often invisible, and/or preferred by the consumer.

Lessons Learned:
1.   Think of pricing in broader terms than price per unit.     Price per ounce, price per pound, price per consumer usage occasion give you far more latitude for consumer-accepted price increases.
2.   Solve consumers’ most nagging problems in a product improvement or innovation and they’ll pay for that privilege.   Increasing convenience or reducing waste are among two widespread benefits that consumers will pay for.
3.   Build an expectation of gross margin enhancement into your innovation program and project selection criteria.

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5 Hottest Food Trends at Expo West |

We were delighted to appear in The Ohio State University’s Food Innovation Center Blog:

Expo West

Natural Products Expo West 2014 was an incredible show of natural, organic, and healthy food and beverage manufacturing, ingredients, and in many ways – the future of the food industry, given that healthier food has moved from trend to societal shift. The natural, organic and healthy products food industry is growing nearly three times higher than the food industry average, per Penton. I had the privilege of attending with 67,000 of my closest friends and 2,600 exhibitors. Expo West was an enlightening window to emerging food industry trends.

 1. Gluten-free continues to explode, up 20% versus last year, driven by perceived health benefits and better diagnosing of celiac disease. New brands, new food categories, and Gluten-freeimproved organoleptics were virtually everywhere. Per NPD, 30% of consumers want to reduce the amount of gluten they are eating, and gluten-free foods’ household penetration has leaped to 11%, more than doubling since 2010, per Nielsen. The tidal wave is projected to continue as the foodservice sector (restaurants and institutions) catches up with consumer demand at retail. Even Pillsbury has jumped into the space with gluten-free dough (et tu, Doughboy?) as has Columbus’ Donato’s with its gluten-free Donato’s and Sonoma Flatbreads brands. Gluten-free is projected to grow by 22% annually through 2016, per Mintel.

2.  Non-GMO (genetically modified organisms) verified food offerings have tripled since last year, in response to growing consumer demand, as well as organic manufacturers’  non-gmo efforts. Regardless of where you stand on the contentious GMO discussion, consumers are responding. 93% of Americans said that foods that have been genetically modified or engineered should be identified, per a recent New York Times poll and non-GMO has recently surpassed ‘organic’ among consumers’ desired food claims. Whole Foods’ requirement of GMO labeling on all products in U.S. and Canada by 2018, will also drive non-GMO consumer awareness. Promising, except only 11% of consumers say they are willing to pay more.

Non-GMO food and beverages are projected to grow at a 13% compound annual growth rate for the next few years and account for 30% of retail sales by 2017, even without mandatory labeling, per Packaged Facts. General Mills, Smart Balance, Ben and Jerry’s, Chipotle, and Kashi have all taken proactive stances on GMOs by either eliminating them or pushing for increased labeling. To help manufacturers and consumers with product and ingredient sourcing, the verification body, the Non-GMO Project has established a centralized database. Buckeye brag: Marzetti launched Mamma Bella GMO free garlic breads, led by Fisher alum Adam Koenigsberg.

3. Proteins, Popcorn, Chia and Kale were prevalent in multiple categories. New protein-rich or enhanced products targeted to consumers who are reducing or eliminating red Popcorn Indiana brand(or all) meat from their diets included yogurts (whey and soy proteins), snack bars (almond and pea protein isolate), and pancakes (oats, quinoa, and whey). Popcorn, with its better-for-you consumer perception, was featured by over 25 companies in every mainstream and exotic flavor. Most intriguing were Popcorn Indiana’s fit brand, positioned as a low-calorie option, and chip’ins, a popcorn-based extruded snack chip. Chia continues to be a hot omega-3 rich and filling superfood in many bars, yogurts, drinks, as well as seeds alone. And kale, which has grown four-fold since 2008, is the hot supergreen in raw snacks, chips, sauces, dressings, and disturbingly: macaroons.

4. More Funding, Investments and Acquisitions – The health and wellness segment’s rapid growth is attracting interest and investment from multiple sources. Major food Food_Acquisitionscompanies are penetrating the segment via acquisition and joint ventures, such as Coca-Cola (Zico and Honest Tea). Heinz (Hain Celestial), and Campbell Soup (Plum Organics), and the sector has become a darling of private equity leaders such as Sherbrooke Capital (Angie’s Popcorn) and Alliance Consumer Growth (EVOL brand). There is also an explosion of funding available for smaller companies through food incubators and crowd-funding platforms, with over 25 new food and agriculture funding sources launched last year. This foretells both continued growth among increasingly well-capitalized companies, as well as improved product quality and rate of innovation.

5.  Local Participation –  Ohio was well represented by many of our friends at 19 companies. In addition to the aforementioned Marzetti and Donato’s, Almondina, Avitae, Bunker Ohio StateHill Cheese (Heini’s), Eurochoc Americas Corp., Fit Organic, Fremont Authentic Brands, Garden of Flavor, Gaslamp Popcorn (Rudolph Foods), Graeter’s, Herbal Science, Jeni’s Splendid Ice Creams, 1-2-3 Gluten Free, R.A.W. Real and Wonderful, Swurves (Mike-Sells), Trophy Nut, Unistraw, and Wyandot Snacks exhibited, all of whom we expect are gearing up for the surge in new business… and hiring talented Buckeyes.”

Meet the Expert

Tammy Katz is an Adjunct Professor of Brand Management at the Fisher College of Business, The Ohio State University, and Chief Executive Officer of Katz Marketing Solutions, a marketing and brand management consulting firm. She is particularly interested in brand management, marketing strategy, commercialization, corporate outreach, and consumer-driven innovation.

Super Bowl XLVIII Ad Rankings: Budweiser, Doritos (and Seahawks) Blowout

Budweiser and Doritos were the uncontested winners in last night’s Ad Bowl, as measured by USAToday (popularity),  Brand Bowl (social media buzz) and Katz Marketing Solutions (effectiveness).   Both brands had two exceptional spots (Budweiser: Puppy Love and Hero’s Welcome; Doritos: Cowboy Kid and Time Machine) that nailed all the essentials of great advertising:   enhances brand equity, persuasive, resonates with the target audience, compelling main message, brand integral to the story, and the Super Bowl ‘wow’ factor for entertainment.   Doritos spots were particularly outstanding – the story line is the quest for the coveted product.

Kudos to several highly effective campaigns that clearly communicated a persuasive sales message (oh – – remember that?) such as Radio Shack (visit our contemporary stores), T-Mobile (no contract carrier), and Volkswagen (durability).     These are the companies most likely to reap the best returns on their +$4 million per ad Super Bowl investments.

While the lovable animals remain timeless, increasingly grating are the formulaic ‘sex sells’ ads, sorely lacking in reasons to prefer their brands.    Sure, they ‘made ya look,” but we doubt H&M, Oikos, or SodaStream need to run out and up their production forecasts.

Lastly, we applaud two brands’ continued respect for diversity:  Cheerios and Coca-Cola.      While Coke’s song choice and multilingual approach pushed the edge with some consumers (a fairly low 57% positive sentiment score), it placed an enviable #5 on BrandBowl’s social media ranking with +33,000 tweets.

As for the worst:  the cringe worthy attempts to be funny, contemporary and cool.    Better luck next year Wonderful Pistachios, GoDaddy, and Beats Music.

Here are the winners (and worst) from three marketing mavens – USAToday’s AdMeter (panel popularity), Pointslocal and Boston.com’s Brand Bowl (twitter volume and sentiment), and Katz Marketing Solutions (effectiveness).

USA Today – AdMeter                              

Best:
1.   Budweiser (“Puppy Love”)

2.  Doritos (“Cowboy Kid”)
3.  Budweiser (“Hero’s Welcome”)
4.  Doritos (“Time Machine”)
5.  Radio Shack (“Phone Call”)

Worst:  BudLight “Cool Twist.”   Good reminder that great advertising requires risk taking.

Pointslocal and Boston.com’s BrandBowl

1.  Budweiser

2.  Doritos
3.  Cheerios
4.  Pepsi
5.  Coke

Worst:  Staples

Katz Marketing Solutions

1.   Budweiser (“Puppy Love”)

2.   Doritos (“Cowboy Kid”)
3.   Doritos (“Time Machine”)
4.   Cheerios (“Gracie”)
5.   Radio Shack (“Phone Call”)

Worst:  GoDaddy

Super Bowl XLVII Ad Winners and Atrocities

No spectacular ads last night (except for the Beyonce brand), but several excellent ads that were well worth the $4.0 million investment for the ad time, pre- and post-game public relations and social media legs.     Super Bowl advertising with strategically sound brand communications that focused on persuading consumers to buy and garner a return-on-investment, rather than sophomoric – or just lame – humor at the expense of a selling message.   Budweiser, Tide, Doritos, Skechers, and Milk Processors most of the car ads were particularly effective at keeping their products central to  the main message (vs. prop ‘afterthought’) and told engaging stories about the quest for the brand.

But some spectacularly cringe worthy ads too:   GoDaddy (disgusting, patronizing and unclear message) and Samsung (fatal flaw: inside jokes about how advertising is developed amuses no one except those who made the ads and unclear message).

Special kudos to Oreo’s brand team and brilliant agency, 360i,  for their nimble Oreo ‘You Can Still Dunk in the Dark’ mega tweet  (over 10,000 tweets) which was created on the spot during the power outage (and depleted chicken wings).    Another bravo to Beyonce’s breathtaking performance (done gratis, but 13 minutes is worth $104 million in advertising).

Here are the winners (and worst) from four marketing mavens – USAToday’s AdMeter (panel popularity), Mullen and Radian6’s Brand Bowl (twitter volume and sentiment),  us (effectiveness), and AceMetrix (Persuasion and Watchability)

USA Today – AdMeter                              

Best:
1.   Budweiser Clydesdale (horse and trainer reunited) 


2.   Tide (Miracle Stain)
3.   RAM (farmers)
4.   Doritos (fashionista Dad)
5.   NFL (Deion Sanders returns)

Worst:  GoDaddy – So awful it doesn’t deserve a link – get domains at 1and1, just in protest.

Mullen and Radian6’s BrandBowl

1.  Volkswagen (get happy office guy)  


2.  Bud Light (voodoo)
3.  Calvin Klein (guy in underwear)
4.  Audi (prom)
5.  Taco Bell (viva young)

Worst:  iRobot

Katz Marketing Solutions

1.  Tide (Miracle Stain) 


2.  Coca-Cola (security camera)
3.  MILK board (Rock running)
4.  Budweiser (horse and trainer reunited)
5.  Skechers (cheetah race)

Worst:  GoDaddy

AceMetrix

1.  Budweiser (horse and trainer reunited) 


2.  MILK board (Rock running)
3.  Coca-Cola (security camera)
4.  Jeep (home again)
5.  Doritos (goat 4 sale)

Worst:   Calvin Klein

Brand Authenticity: Tiger’s Tailspin

Brands must be authentic.    Great brands, like people, create positive enduring relationships based on their credibility and consistency.      While brands have always needed to continuously earn their esteem, social media now makes brand authenticity a mandate.     All eyes are watching your brand, and missteps are reported globally in an instant.    Keep it simple.    Make your brand authentic.

Lack of authenticity is what’s driving the unprecedented demise of the Tiger Woods brand.   His ‘brand truth’ is dramatically different from the carefully honed aspirational brand image.    And it was that faux brand image and esteem that made brand Tiger so ideal for corporate sponsorships.     Incessant media coverage and its exponential visibility in the blogosphere unearthed the size of brand Tiger’s lack of authenticity.     Post-media frenzy, his champion credentials will remain, but the ‘wonderful man’ imagery has been unveiled as a sham.      Brand Tiger’s demise is an extreme, but illustrative example, of the danger of lack of brand authenticity.     Last week, AT&T joined the growing list of multi-million dollar sponsors who really had no choice but to stop aligning their brand with Tiger Woods.    The financial value of the Tiger Woods brand is a fraction of what it was just a month ago.     Continue reading

Target Triumphs with Consistent Marketing Communication

A staggering 96% of Americans recognize Target Corporation‘s bullseye, putting the brand in the brand awareness stratosphere with the likes of Nike and Coca-Cola.target2

This exceptional brand awareness is a direct result of their consistent communication. While most chief marketers continue to cite Integrated Marketing Communication as their biggest challenge, according to the Association of National Advertisers, Target masters it. Continue reading