Ditch the discounts! Avoid a price war with loyalty and brand values

In tough times, it can be tempting to keep prices down to win over cost-conscious consumers. But smart marketers know this will erode brand positioning and margins. Instead, now’s the moment to communicate value and build customer loyalty


The easiest tactic for any marketer in tough economic times is to keep prices as low as possible on the assumption that cash-strapped customers will only be buying based on price. As they will rightly suspect, though, the problem with that approach is that it puts them in a race to the bottom.

At a time when production and staffing costs are rising, cutting prices will not only erode margins and change a brand’s positioning to one built around budget-conscious purchasing, it poses a fundamental quandary: if prices are lowered now, how can they be restored to where they need to be when the economy starts to recover without appearing to be a massive price hike?

The main argument the Harvard Business Review offers against slashing prices and cutting marketing budgets is that, apart from diminishing margins, it changes a brand’s comms strategy. Instead of concentrating on the messages a company wants to convey to consumers, the conversation ends up being dominated by price.

It’s a difficult position for consumer brands to find themselves in, and it’s something marketers will face again and again over the next year or so. Research from Mindshare, part of advertising giant WPP, suggests that as many as eight in 10 consumers could soon start re-evaluating their favoured brands as money gets tight. However, its chief executive, Jem Lloyd-Williams, reiterates the point that price cutting might not be the best solution when there are alternatives, such as encouraging loyalty and focusing on shared values.

“Marketers will be tempted to cut prices to maintain volume and penetration,” he says. “However, our consumer research tells us that while consumers are clearly looking for good value for money, they are also influenced by brands that show empathy with their situation, beyond simply cutting prices. They will warm to brands that explicitly honour loyalty, as well as demonstrating honest and trustworthy values.”

This sentiment is echoed at audience research business GWI. Its founder, Tom Smith, says his company figures show that while nearly half of consumers expect to spend less now compared with two years ago, 70% are most interested in reliability. Price, it seems, is not everything.

“The perception of cost-effectiveness can be just as important for brands as price,” he says. “Across a range of product categories, we’re seeing consumers wanting to buy from brands offering greater perceived value – even if technically, they aren’t any cheaper. The buck is with brands to showcase their value and position themselves as the best choice for consumers’ hard-earned cash.”

One way of offering customers value, rather than cutting prices, is to double down on messaging that underlines why consumers get good overall value from a product or service, even if there are cheaper alternatives. For Reckitt Benckiser, the brand behind household names such as Vanish, Finish and AirWick, this means drawing attention to its sustainability credentials.

The perception of cost-effectiveness can be just as important for brands as price. The buck is with brands to showcase their value and position themselves as the best choice for consumers’ hard-earned cash

“We are laser-focused on value. If you focus on price cuts instead, you erode your brand value and destroy profitability,” says Ainhoa Robles, the company’s brand experience lead.

“There are a lot of ways you can offer value and, for us, we concentrate on telling our story about how we are always striving to be as kind to the planet as possible. That helps build up user trust and loyalty, and it also introduces us to new customers who see that value is about more than the price, it’s about the whole brand experience.”

This strategy has led to two high-profile campaigns as the country has begun to grapple with the cost-of-living crisis. Dishwasher brand Finish has partnered with National Geographic on a “Skip The Rinse” campaign, where customers are invited to pledge not to rinse dishes before they go in the dishwasher. For every customer taking the pledge, a dollar is donated to a conservation charity. So far, more than 5 million gallons of water are claimed to have been saved.

For fabric stain-removal brand Vanish, a partnership with the British Fashion Council has led to a documentary series on Amazon, advising the industry and public how they can reduce waste by treating older clothes well. It has also partnered with Oxwash, the country’s only laundry business to be B Corp registered, to promote a new formula that uses fewer chemicals.

By concentrating on brand values such as sustainability, Robles believes marketers can steer the conversation with customers to the all-round experience a product delivers and away from the price at the till or checkout.

Of course, brand ethics are just one way to communicate the full value of a product or service. Another route is to double down on loyalty. Figures will vary from one business to another but it always costs a lot more to recruit a new customer than to retain an existing one and turn them into an ambassador.

That is the approach being taken at candle and fragrance company Essence of Harris. Co-founder Jamie McGowan says that his determination not to cut corners on ingredients and production methods has paid off over the past couple of years. Expanding the brand’s loyalty club has also helped, as loyal customers appear to have started introducing their friends to the brand.

“During the pandemic, we relaunched with a new logo and fonts, and with new packaging that is designed to reflect the sandy beaches of Harris that we name our products after,” McGowan says. “We didn’t want to use inferior materials or to cut back on the quality, so we underpinned our position as affordable luxury. It has worked really well because people like the products, and now they can also earn points that add up to future discounts, free delivery and the opportunity to try out new lines before they’re made available to the public.”

So, while some marketers are going to find themselves pressured to go against their better instincts in the months to come, those who can instead concentrate on brand positioning and sustainability, as well as doubling down on loyalty, may be able to shift the conversation from price to value. Then, when the current economic hardship is over, they will have protected their price points while improving their positioning and building a legion of loyal customers. What could be better?