I love a good deal. I love paying less for products. I enjoy bargain hunting. And you probably do too, right? All the same, if you sell a product or service that is cheaper than your competitors, you shouldn't be making this the focal point of your marketing - and I'm going to tell you a story to show you why.
The Big Pepsi F^ck Up of 1936
Name two brands of cola right now.
Did you pick Coca-Cola and Pepsi?
If so, then it's probably because both brands launched their products back in the 1800's, and have been dominating the cola market ever since. But although both Pepsi and Coca-Cola might now hold a similar reputation, and a similar market share, it hasn't always been that way.
In fact, for nearly three decades, Pepsi was classed by most as a nasty budget cola drink that they were embarrassed to pull out of the cupboard.
So how did this happen? Well, we have to go right back to 1936, when their marketing team came up with a brand new advertising campaign to try and steal the market share held by Coca-Cola. This campaign was focused around their price, and the fact that customers could get twice as much cola for half the price:
Pepsi-Cola hits the spot
12 full ounces? That’s a lot!
Twice as much for a nickel, too.
Pepsi-Cola is the drink for you!
How this catchy radio jingle destroyed Pepsi's reputation for nearly 30 years
Between 1936 and 1938, Pepsi's profits doubled. Result? Kinda. But it carried a heavy cost.
Rather than securing their place as the winning competitor in the Pepsi Coca Cola war, it relegated their brand to the kitchen cupboard. And for nearly 30 years, it was considered a budget drink that was bought by thrifty housewives who couldn't afford the premium brand Coca-Cola.
Customers would buy Pepsi, but hide it in the kitchen - and serve it to guests ready-poured, trying to disguise it as Coca-Cola!
Coca-Cola casually picked up the trophy of top cola brand, and dominated the market for many decades.
Pepsi finally redeemed themselves by finding the right value proposition
For 30 years, Pepsi couldn't shake their image as a budget drink. But eventually, they found the winning campaign that restored some customer faith in their product:
"Come Alive with the Pepsi Generation"
Public perception gradually began to shift, and over the years that followed, Pepsi managed to close the distance between their brand and Coca-Cola. But even today, they remain a close second place in most countries.
So while their focus on price increased short-term profits, it damaged their long-term reputation. Was it really worth it?
Find your value - let the price speak for itself
If you sell a serious product or service - one that you're proud of - then tell me what you want your customers to think about it:
- I want X. I'll buy this one because it's all I can afford.
- Wow, this is the best X there is. Oh, great - I can afford it, too!
Focusing on price attracts customers who will blow away whenever somebody undercuts you. Focusing on value brings you loyal customers for life.