Is there anyone in the room who has never heard this question, “If people buy on price, since they are sooooo price sensitive, why do we need branding?”.

The answer will of course be negative. And that is what layman’s think. In fact more often than not just about anyone who has never stepped in the shoes of a Brand Manager thinks in the same way…..if A is priced at X, and B is priced at X – 2, and people buy B more often, then why the big hue and cry about branding?

The answer of such a simple question is of course simpler. Its because Brand A is not creating enough value for its customer so that he chooses A with its higher price instead of  B, which costs lower. So the solution is not “We dont need any branding” in price conscious markets, but rather “We need more effective branding” in price conscious markets.

 Now this creates some very interesting statements.

1. The lower we go in the socio-economic status, the power and scope of branding must increase incrementally. Meaning – even financial struggling rural audience can be lured by branding.

2. The more price conscious a market is, the brand marketer must put in doubly the effort to create a brand pull. Meaning – Bangladesh is a price conscious value driven market, so the power of branding is more required here than anywhere else.

3. The more commodity oriented the market is, the more there is scope for Branding to create differentiation. Meaning – Even tubewell water in rural Bangladesh can be branded.

There was a moment in history, when there was a huge roar that Branding was dead. This moment in history is known as “Marlboro Friday”. As per Wikipaedia,

“Marlboro Friday happened on April 2, 1993 when Philip Morris announced a 20% price cut to their Marlboro cigarettes to fight back against the bargain brand competitors who were increasingly eating into their market share. As a result, Philip Morris’s stock took a major dive, along with the share value of other household brands including Heinz, Coca Cola and RJR Nabisco Fortune magazine deemed it “the day the Marlboro Man fell off his horse”

Investors interpreted the price slash as an admission of defeat from the Marlboro brand, that Philip Morris could no longer justify its higher price tag and now had to compete with generic brands. Since the Marlboro Man was an image that stood since 1954, it was considered one of the biggest marketing icons. Investors reasoned that to see the Marlboro icon give into a price war, the marketing itself must be ineffective. As a result of plummeting stock value in major American brands, 1993 marked a slight decrease in U.S. ad expenditures. Companies began investing in promotions rather than advertising. In 1983 in the U.S, the average expenditure on marketing was 70% advertising and 20% on promotions, by 1993 it had made a complete turn around, to 70% on promotions and 20% on advertising.

It was the only decrease to occur since 1970. At the time, this event was regarded as signifying “the death of a brand” and the advent of a “value-minded” consumer generation who pay more attention to the real value of products and not the brand names. This view soon proved to be incorrect, with the rest of the decade’s economy being dominated by brands and driven by high-budget marketing campaigns.”

And that more or less laid to rest any doubt over the future of branding.