Know-How Exchange : Branding

Lower-priced brands will have a tough time repositioning to command a higher price. Even though they may reformulate or re-engineer in an effort to present higher value, it's hard to move a brand out of the original position in the customer's mind.

Here in Targetland (Minneapolis), corporate execs say that the store is still thought of by consumers as a place to pick up toilet paper and other common household items--despite its 15-year emphasis on design and innovation. (To be accurate, Target is not really a discount store--it's a mass merchandiser. At least, that's what insiders have told me.)

Anyway, what's more effective is to introduce a new brand at the higher price point, i.e., Lexus from Toyota, Infiniti from Nissan, Acura from Honda.

Or, you can try to elevate your discount brand by associating it with other brands that have higher perceived value, such as bringing Martha Stewart products into K-Mart. While Martha Stewart products have been popular there, the K-Mart brand itself has not changed much. It's stuck in an ambiguous position--neither as cheap as Wal-Mart nor as highly regarded as Target.

Skoda is the prime case study - they're still working on it after around 10 years. You might also look at the Japanese car industry which when it first launched was generally seen as cheap - an incessant focus on quality but also some rebranding in some cases (eg Datsun to Nissan).

The other side of this is that a low-cost provider can drive out higher priced competitors in the longer term so long as they maintain strict cost control and price competition, combined with quality focus and faster innovation. An example might be Dell which drove out many more 'premium' PC brands such as IBM.

That's going to be nearly impossible...In order to position yourself or your product as higher priced, it needs to warrant a higher price.

Once the prospect has a mind set that a product is "cheap" or "discount," they will never perceive it as anything else. Better to launch a new brand, with a new name, strategy, target customer...

Another company in your situation is Old Navy. If anyone watches commercials as closely as I do, you may have noticed that Old Navy has been repositioning itself as a fashion brand. Gone are the funky, quirky tunes and prices flashed on the screen. They're new collection is starting to remind me of their big sister company, Banana Republic. I don't know if this is the best time for this type of major brand overhaul, given the economy's unstability.

A professor of mine once said on branding/positioning/pricing strategy, "it's easier to sell a Mercedes to a guy with a Chevy budget, than it is to sell a Chevy to a guy with a Mercedes budget"...

Lucozade was targeted to ill people, but now it is re-launched as a energy drink