The Purpose of Purpose

Brand purpose, with some socially-beneficial, ethical or environmental dimension, has “become a thing” in marketing. And given issues around Climate Crisis, D&I, etc., you might well think ‘about time too’. But there is ‘purpose’ and there is ‘purpose’. There are a number of brands who are genuinely concerned about reducing their impact on the world, but there are many others who have jumped on the bandwagon and whose “brand purpose” is barely skin deep. From a marketing point of view, this comes down to positioning. A good positioning seeks to push as high up on the benefits ladder as possible. The ladder starts at Product, then moves up to Product Feature, then Product Benefit, then Customer Benefit with Emotional Benefit being the ultimate goal. But such a positioning should be founded in consumer insight and both relevant and significant to the product or service, and to those consumers. Tesco’s “Every Little Helps” is a great example, or, in a similar vein, Walmart’s “Save Money. Live Better”. Both describe the principal benefit of the service; helping consumers save money, but do so in a way that seeks to create a deeper, emotional connection. Brand purpose, in the sense of social purpose, seeks to go one step further – to align with a societal concern and demonstrate that the brand in question is both aware and caring. Patagonia and Ben and Jerry’s are often quoted as prime examples. But there are many more brands who are faking it. Rather than being the latest, essential marketing “must have”, brand purpose is actually a strategic choice. When done well, it can be extremely powerful, but it needs to pass the 3C’s test of good positioning; Is it relevant to your Customers? It is something that your Company can actually and genuinely deliver? Can you do it better or differently than your Competitors? If your brand purpose passes the test, then great, go ahead and use it. But if it doesn’t, then don’t fake it.

The Power of Pricing

Pricing is probably the most under-rated weapon in the marketer’s armoury. Indeed, today, far from being a key element of the marketing mix, pricing decisions are often left to the Finance department. And, companies are losing out as a consequence.

Most companies use a cost-plus approach to pricing; starting with the cost of goods sold, perhaps conducting some comparative competitor price analysis, then adding an arbitrary margin. But this pricing model rarely maximises the value potential. There are other more effective ways to determine a pricing position which can help achieve a price point much closer to the True Economic Value and avoid leaving money on the table. The best businesses are quite rightly focused on profitability, and understand the critical difference between revenue and profit; “revenue is vanity, profit is sanity”, as the saying goes. However, all too often, the short-term method to increase profit is to drive sales through promotion or cut costs. But analysis from the Wharton Business School, based on original research by McKinsey, points to the unexpected Power of Pricing. It shows that if a company reduces its fixed costs by 1%, it can expect an increase in profitability of 2.5% on average. Similarly, if a company increases its sales by 1%, it can expect a 3.3% increase in profitability. A 1% reduction in variable costs yields a 6.5% increase in profitability. But a 1% increase in pricing gives a 10.3% increase in profitability.

The analysis underlines the Power of Pricing, showing that it is by far the most effective lever to increase profit. Pricing should be treated as a key and fundamental element of the marketing mix.

Marketing Means More can help improve the profitability of your business and significantly improve your Return on Marketing Investment.