Two-ply or not two-ply, that is the question

We at Finch Brands are a curious bunch. Like Socrates, we ask the really big questions, such as “what’s the point of single-ply toilet paper?” We imagine that the manufacturers’ intent is to create a perception of value achieved through savings—reducing consumer cost by cutting product characteristics.

This “no frills” approach is an interesting premise, and one that achieved wide adoption by many companies scrambling for footholds during the world economy’s descent into Recession. Can this method, however, be taken too far? How many features can be stripped in order to justify cost-cutting before a brand becomes blemished?

When too much is taken away, the “savings” achieved is often more illusion than reality. After all, who uses only one square of toilet paper? Firstly, eww! If you can see through it, we’re fairly certain that you can feel through it! Secondly, the moment you fold over at least two squares, you might as well be using two-ply.

We won’t go so far as to claim that pursuing price-pruning to establish your product’s key promotable benefit is the equivalent of flushing it down the toilet—several major businesses, including high-end brands like Vera Wang’s, have launched cost-conscious collections successfully—but we do think there are limits and that this topic warrants some discussion.

Where do you stand on this issue? Please comment and share your thoughts.   

Comments

[Rajendra Grewal]

After some time consumers will buy when they see the sign , "SALE", and / or switch to a brand offering a rebate, a banded product with the original, or some sign of more value for money.

[Anthony Davis]

2 ply... I have my reasons

[Giles Lury]

The case of Stella Artois in the UK is perhaps one of the more obvious and recent examples of a brand that was eventually 'hurt' by continuous discounting.

For many years Stella was the benchmark for premium lager in the UK, underpinned by a good product, with a long and rich history, and promoted by a long-running strong advertising campaign under the tagline "Reassuringly expensive". (The campaign ran from 1982 -2007)

However as the market for premium lager in the UK developed (late 80s and 90s) and cheaper imports could be found just across the channel in France, the brand started to be discounted strongly and almost continuously in the off-trade.

Ultimately the discounting which meant not only was the brand reassuringly inexpensive (and not so premium anymore), the cheaper price encouraged very heavy (and some less sociallly attractive) drinkers to adopt the brand, together these factors combined to drag the brand's image down.

Finally in the 00s the brand has had to change tack and try and balance a necessary on-going promotional budget (they can't suddenly stop this completely, the trade wouldn't let them) with an aggressive innovation/brand stretch initiative and a new advertising campaign all with the aim of rebuilding the brand image.

In short - the answer to the question is Yes, discounting can sometimes hurt a brand.

[Catalin Lascu]

Giles, yes, as you describe it , you're right, it hurts.

I don't know the details of Stella UK case, but based on what I read here, I am tempted to ask : could it be that they did wrongly the discounting?

Would have done it dfferently to avoid brand image loss, if consumer / competition pressure on price was so high. Ex. Hi-Lo approach on consumer/retail shopper side , in a double approach : alternative Hi-Lo periods (ex. every two weeks) and on the other hand introducing new SKU's appropriate to discounting while keeping out of discount the core SKU (those that are price & image positioning). And in parallel, promotions addressed only to retailers to sustain, invisible to consumers, nothing to do with image.

I assume the case is about discounts to retail shoppers/home consumption, not to on-premise consumers, where the discount doesn't make much sense, as the mechanics of preference & purchasing are different....but if they did both, sounds like another mistake.

But again, I am not aware of details, so it's just another angle of looking at this.

[Melissa Wildstein]

Pricing and discounting is always such a tricky thing. The real issue is that when you start discounting your brand, you end up then playing a game of 'price war' with your competition and guess who loses every time?!? I think that's why most of the luxury car manufacturers don't discount - instead they offer 'attractive lease options' or a 'certified pre-owned program'. You've got to protect your brand and the minute you start discounting, you're signalling to the public at large that you might not be 'all that'.

[Margo Poole, MBA, PhD]

The easiest thing a competitor can match or beat is price. Any brand that gets caught up in discounting is pretty well doomed. Although, if it is at the end of it's life cycle, then sell it off and let it drop into the discount retailers. As a great mentor of mine once said, always look up, never look down.

[Jack Hart]

I think it all boils down to what was the consumers' perception of the brand in the first place in comparison to their perception of the category as a whole. There are, of course, categories where discounting is pretty much expected. I'm pretty sure there is always discounts and promotions on coca cola, but through a clear brand truth coupled with great design they have created a brand that feels integral to our culture, not just our lives. Can discounting every really hurt such a brand? I think not, as long as they continue to innovate and maintain relevance with their audience. Just my two cents, or pennies depending on where you're from - haha.

[Catalin Lascu]

Jack, you're right...actually my example above for Stella is practiced with soft drinks, both CC and Pepsi (Pepsi in Romania reaching parity both in shares and brand indicators with Coke in the past, based on such approach)...

but again, discounting should not be applied on core SKU, the SKU used for price positioning (could differ by country, I assume in UK is the 0.33 L and the 1 L, don't remember) and only in retail, not in on-premise where the choice for soft-drinks and beer is usually made on TOM or brand equity, rather than price

an example as of today in Carrefour here...Pepsi two-pack promo 2x 2 L at 6.90 ...Coke 2 x 2 L at 7.95 (regular price for CC and Pepsi 2 L is around 4.9) but...Coke adding an extra offer, a pack of Chio snacks usually priced ~ 3.90 !...so basically Coke is discounting more, but the snacks + higher ex-pocket money could induce value-added instead of cheapness

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