Recently Procter & Gamble announced that its response to the weakening economy would be to increase its prices and use its marketing efforts to persuade consumers that its products are a superior value despite the premiums they charge. In other words, P&G–the company that invented the concept of brand management–has decided that our economic woes are no excuse to panic and abandon the long-held value-added marketing strategy that made the company one of the most successful businesses on the planet.
As someone who used to compete against P&G, I have always had tremendous respect for the rigor and consistency of their strategic thinking. (Their creativity sometimes leaves something to be desired, however, but their huge budgets allow them to compensate for that shortcoming.) While their decision to stick to their guns is thus hardly surprising, it is nonetheless refreshing and admirable–particularly when institutions like Saks Fifth Avenue are indulging in marketing myopia and slashing prices left and right.
Early in my career, I was in a meeting in which someone suggested cutting prices in order to stimulate our sales. I’ll never forget the response from the senior manager in the room: “Any business you get because of price you’ll eventually lose because of price.” He directed us to come up with ideas that would increase revenue by adding value rather than subtracting price. And we did.
Perhaps his direction–and P&G’s decision–are not particularly profound, but in an environment in which so many once-esteemed companies are taking the easy way out and abandoning the principles that built their brands, it’s encouraging to see a company respond to a tough market by demonstrating the courage of its convictions.