Al Ries, marketing, branding and positioning guru
extraordinaire, has penned a most fascinating opinion piece in a recent Ad Age. 
Starbucks and Cadillac to stop cheapening their brand before it's too late.
Ries says the long lost Packard automobile did just that and died as a result.
Prior to The Great Depression, says Ries, Packard totally
dominated the U.S.
luxury car market. In fact, Cadillac was little more than a distant blip in
Packard's rear view mirror. But, when the downturn came, Packard developed a
much lower cost alternative. The cars sold well. But, when the economy
rebounded, newly affluent Americans went with Cadillac, which had remained true
to its high-priced, high-quality roots throughout the Depression. Packard never
recovered and eventually disappeared altogether in 1957.
Now, fast forward to today. I see lots of commentary in the
PR and advertising trades from agency leaders who are suggesting that others
follow their lead in cutting billing rates to 'ensure ongoing business and
demonstrate value.' I see other 'leaders' offering 'lite' versions of their
positioning, media training and media relations services or charging $500 per
press release. I think such 'strategies' scream desperation and cheapen an
agency's brand.
I think, instead, we should be providing additional value by
being more creative, getting closer to our clients' customers and helping our
clients fight the good fight when their purchasing, finance or legal
departments suggest wholesale marketing cuts.
Cheapening your brand by lowering your billing rates or
giving away your services in "a la carte" menu style will cause you
huge headaches when the economy rebounds. And good luck convincing your clients
that you deserve a rate increase just because other vendors have increased
theirs.
We all have to endure budget cuts. They're a fact of life.
But offering the PR version of instant coffee a la Starbucks or a Cimarron
strategy. (And Cadillac's mistake of the 1980s was all the more dumbfounding,
considering that it defied the very strategy that made them a big name brand
coming out of the Depression.)
The good times will return. Maintaining one's position as a
high quality service provider during the downturn will ensure a swifter return
to heady profits in the days to come. We, for one, have no interest in
becoming our industry's version of the Packard.
I totally agree, Michael. But, the magic in what Ford did was staying true to the Mustang’s original price points. The mistake Starbucks, Cadillac and numerous PR firms are making is to cheapen their previous images by offering lower cost, ‘lite’ alternatives.
I think the key is offering prospective clients a price/value they have rarely (if ever) seen, and, as Michael Corleone once said, can’t refuse. That doesn’t mean offering discounts on current services. It’s packaging a suite of services at a value that guarantees a strong ROI. Idealistic? Yes of course. But let’s remember one of 2005’s most successful cars – the Ford Mustang, which celebrated key elements of the 1964 model, while offering 4 passenger room, modern gizmos/gadgets, AND promising consumers they wouldn’t pay more than $19K fully loaded. A great product, “new” while celebrating heritage, at a win-win price.