Price Only One Part of the Value Proposition …So Say Companies Trying to Raise Prices

Excerpted from New York Times, “With Shoppers Pinching Pennies, Some Big Retailers Get the Message”, by Stuart Elliott, April 13, 2009

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As shoppers remain reluctant to open their wallets, stores are still scrambling to adjust advertising and marketing strategies to play up the value aspects of what they sell. Even as retail sales data for March suggested improving results at some chains, consumers are hesitating to buy much beyond groceries, gasoline, vitamins and candy.

Much of the focus on value defines the term in a way that will resonate with choosy shoppers. Value can mean more than low prices, but with unemployment high — and consumer confidence low — many are fixating on cost.

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That is reflected by a change in approach at Home Depot, which introduced a campaign that carries the theme “More saving. More doing.” The theme replaced one used since 2003, “You can do it. We can help.”

J. C. Penney, whose campaign carries the theme “Every day matters,” recently added phrases to its ads like “Style, quality and price matter.”

Whole Foods Market is promoting the lower prices of its private-label brand, 365 Everyday Value, in regional ads with headlines like “Sticker shock, but in a good way” and “No wallets were harmed in the buying of our 365 Everyday Value products.”

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Target, the discount retailer, began running a value campaign on April 5 in newspapers in 19 major markets. The headlines asked, “Why pay more for more?” The campaign seeks to explain the value proposition within the longtime ad theme, “Expect more. Pay less.”

In May, Target plans to advertise with “a whole new articulation” of the promise inherent in the “Expect more. Pay less” theme.

Before the recession, Target “fell into a trap,” and was “not doing as much as we should have been doing” with the “Pay less” part of the theme.

As the principal Target rival, Wal-Mart Stores, made hay with ads carrying the theme “Save money. Live better,” ads for Target played up the stylishness of merchandise or featured the designers behind its apparel and home furnishings.

“‘Expect more’ is the true differentiating play for Target if Wal-Mart owns price. The right price is only the beginning of the conversation.

Edit by DAF

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