Top tier and lower-end brands are shifting their positioning in the consumers’ eyes. While some brand names are downscaling their value, some brands such as Walmart and Mazda are trying to upscale their name in hopes of attracting more consumers to buy their products. 

Why is it difficult for companies to brace for this change? Because companies are like humans. Companies don’t want to cope with the fact that consumers’ ideals are changing rapidly. In the age of social media, your brand could be dead last one day and with a viral video overnight, it could be the only brand people talk about the next day. Brands are changing constantly, but is it a good idea to shift their positioning? 

The case study mentioned in Ad Age’s article, “Why JCP, Walmart, and Others Fail at Changing their Spots” talked about Ron Johnson and J.C. Penney. Ron Johnson has transformed the company into a JCP boutique-like department store and all the prices were changed to whole dollars. This transformation soon led to Johnson’s departure due to insufficient market sales, and the company had lost $985 million. 

On the other end, Mercedes-Benz is hoping to catch the consumers’s eye by offering a sedan with a coupe styling for only $29,000. This car model has not been released yet, but there was a Super Bowl commercial highlighting the low price for the Mercedes, which will be unveiled in September. You know you are up to big things, when you can release a commercial 7 months prior to the actual product launch and get people talking. 

So is this good strategy to get consumers buzzing about your high-end product? Probably not in the long-term. Consumers think of name brands for a reason – the top tier, the quality, the best, the superior. And price usually goes hand-in-hand with that thought. So for MB to lower its prices, it might open a new target market for them, but brand as a whole might lose some value and dollars. It’s always easier to sell something at a lower price. 

Advertisements