In the past week, Walmart and Amazon have been engaging in a very public war over the price of popular new books sold online. Walmart fired the first salvo with a $10 book price, and the two have traded cuts back and forth. Amazon matched the $10 price, so Walmart dropped their price to $9. Not to be outdone, Amazon and Target both went to $8.99. Now Sears has joined the battle, with a very clever promotion (free books) that trades off the price war (more on Sears’ strategy here).
On the surface, this battle may not appear to be about CPG brands, but there are important lessons to take away. At the end of the day, this isn’t about selling more books in the fourth quarter. Instead, this is a battle for brand leadership. These companies are fighting to be the most trusted, top-of-mind brand for consumers. It is a battle worth billions.
The national CPG brands are fighting a similar battle in the face of increased competition from private label, retailer sku rationalization, media fragmentation, and a consumer focused on spending less in a tough economic climate.
Herb Sorensen recognized this fact in a very interesting commentary on the price war over on the BrainTrust blog. In the post, Dr. Sorensen concludes that the way out of this “paying of customers to buy” is to “genuinely engage individual ‘shoppers’ in personal ‘conversations.’” The result will be an engaged and highly profitable consumer who trusts your brand and seeks our your products and marketing.
Importantly, Dr. Sorensen points out that this one-on-one strategy isn’t available exclusively to retailers. In fact, he argues that the national brands have an even greater opportunity to use one-on-one marketing to engage consumers across all their channels of trade and realign the balance of power between manufacturers and retailers.
Will the national CPG brands respond to this opportunity? P&G announced a clever social media campaign with its Charmin brand yesterday, and I expect we will see many more efforts like this as national brands continue to evolve their marketing to stay top of mind with consumers. Mark Addicks, the CMO at General Mills, laid out the challenge nicely in a recent interview in The Hub Magazine: “Part of the next frontier of brand identity is how brands are going to continue to grow in this world of consumer engagement.” It appears that national CPG brands are ramping up their digital and social media marketing to do just that.