You Don’t Have to Race to Zero
By Zach Kliger
In countless industries, companies are content to compete on price. Rather than looking for unique ways to differentiate, they are simply content to undercut their competition in order to gain even a fleeting advantage in the market. Businesses battling to capture their share of increasingly price conscious markets are in a race to zero.
But, there is another way for companies to attract customers and supersede the price tag.
There is a reason that brands like Downy, Dove, and Colgate consistently sell better than every single one of their many competitors, and it’s not because they are inherently better products. All these brands are commodities: products with very similar features and ingredients to their competitors. These companies stand out from their crowded marketplace because of the emotional ties they fostered over a long period of time with a wide range of customers.
Emotion will always hold a firmer grip over people than logic, and that’s a good thing for brands that are prepared to fully invest in that connection. Price mistakes humans as purely rational buyers, which could not be further from the truth.
Not every brand has the luxury of decades of developing trust and forging indelible connections with consumers. The real test is when a fresh-faced market entrant can create new value and establish itself in a market where there doesn’t appear to be any space left to do so.
Grocery stores like Sprouts and Whole Foods didn’t achieve rapid growth by surrendering on price. Quite the opposite, in fact. Both brands have something of a reputation for high prices. Despite that, both consistently rank as some of the fastest growing grocery chains in America. In Whole Foods’ case, this culminated in the well-publicized $13.7 billion acquisition by Amazon a year ago.
Despite entering the market years after more entrenched competitors, neither retailer undercut on price to get an advantage. In fact, they sold on high-quality, organic foods, and a clear commitment to helping their shoppers live their values.
It could even be said that both brands made their high prices a part of their brand story. Premium selection and conscious sourcing reflect a discerning shopper looking to live well and live green. Customers are more than eager to spend more on this most basic of human needs.
Ever since King Gillette started ruling over the world of men’s razors 100 years ago, competitors have struggled to find a footing in the space. Since then, companies have invented increasingly counterintuitive technologies purely for the sake of trying to establish a point of differentiation in the marketplace — even if the patented technologies are of little use or interest to the actual customer.
In 2011, Dollar Shave Club entered this market, offering a simple subscription service that delivered razors completely stripped of all the unnecessary bells and whistles. They created a humorous brand personality that mocked the unnecessary excesses of other razors, and, through straight-shooting humor that was laser focused on the customers’ needs, they created an authentic bond with their target audience.
If a person wanted an inexpensive razor that did its job, they could get one regularly in the mail from Dollar Shave Club. Dollar Shave Club customers weren’t just purchasers of commodified razors — they were people who had a sense of humor, didn’t fall for gimmicky product features, and who relished the convenience of regular delivery. This compelling brand story brought in millions of customers, and the company was acquired by Unilever for $1 billion just five years after its inception.
On the face of it, Dollar Shave Club’s approach may seem like a classic example of price undercutting, but their strategy ran much deeper than that. They didn’t just brand as a slightly cheaper Gillette knock-off. They made affordability, convenience, and utility essential to their identity. When customers considered those values, they thought of Dollar Shave Club, and the company was able to meaningfully differentiate as a result.
Whole Foods, Sprouts, and Dollar Shave Club made price — whether high or low — a part of their brand story, but did not rely on it as their comeptitive differentiator. Instead, they infused meaning into who and what they are that reflected the interests and concerns of the customer they wanted to attract.
The only thing more boring than purchasing a razor might be a mattress. For most customers, it was just a matter of picking an option in a big box store that seemed like it would be comfortable to sleep on for the next 10 years. All but the most discerning of mattress shoppers probably couldn’t pick out the qualities of one mattress brand over another.
Casper and its many contemporaries have changed all that. The company connected with sleepers around an aspirational promise — better sleeping for better living. That message resonated with millennials looking to optimize their health in any and every way they could.
Casper made buying a mattress cool again, and suddenly, billions of dollars of venture funding started funneling into the industry. An analysis of the mattress space today reveals dozens of competitors, no longer seeking to differentiate around price (virtually all offer identical pricing and 100-night sleep guarantees), but rather to connect with different lifestyle segments of the population.
It might seem like these emotional brand stories, defined by a true examination of the hopes and interests of target customers, is an advantage that only consumer companies can leverage, but that is not true. The decision makers at businesses are people too, and they can similarly be driven to purchase on the strength of a brand story rather than price.
Much like a consumer, decision makers want an emotion-based reason to believe. In highly technical spaces, there is a real advantage in moving beyond technical specifications to telling a story that threads all the product features together to a compelling vision and inspires prospects to act.
Cisco has stood out by moving past technical details and features to describes its products. Instead, it tells simplifying and relatable stories to articulate its steadfast commitment to collaboration and efficiency.
The company compares operating in a business to sailing a boat. Whether piloting a yacht or a business, teams must be adaptable and collaborative in the face of changing circumstances to stay ahead of the competition. Cisco’s technology is quite literally empowering in both cases — with sensor data and analytics to help the crew (or the team) make critical decisions.
Business decision makers want to feel like heroes just as much as consumers. The only difference is in the tools they are looking for to empower them on their journey. Where the millennial buyers of Casper are looking for a way to live a healthier life, Cisco buyers want to operate at a higher, and more productive level. Those are the respective values evinced in every story both brands tell.
Technical, business-oriented companies struggle routinely to make those connections. Instead, they argue why the product is so much more powerful and why its features are so incomparably innovative. Or, they choose to undercut on price to get an edge over every competitor that’s saying the exact same thing.
No matter what industry a company is in, and no matter how saturated its market may be, a company can differentiate based on the story it tells. The first and most important step is to understand what customers want — whether that be seeing their environmentally conscious values reflected in the place that they shop for food or recognizing a clear opportunity to make smarter and more productive decisions.
Once a business understands what drives and inspires their customers, they have to clearly express why and how the brand will help them achieve their own vision for success and make them feel like a hero. That’s something you can’t put a price on.
Zach Kliger is an associate at Woden. Whatever your storytelling needs may be, Woden can help. Read our extensive guide on how to craft your organization’s narrative, or send us an email at connect@wodenworks.com to discuss how we can help tell your story.