Category Archives: Branding

It’s Not All About Price

I recently had a discussion with another redditor about pricing.  Specifically, someone asked what kind of margins other e-commerce owners had and what their markup should be. Instead of answering, the redditor posted that they should stop focusing on price as a number and the only way to compete and as a reflection of their brand.

I don’t disagree with that – it’s actually a decent way of looking at it.  However, it’s also worthwhile understanding that when you develop your business model, it’s not just about deciding on where you want to position yourself (and thus the price) but also the underlying business industry you are working in.

It’s even more important to understand this and your business resources when developing your business.

Let’s give an example – you sell Widget A. If you and your competitors are all selling Widget A, then you cannot afford to price yourself too far off from your online competitors. If they sell it for $10, it’s really, really difficult for you to sell it for $50 or $30. You might be able to pull off $20. Part of how much you can afford to price yourself away from them is based off how knowledgeable / fractured your market is. For example, if a significant portion of your market reads 2 magazines, and your competitors all advertise there, you can’t be too far off. If, however, your market is extremely fractured, then you can afford to price yourself at a higher rate.

Developing a brand will allow you to price at the $20 range and get customers – the number of customers really depends on the demand curve.  How brand (in)sensitive are your customers? How brand loyal?  If you sell sugar – the answer is almost negligible.   If you sell high end clothing, the answer is extremely high.

In addition, you need to take into account the various services and your resources – a high price generally requires a high level of service.  That level of service generally dictates a higher cost in time and money.  If you are a one man show with very little money, you might not be able to handle a lot of business – so your markup better be really, really good.  Again, at the higher ends it’s viable at the few hundred dollars and more range. If your product is only selling at $30 but that’s a 300% markup, things might get tricky.

In addition, there’s also the question on time.  Getting a $50 customer will likely take longer than getting the $10 customer.  In e-commerce terms, it might be the difference between a 1% conversion rate and a 0.01% conversion rate.   When traffic is hard to get, that 0.01% conversion rate might be a killer.

Crowdfunding, Shareholders and Oculus Rift

So, this is going to be a somewhat meandering post about branding and managing expectations, especially dealing with things like Kickstarter and ownership.

Oculus Rift

Let’s summarise this quickly – Oculus Rift is a tech company that is building a VR interface which from all reports is really good.  Oculus Rift went to Kickstarter to get further funding and they received a ton of cash – nearly a million I believe compared to their $100k ask.

This means they had a lot of stakeholders (i.e. people who have an interest in the company) but not a lot of shareholders (i.e. people who own a part of their company). They recently sold the company to Facebook for a cool billion.  Yeah, b not m.  The shareholders made a lot of money this way, but the stakeholders didn’t.

Since then, a lot of people have grown angry with them – going as far as threats on the owner and his family.

Shareholders & Stakeholders

Shareholders have a tangible stake in your company.  They physically own a part of your company.

Stakeholders on the other hand just have an interest in your company – emotional or contractual (e.g. suppliers); they have an interest in your company but don’t have a say in how it’s run (technically).  You can ignore your stakeholders, but as per Oculus Rift, there will be lashback.

Branding & Public Relations

Your job as the marketer in the company (and you could be CEO too for all I care, you are still doing marketing); your job is to manage perceptions.  Much of the anger that has been directed at Oculus Rift is because they  never attempted to manage perceptions beforehand – the news was rather startling and made many of the stakeholders feel betrayed.

In addition, you should understand that crowd-funding systems like Kickstarter are still new in execution.  Few people who take part in the system have an understanding of what is required in terms of communication and branding.  The closest relation that I can think of is the way non-profits manage donations from their supporters.  They don’t control the non-profit, but without the donations the non-profits are nothing.

Manage expectations, manage the idea of what say people have and can have, where you might be going (the vision / the brand!) and you can avoid or at least decrease the issues you might have in terms of the backlash.  Don’t and well… you have another Oculus Rift.


The Victoria Secret Fashion Show and Selling the Dream

Watched the Victoria Secret Fashion Show last night and I was surprised by just how well done it was. Both the production values, the editing, the musical guests and the cut-in segments showing just how much work goes into it.  It was an amazing branding exercise, one that I’m just in awe of us as a marketer.

Speaking with a friend afterwards, we discussed what Victoria Secret really sells. It’s not bras & panties.  Those you can get at Target or Wal-Mart or Marks & Spencers.  What they sell is a dream.  They sell sexiness and beauty.

It’s probably the hardest thing to sell, a dream.  It requires such a tight balancing act.  Your entire brand has to be in sync all the time because a moment of wakefulness for a viewer and the dream could be over.   Look at Lululemon – they screwed up, and instead of owning it, they accused their customers of being the problem.  Poof.   What? Not everyone can look good while working out? You aren’t selling the dream of looking good while working out? You aren’t granola munching love-the-world individuals? Oh…

It’s an incredible job to do that, to sell a dream.  It requires dedication and belief and the ability to see what is missing and the commitment to push through the slow periods.  On the other hand, once you have sold that dream… well, who wants to wake up from a good dream?