Brand health versus sales volume – a delicate and misunderstood conundrum

Brand health versus sales volume – it’s a delicate and often misunderstood conundrum that only those deep in the marketing trenches truly understand. By Nina Hendy.

 

Marketing professionals constantly wage a war, as the need for sales faces off with the desire to build and maintain a strong, compelling brand.

On one hand, you’ve got the sales guys, charged with the task of selling product. The equally important marketing team sits nearby at their desks, working hard to maintain and build the brand. And the relationship between the two teams can be tense, to say the least.

Often, the tension can spill over into the communications and advertising agencies hired by brands.

The tension between sales and marketing teams is very apparent to agencies, says Peter Cleary from Zinc, who has worked on both sides of the fence. Tension usually exists because both teams are being pulled in opposite directions, though the changing dynamics of how consumers decide and shop isn’t helping matters, he says.

“It’s tough out there. We’re buying differently, we’re shopping differently and, as consumers, we’re more demanding of brands than we’ve ever been before.

“Marketers are under pressure to think about the next quarter versus the next 12 to 24 months, which means long-term strategies are diminishing, leading to price promotion becoming a habitual part of the marketing mix. The results are misleading – spikes in volume are usually at the cost of margin,” Cleary says.

If value is part of your proposition, then price is what people will expect from you, he says.

“Unfortunately many marketers have fallen into the trap of seeking short-term gains through price promotion, or they’re following the pack, because that’s what the market dictates. Price promotion was never intended to be a constant lever in the marketing mix. Its traditional use is to stimulate trial purchase,” Cleary says.

The biggest enemy for both sales and marketing teams is time, he says. “Clients simply don’t have the time to review one thing before they start another, which is why more often than not, decisions aren’t made on performance, they’re made on what’s easiest and quickest to execute.”

Carlo Tarquinio, Trout Creative Thinking’s strategy director, agrees that price comes into the debate. “Retailers today need to balance the commercial reality of having to generate sales with building their brand. The common reflex is to battle sales with sales – if our competitor is having a sale, so should we. But that’s not always the best approach, particularly in terms of brand value and customer relationships,” Tarquinio says.

“The centre of this debate is whether sales undermine brand proposition and erode the premium. Then there are arguments about which products to discount, and by how much. It’s a debate that will often bring brand managers into conflict with their internal sales or operations departments.”

Lorenzo Bresciani, managing director of DDB Melbourne, says it’s crucial to understand whether the brand is strong or weak on value perception and select a retail strategy that will have the most impact.

“At the same time, it’s important to understand the specific behaviour change task that is required. Do we simply want people to buy now? Do we need to address a perception of high prices? Or do we need to do more to communicate the underlying value for customers?” Bresciani says.

 

Getting the balance right

Although, brands feel they’re getting the balance between brand and sales right. Unless you’re discounting heavily, brand and retail can work together in harmony, according to Kevin Goult, general manager, marketing, for automotive marque, Audi Australia.

“Brand-tail seems to be the phrase that has been well coined over recent years in the automotive industry. It’s a combination of brand and retail material rolled into one and, if done intelligently, can work well. Premium brands are working hard to protect the brand image and undertaking retail campaigns with dignity, but compromises are always needed in competitive retail environments,” Goult says.

“The basic idea is not to have everything on sale at the same time, and have a well thought-out retail strategy that is underpinned by a very strong brand strategy.”

For Goult, promotional marketing is an important part of the debate, and needs to dovetail seamlessly. “I like to look at the year as a whole, because part of the marketing is planning to tell the story with key events and launches, then have the retail discussion from that holistic perspective, and tie in the marketing messages.”

For example, Audi’s ‘Land of Quattro’ campaign in 2013 was a fully integrated launch campaign kicked off with marketing messages, but followed shortly afterwards with a Quattro drive campaign, he says.

“In other words, we reinvigorated the familiarity of Quattro and then introduced our retail campaign at the end of it,” Goult says.

Westpac believes that good branding goes well beyond communications alone. The bank’s head of mass marketing services, Lisa Ronson says it goes back to the purpose and values of an organisation. “The brand values can’t be compromised for an institution like Westpac, where trust and transparency are prerequisites.

“A purely retail or price-led approach for budget brands in another industry may get sales in the shortterm, but it’s important for all brands, big or small, to create meaning and relevance to customers to be sustainable in the long-term.

“Consumers need to have a level of trust and understanding in what the brand stands for and the service experience, as they have so many more choices and outlets to share customer experience – both good and bad – which can have a profound impact on brands.”

Measurement is also a vital part of the debate, Ronson says.

“By measuring the impact of communication and other brand health measures through to sales, you can clearly see whether the campaign is having the intended effect, and where.”

Further down the luxury ladder to independent FMCG brand Oscar Natural, brand versus sales is a battle waged every day, brand founder Oscar de Vries admits.

“It’s a double-edged sword of getting supermarket distribution for your fledgling brand and having to balance maintaining your price point versus retailers’ insatiable demands for promotional discounts. It can be a vortex of brand and price erosion,” de Vries says.

Online wine retailer Vinomofo also works hard to strike a balance between sales and brand experience. Co-founder Andre Eikmeier says that they have daily targets they need to hit, and every day the get producers submitting products that would work price-wise and may well sell, but aren’t a brand fit.

“From the beginning, we’ve made a promise – unless we love them personally, we don’t sell them. “We would rather go with something we might sell less of but we believe in 100%. The trust we build from not compromising on our promise is more important in the long-term.

“We’ve got a phone team of brokers to look after our members, too, and they could go super-hard on the pitch and annoy people to increase conversions but, again, their number one objective is to be helpful, to have a positive engagement with a customer, not to just sell them wine. And when you’ve got targets to hit, it’s tempting to want to bend this a bit. But again, not worth it.”

 

Relieving cross-functional tension

Cleary believes that agencies should be helping their clients work more cohesively to get brand and marketing teams on the same page. Sometimes, asking the right questions can prompt a turnaround in relationships between key internal players, he says.

“We’re usually dealing with the marketing guys, but to make sure objectives are aligned, we often need to include the sales teams. But sometimes they just don’t talk. A good agency always tries to smooth out the objectives and challenge their clients to do things better,” Cleary says.

The tension between sales and marketing is what, in part, attracted Jeff Froud over to the agency side. The integrated strategist at Evocatif@JWT agrees it’s up to agencies to help their clients navigate this conflict.

“Agencies need to take some of the responsibility here. Many haven’t been helping their clients get their head around this issue, and they should be,” Froud says.

Part of the solution is putting a greater emphasis on shopper marketing, he says.

“Shopper marketing is an incredible retail experience. The shopper is far more influential and powerful than previously thought in the marketing mix, so it’s worth considering what percentage of sales you’re making when consumers are in shopper mode.”

Froud recently returned to Australian shores after a stint in the US, where brands are far more successfully leveraging the concept of shopper marketing, he says.

“We need to grapple with the fact that traditionally speaking, sales and marketing teams don’t get on particularly well. In fact, there’s long been a serious tension and conflict between the two teams within most organisations,” he says.

“What agencies need to do is bring the two sides together. That means sitting the two sides down together and helping everyone get everyone on the same page,” Froud says.

Rethinking what a sale represents is also important, suggests Eikmeier.

For Vinomofo, it’s not a sale when the customer hits the buy button and hands over their credit card details – that’s a loan, he says.

“It’s a sale when they’re sitting back on the deck enjoying that wine they bought. And that’s the key that makes this whole conflict simple to resolve. Trust in your brand leads to loyalty, and long relationships with your customers, with multiple purchases, and that’s far more profitable than churning customers. And it’s the right thing to do.”