Reduced Price Elasticity is the Least Appreciated Result of Brand Building

Chubbies was acquired for 9 figures and went through a 10 figure IPO. Upon reflection, the least acknowledged benefit that came out of our journey to effective brand building was *reduced price elasticity*.

This supported our ability to introduce new products at higher and higher price points, without negatively impacting volumes, which greatly contributed to our ability to generate profits.

To that end, here are the 3 things (and a case study at the end) you can implement today to effectively use brand building to decrease price elasticity, as told by the GOAT of brand-building effectiveness, Les Binet.

1) Reach.

Binet said more than 2,000 case studies have failed to identify companies that have strengthened their pricing power by targeting existing customers.

“CRM, all that stuff, is absolutely useless when it comes to trying to firm up your pricing,” he said. “It’s more about acquisition, and more importantly reach.” Campaigns that reach wide audiences are more beneficial than tightly targeted messages when tackling this challenge, Binet insisted.

2) Emotion.

“It’s not about telling people things,” Binet said, asserting that it is not possible to convince customers to pay more for a product by rational argument.

“Getting people to pay more for the same old shit is not a rational thing. It’s emotional. The key to pricing power is to get people to feel strongly about your brand, to disengage the rational and make people want the thing at any price,” he said.

3) Fame.

“Campaigns that consciously aim to make the brand and its marketing famous are much, much better at reducing price sensitivity and supporting premium prices than any other kind of marketing.”

The easiest way to fame is creativity.

“Highly creative advertising is much better at getting an emotional response and is much more likely to generate fame,” said Binet.

The “kind of ads that win at Cannes” are more likely to get fame than a more rational, measured approach, he added.

Case Study:

Binet demonstrated his theory with a case study of cat food brand Felix, which in 1989 was on the verge of being delisted from a number of supermarkets. “It hadn’t been advertised for decades, it was dying,” said Binet.

A campaign that repackaged the product and introduced a cute cat brand mascot – but which featured virtually no product information – ensued. “All we said was ‘Cats like Felix like Felix,” recalled Binet.

Over several years the brand went from a market share of 5% to leading the category, based on the famous antics of a cartoon cat.

Alongside the increase in sales volumes, Felix managed to decrease its price elasticity measure, allowing it to increase its prices.

“Not only were they quintupling the volume, but they went from being one of the cheapest brands to being one of the most expensive,”

🤯

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