I was walking through Bristol Temple Meads train station recently where I saw a real life example of how advertising works. I don’t mean direct response advertising.
I mean advertising that is developed to change our perception of a product. And to usually add some kind of perceived value so we pay more for it and want more of it.
But, and this is the killer, this is achieved without really changing the product itself. Or making it significantly better than its competitors either.
The product I’m talking about is coffee. And the brand benefiting from its advertising was Starbucks. It was illustrated like this:
There is a Starbucks coffee shop positioned only about 5 meters away from an AMT coffee booth in Temple Meads train station. I’m no retail expert but I think the AMT booth is actually better placed to catch your attention.
Anyway, both sell very similar products. And to my knowledge neither product has any meaningful differentiation or competitive advantage.
However, Starbucks was packed with people buying their overpriced coffee. But the AMT booth was empty. Yet they charge less for coffee.
Because the Starbucks brand and the advertising that support it communicates a perceived value. It tells you their coffee is premium (whatever that means), that they source their ingredients from Fairtrade suppliers and that they generally love the planet.
This is very emotional. Starbucks understand that emotion plays a massive part in peoples buying decisions. If it didn’t, and it was practicality that drove purchasing decisions, most people would buy from the AMT booth.
After all, you have the same product, at a lower price and available in a more visible / convenient location. In fact, you have to walk around the AMT booth to get to Starbucks!
And there you have it. Starbucks’ advertising communicates a perceived added value which means they can charge you more money for an undifferentiated product.
There are 1000s of other examples of this of course. For example, the Stella Artois lager brand used to use the positioning line “Reassuringly Expensive” in its advertising. Yet Stella Artois is not much different to most other lager that contains similar alcohol content. And just how different, apart from being lower in price, is Red Rooster compared to Red Bull?
Rory Sutherland explains how advertising changes perception of value far better than I could dare to even dream of. To watch him doing this with hilarious examples just click here: http://www.ted.com/talks/rory_sutherland_life_lessons_from_an_ad_man.htmlCarl