In my day to day discussions with brand clients, sports retailers and the sales team price is often discussed.
That is the selling price to both the customer and the end consumer. We live in such a transparent world that to find the latest price on an item is now as simple as one google search or even one scan of a barcode.
Inevitably end consumers want the best price however is this really the only criteria we use when choosing goods and can both brands and retailers be smarter in their pricing strategies and increase prices and margins.
In the 1960’s the marketer E Jerome McCarthyproposed a four Ps classification which has since been used by marketers throughout the world – Product, Price, Promotion, Place – all of which have a direct influence on the selling price of a product.
Today those P’s have expanded to become 7 or 8 (or even more) to address the different nature of services however their impact on business development and go-to-market strategies should not be underestimated and are equally applicable to the sports industry;
So, if we take price out of the equation what other factors should we be looking at from both brand and retailer perspectives;
Of course this is key. The product pipeline must be continually full and whether sports brand or retailer, without appropriate, attractive and relevant product the business cannot evolve.
Over the past ten years we have seen more and more niche areas of the industry being driven by product development as eCommerce, in particular, has allowed retailers to exploit the long tail and push more and more specialist products into a bigger specialist market place.
Innovative product development continues to be a key business driver here as the specialists (retailer and brands) demand more “fit for purpose” products than those in the “general” sporting goods category.
Because of the nature of these products – cutting edge, innovative, in-vogue – consumers do not expect to see products discounted and thus the retailer who immediately discounts a brand new to market line in this area is simply giving margin away. New products launches are the time to make hay and to maximise margins.
As a retailer one should take advantage of the marketing tools that are often available around new launches and piggy back on the brand spend to drive consumers to your own website/store – take any POS or co-operative support that is available.
It is the authors view that, as an industry, the sports trade can still learn from our FMCG cousins in this area.
If we compare brand and retailer activity with, for example, that of the grocery trade we often fail to address some powerful tools that are available to the brand and retail businesses.
Added value promotions, Buy One Get One Free (BOGOF), voucher redemptions, staff incentives, gondola end promotions (or equivalent), and direct call to action initiatives are all areas that we recognise as end consumers in other marketplaces but not necessarily throughout the sports market.
When used strategically these types of tools can be extremely beneficial and allow additional points of difference versus the competition.
These approaches work both online and in store and, most importantly, do not necessarily result in margin erosion.
Often you will hear marketers saying that marketing is about putting the right product, at the right price, at the right place, at the right time. It’s critical then, to evaluate what the ideal locations are to convert potential clients into actual clients.
From a brand perspective this might be a trade show, shop visits or dealer trips.
For sports retailers it may depend on your route to market – shop, mail order, eCommerce, event – but the same principles apply.
This marketing P is the one that on the surface appears less relevant but is the one that, arguably is having the biggest impact on the sporting goods marketplace. Put simply the “places” where goods are being purchased are changing.
Channels are merging – running and outdoor; embroidery/embellishment and sport; mail order and eCommerce etc. For sports brands to evolve they must address these changes and “find” this new business and the “place” where this new business exists.
With a continued decline in the sports independent base and a consolidation of sports multiples these changes will be fundamental for sports businesses to evolve.
It may seem simplistic to view our industry within these basic parameters, however if explored in depth then the answers to all successful business sales and marketing strategies can be embraced under these umbrella terms.
In recent years new P’s such as Passionate People, Packaging, Performance, Persona and more have been put forward as being equally and/or more important than the four terms outlined in this article, however it is clear that whatever your final list of P’s the discipline of reviewing your business in these terms may just help you find the answers you are looking for to help grow your business.
This is the ultimate component of marketing strategy; it’s all about the people. Keeping people top of mind in all your marketing efforts will be instrumental to success. From product development, customer service, accounting and senior management, the people involved in the making the product/service need to know that you are on board with them.
As eCommerce becomes more important where does that leave packaging? The balance between the brand/product message and the opening experience continues to evolve – look at the increase in unboxing product videos on youtube – the unwrapping of the package has become a vital part of the consumer experience and thus the brands must address this.
Sport at any level has a performance element. To compete, particular in niche product areas, product performance is vital and, perhaps more than in other industries, warrants its inclusion in the new P’s list for the sports industry.
But product excellence is not enough for a premium brand. The luxury brand must perform at an experiential level as well.
If we embrace those ideals originally laid out by E Jerome McCarthy then it is clear that it is not all about price price price. In fact, to take this to its logical conclusion, if it were then there would be no place for, for example, the likes of Aldi to compete with Waitrose where many many of the same lines are sold in both stores. If our buying criteria was just price then Aldi would be the dominant player and Waitrose would not survive.
Our emotions, ideals, shopping environments, moods, peers and so many more factors are the real influencers in the market.
Why do artisan butchers and bakers still survive when bread is so much cheaper in the supermarket next door?
Why shouldn’t independent sports retailers be able to compete with multiples?
Think about what your business is good at – service, added value, promotions, specialist products – and use those key strengths to counter the price argument.