Being cheap. How it could actually prove to be expensive.

I’ve often wondered about the adverse affect that having a USP of being ‘low cost’ can have on a brand’s reputation. Whilst admittedly it’s going to attract customers in search of a bargain – and in the current climate that’s going to be most of us – surely this kind of marketing is also very risky for one’s reputation. What happens once we’re out of a recession, as we supposedly now are, and the customers’ priority shifts over to quality as opposed to cost?

A piece in PR Week UK this week addresses the issue; ‘Ryanair, Primark and Asda have all used a reputation for being cheap to their advantage. ‘Low-cost strategies can help build a brand and there is a clear appetite in today’s climate,’ says Good Relations CEO Teresa-Anne Dunleavy. ‘People love a bargain and as long as the quality is acceptable they will share their stories and become powerful ambassadors for the brand.’

Take Ryanair for example – ‘Bagging a bargain has become a badge of honour for consumers struggling with a tough economic climate. Being thrifty – or at least being seen to be sensible with money – has become fashionable, especially after the furore over MPs’ expenses and bankers’ excess. Brands have been jumping on the bandwagon, keen to emphasise their cheapness.’

However, ‘taking a brand downmarket’ is not without risks. ‘It only works, for example, if it is a long-term strategy. Once a brand is marked as cheap, it is difficult to change perceptions. And once the market bounces back, brands can be caught out. ‘I admire companies such as Ryanair that have built a huge business on that approach, but no-one can tell me that these things don’t go in cycles,’ says Seventy Seven PR managing partner Alan Twigg.’

Once out of a recession, brands that have taken this approach, can get left behind: ‘In the boom years, brands put Swarovski crystals on everything to make a product look expensive. Then there was a back flip, with brands trying to look as cheap as possible and people talking about how much they’ve saved. But that will change. We’re going to come out of the recession and people don’t want to be aligned to “cheap”. People will always aspire, it’s human nature.’

Marks and Spencer, on the other hand, whilst advertising ‘value’ offers to reflect the market, such as their ‘dine in for £10’ promotion, have always promoted a strong message of quality. Okay perhaps consumers will opt for a slightly cheaper brand than M&S in the midst of a recession, but once we’re out of it, Marks will still have the strength of their ‘quality’ brand intact. A brand that customers will always come back to.

It goes back to the point about aspiring – people are always going to buy into the quality brand over the cheap one, no doubt in the hope that they themselves will live up to it.

Written by Gemma Carey – www.bluewoodtraining.com – January 2010