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David Ogilvy on Price David Ogilvy, a legend alongside the likes of Rosser Reeves and Bill Bernbach, has some strong words to say about deals and price. They are certainly worth repeating:
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Any damn fool can put on a deal, but it takes genius, faith and perseverance to create a brand. The financial rewards do not always come in next quarter s earnings per share, but come they do. When Philip Morris bought General Foods for five billion dollars, they were buying brands. There used to be a prosperous brand of coffee called Chase & Sanborn. Then they started dealing. They became addicted to price-offs. Where is Chase & Sanborn today Dead as a doornail. The manufacturers who dedicate their advertising to building a favorable image, the most sharply defined personality for their brand, are the ones who will get the largest share of market at the highest profit. The time has come to sound an alarm! To warn what is going to happen to brands if so much is spent on deals that there is no money left to advertise them. Deals don t build the kind of indestructible image which is the only thing that can make your brand part of the fabric of American life.*
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* David Ogilvy, Fiftieth Anniversary Luncheon Speech, Advertising Research Foundation, New York City, March 18, 1986.
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What David Ogilvy was getting at was that what you need to build into a brand is a positive. The purpose of all that hanging a negative on your competitor is to set up that positive idea. Some years ago, Stolichnaya vodka hung American made on its U.S. competitors who were making believe they were Russian. It was setting up the Russian vodka as its positive idea. Many years ago, BMW introduced its automobile into the U.S. market by repositioning Mercedes as the ultimate sitting machine. This was a set up for its longterm position of being the ultimate driving machine. Repositioning Mercedes as a living room on wheels did indeed resonate with people, as at the time Mercedes was indeed manufacturing big limo-type cars. The first BMW was the 3 Series, which was a long way from today s 7 Series, which is also a sitting machine. It s also the main reason that I m not a fan of these big gadget-loaded BMWs. They are not driving machines; they are high-tech sitting machines. It s why you don t see many of them driving around.
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Some years ago, I was down in Venezuela working with a big ketchup brand called Pampero. By the time we were called in, Del Monte and Heinz had nudged it
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from its number one position. Pampero was in a decline. What was needed was a differentiating idea beyond its current claims of redder or better. Why was Pampero better What did the company do to its tomatoes After some prodding, what emerged was the fact that Pampero removed the skin so as to enhance the flavor and color. It was something that its big competitors did not do in their manufacturing process. Now that s an interesting idea, as many people are aware that most recipes using whole tomatoes call for removing the skin. Pampero could exploit this without the skins perception of quality and taste. When we told the company that this was the best and only way to rebuild the brand s perception, Pampero became very upset. It seems that the company was in the midst of changing to a money-saving automated process that didn t remove the skins (like that used by Del Monte and Heinz). Pampero didn t want to hear about doing things the old-fashioned way. Our recommendation was that Pampero stop the modernization plans, as skins off was the differentiating idea. Doing things the same way as your bigger competitors is how to get killed in the wars out there. What was called for was a major repositioning effort to hang skins on the competition. The positive was skinless tomatoes a repositioning idea that never saw the light of day.
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