Clorox, Price Discrimination, and Line Segmentation

Take a look at the above: Both product lines are within the Clorox family of products – one is branded Clorox and the other is branded Green Works.  Although the image of Green Works does not show it, Green Works also offers disinfectant wipes and detergent.  Essentially, the Green Works line has the same product types as the Clorox line.  This is an example of both price discrimination and line segmentation.  Below I will walk through both price discrimination and line segmentation in action so that you can learn and hopefully develop creative ways to utilize the same strategies in your small business marketing strategy.

Price Discrimination:

  • Clorox Bathroom Spray is $4.49 vs. Green Works Bathroom Spray at $5.79
  • Clorox Toilet Cleaner is $3.79 vs. Green Works Toilet Cleaner at $5.49
  • Clorox Disinfecting Wipes is $2.99 vs. Green Works Disinfecting Wipes at $5.99
  • Clorox Stain Fighter & Color Booster is $5.79 vs. Green Works Detergents at $5.99
Each of the compares in the above is an apples to apples analysis – same oz., similar product.  And as you can see, Clorox clearly marks up the price of its Green Works line vs. its generic brand.  Why is this?  There is a different value proposition behind the Green Works line – it is natural, and because of this, they believe that natural-seeking consumers are willing to pay the premium for better-for-you products.
Through the Green Works line, Clorox reaches a new set of consumers and potentially cannibalizes its own sales on its existing Clorox brand.  However, this cannibalization is positive cannibalization since the consumers are pricing up to a more expensive line.

Line Segmentation:

Clorox manages its cleaning products portfolio by segmenting the market into mainstream and natural and leveraging different brands, that are relevant to each market, within each market.  This benefit of creating two distinct brands is that Clorox has the ability to develop two distinct and targeted marketing plans.  It would be difficult for Clorox to develop a marketing plan to natural consumers without impacting its brand positioning within the mainstream channel (which is Clorox’ bread and butter).  Likewise, it would be difficult for Clorox to maintain its brand positioning in mainstream while also trying to effectively market to natural consumers.  There are also financial reasons for such a segmentation:  For example, since the Green Works line is premium priced, the financials behind a couponing or promotional campaign will look differently than that of the mainstream Clorox line.

Conclusion and Implications:

As a small business owner developing a marketing strategy, if you find a new need within your market that you would like to market against to generate incremental sales, consider a price discrimination and line segmentation strategy if the new need is a different type of consumers.  By following this rule, you will be sure to not impact your existing brand, products, or sales while taking advantage and capturing the new market opportunity.  This rule implies for both product, retail, or service driven companies.

Social Media Conversation Calendar for Better Planning

Have you ever wondered how large brands such as Popchips, Virgin America, Kraft, etc. have maintained a steady conversation flow on their social media accounts?  There is more to social media conversations than posting on the whim.  Although posting on the whim is within the rulebook, there is a deeper strategy to the daily tweets or posts that your favorite brands make.  The best thing about this is that you can take this social media marketing strategy right out of the playbook of these large brands so that you can adopt these for your small business social media strategy.

What is the secret?  A social media calendar of course!  It looks something like the following (this example could be for a local catering company)

The conversation calendar is simple in form: assign a post type (i.e.: Image, Recipe, Trivia, Poll, Fact, etc.) to each day and build a monthly calendar in advance.  By doing so, you will be preventing any lapse in social media conversations because you will no longer need to think of ways to generate engagement on the whim.  Furthermore, by utilizing a conversation calendar, you will now be able to divide your social media week by topic and therefore, always finding something to speak to.  For the days that you might not have a branded message that you would like to share for the daily post topic, you can use an un-branded message to keep your compelling conversations on-going.

Conversation calendars are used by all social media agencies that work with large brands – it is a way for these agencies to stay focused, provide on-going, compelling, and engaging content, and a way to measure and refine the daily post type based on measuring the reactions after making certain types of posts.

Burger King – Marketing Strategy

Food Trucks and Touch Screens?

Burger King is creating a good amount of marketing buzz around their new menu and the experience that consumers will have.  They have redeveloped their menu, which is somewhat reminiscent of McDonald’s to be more health conscious by adding salad and wraps options.  They will somehow be incorporating a touchscreen into their point of sale and using food trucks to get their product out to the masses.

 

What is their marketing strategy here? Here are some takeaways from the whole concept.

Takeaways:

Track your sales. For a big company to shift like this means that their stores aren’t performing as well as they hoped.  John and I are adamant about tracking sales dollars and quantities and as Burger King probably has been losing share to competitors, they hope to get it back with this new product launch. Track your sales so you can make marketing programs to tackle a downturn.

Get people in your door.  Any type of retailer knows that if they can get you in their door and on their grounds, they can probably sell you something you did not want to buy, eat, or have. Give them a reason to come by – like Taco Bell and the Locos taco, Burger King hopes to create a new customer experience.

Test your product.  With the food truck, Burger King plans on sampling the new product to the masses before they actually release to stores. How can you do the same? Test your market before you assume that everyone will love your product or service.  You might be liked be everybody because you smile, but that does not mean you know what everyone likes to smile about.

Doritos & Taco Bell – Creating Marketing Buzz

Doritos and Taco Bell have teamed up to deliver the Doritos Locos Taco.  Why does this makes sense? I’m not exactly sure but, I can tell you that Taco Bell of Yum Brands has not been as successful as they have been in the past and they definitely needed a marketing program that will make or break them. What was the benefit to partnering with Doritos? Good question.

Aside from the need of a great marketing campaign, I feel that this cross-selling of product is a great way to accomplish a few things: creating awareness, stimulating trial, redefining the brand, and better understanding your consumer.  I would not be surprised if research demonstrated that the consumers of both brands are similar in age, preferences, lifestyles, financial well-being, and most importantly new product adoption.  On a side note, it appears that Taco Bell is doing the marketing aspect very well with a countdown, official day to start the program, and reaching out to many different categories with the Locos Taco options.

 

What can we learn from this example? John and I have trumpeted that understanding your consumer is vital for your success, but in addition to this, understanding your competition as well as other brands in similar industries maybe a token for new markets as this could lead to partnerships, cross-selling, and potentially more brand loyalists who were not aware of your brands and products.  Only time will tell if Taco Bell and Doritos really hit it off well as they both gain awareness around the marketing campaign but a “win” from the campaign that they gain is trial of the product and bringing consumers into their stores – this is harder to do than you think.

Takeaway for a Small Business Owner

The executives at Doritos and Taco Bell both understand their consumer well and with this were able to cross-sell them without cannibalizing their own sales in new markets.  Both created great marketing buzz around their brands.  So what if you are not a big business? Well, here are a couple examples:

If you own a flower shop, you might partner with a local chocolate shop to deliver a combination of products for those I love you, I am sorry, congratulations, or get well moments.  If you have a bicycle shop, think about offering a special to people who shop at the running store with a coupon or special promotional event with the respective shop.  For specialty ice-cream shops, partner with a local elementary school or swimming pool to blast your message. The options are unlimited but creating free marketing buzz should not only be easy and fun but it can also help you grow your market.