One byproduct of the economic recession is that companies are afraid to make money.

That’s not to say they’ve given up on maximizing profits, just that they’re trying to minimize the public perception of that profit, and keep any increase in fees as low profile as possible.

Recent examples of this include the Netflix pricing model changes, Bank of America’s $5 debit card fee and Verizon’s $2 bill pay fee.

In each case, the company raised the amount that it charges customers, received a wave of negative feedback from those customers (often through social media) and then reverted to the previous pricing structure to try and keep its customers happy.

The reason these price increases are met with negative feedback is that consumers are smarter. They know more about a company’s product, they know more about a company’s costs, and they have a better idea of what they should be paying for the product or service a company provides.

Just look at the recent changes J.C. Penney made in response to the smarter consumer. According to CEO Ron Johnson, while discussing his company’s new simplified pricing strategy,

The customer knows the right price. To think you can fool a customer is kind of crazy.

In this new economic environment, any company that appears to be making excess profit, or appears to be taking advantage of any opportunity to make excess profit, is villainized by a battered public that now believes most companies are trying to take advantage of them in any way possible.

This public reaction can cause problems for companies that legitimately need to raise prices in order to survive as a business, or to ensure their future survival. Markets change, rules and regulations change, and the competitive landscape changes, all of which can require a company to adopt new costs, or a whole new pricing structure.

So what should a company do when it needs to increase the amount it charges customers?

First, be upfront about the reasons for this new pricing structure.

Have supply costs changed? Has the competitive landscape shifted? Have new regulations forced the entire industry to change and adapt to survive?

Tell the customers.

Second, be upfront about why you need to raise prices instead of adapting to these changes in some other way.

Does your product rely on a single supplier of a specialized good? Has a competitor undercut you with a business model that’s not sustainable in the long term? Are the new rules and regulations that you’re now facing unavoidable for everyone in your industry?

Tell the customers.

Lastly, be upfront about what the increased income from the new pricing structure is going to be used for.

Is the increased revenue going directly to a supplier to cover increased costs? Are you building a stockpile so the company can survive short term shifts in the market? Is the price increase being used to pay new fees and regulations?

Tell the customers.

They’re going to find out anyways, or they’re going to assume the worst, so you might as well steer the conversation in a favorable direction, and make sure everyone is talking facts, not fiction.

If you can’t answer these questions publicly, either because you don’t need to raise prices to stay in business, or because you’re just trying to give shareholders a few extra pennies or the c-suite another day off, then maybe it’s time to re-evaluate the decision to raise prices in the first place.

Of course this will necessitate carefully crafted words from the Marketing and PR departments, and I’m not saying you need to share your entire business model with your customers, but an honest explanation can go a long way towards building trust that can pay dividends in the long run through an increase in loyalty between the customer and the company.

At the end of the day, it’s all about trust.

If you raise prices, and then lower them again, consumers will not trust you. They will think that you either didn’t need to raise prices in the first place, and were just gouging them for extra cash, or you did need to raise prices, and are going to find another, less obvious way of getting that money from them.

For example, look at this Tweet from Harry McCracken:

When Verizon says it won’t charge $2 for online payments, it’s saying it’ll get $2 out of you in some less obvious manner. Some victory.

— Harry McCracken (@harrymccracken) December 30, 2011

Canceling an already announced rate hike might put a stop to the PR backlash, but there are still long term consequences that include a net reduction in trust, as your customers are now weary of any change that you make. In the future, even if your intentions are pure, customers will no longer give you the benefit of the doubt, and will instead assume that you’re taking advantage of them and doing what’s in your own best interest, not theirs.

The only way to combat this issue is to be upfront and honest about the situation that you’re in, so think long and hard about any increase in price, because once you go down that road, you better be prepared to finish the journey.

The post Pricing: It’s All About Trust appeared first on The Future of Ads.

Launching a new brand into a crowded market is never easy. However, if you’re focused with your message, and use the tools now at your disposal to spread that message far and wide, then you just might have a shot at gaining some decent exposure. Mix in fun, whimsy and a bit of mythical storytelling, and you’ll follow in the footsteps of The Kraken Rum, which recently set a new high bar with the launch of their Caribbean black spiced rum.

The Kraken is the most fearsome of all sea monsters, that lives up to 3,000 feet below the ocean surface. This dreaded behemoth has been known to attack ships, dragging god-fearing seamen to their deaths. The largest shipment of Caribbean black spiced rum was said to be brought down by the Kraken. The rum was named thusly, as to being as dark, strong and mysterious as the ink of the beast.

The foundation of The Kraken’s marketing success was their focus on design, which gave them both a target audience (design geeks) and a messaging platform to build off of. The unique name, bold aesthetic and double handled bottle help to create a memorable brand, and set them apart in the minds of consumers from the supermarket aisle full of rums that merely focus on the results of drinking their product, or the history of their company to move units. By keeping their look and feel strong, yet simple, The Kraken has managed to not clutter their brand with excess design and distraction, and instead let the elements that form the essence of their brand shine through.

I emailed Charmaine Choi, who was responsible for much of The Kraken’s launch campaign, and asked about the development of the brand. She replied, “The Kraken Rum’s brand really came to be when we developed the voice and look of it out of the packaging. We wanted to make sure the style of writing and art only made the packaging come to life.” Her explanation makes perfect sense in the context of her agency, Dead As We Know It, which she describes as “a Brooklyn-based, creative-only advertising agency that conceives and produces communications, in all mediums, from the traditional to the uninvented, with the sole purpose of developing unique brand characters that deeply connect with people.”

Many companies claim to have a strong brand, but it’s usually just the combination of name recognition that comes with age, a specific color that they call their own, and perhaps a logo or other design element that they have clung to. With Kraken however, their brand is not just a collection of elements, but a whole style and persona that is both unique, and instantly recognizable. There’s a feel to Kraken that you just don’t get with many products, and while it’s polarizing, it’s also something that consumers can latch onto and really claim as their own.

The first time I encountered Kraken Rum, they were in the midst of a PR blitz that caught the eye of NOTCOT, resulting in not one, not two, but THREE separate posts on the bottle, the gift guide, and the unboxing. This was no doubt due in large part to the fact that NOTCOT received 1 of 50 silk screened press kits that were sent out to a highly targeted list of bloggers, which contained evidence that The Kraken truly exists. Each kit included a personalized letter, Kraken teeth, Kraken ink, quill, Kraken poster showing its enormous scale, scientific journal, a DVD of Kraken tales, and a bottle of the Kraken Rum itself.

According to Charmaine Choi, “The press kits were really done out of a labor of love. We didn’t have a huge budget and we all wanted to make something that we would want ourselves as an art piece. Everything was silkscreened by hand in house, from the box to the poster to the DVD covers. Conceptually, the items in the box were in support of the Kraken’s true existence. At the end, we really wanted the viewer to have something that was one of a kind and each kit had its own unique ink smears.”

By using their brand’s strong design elements to create objects that would stand out from the crowd of me-too swag giveaway, The Kraken ensured that their communications would catch the attention of target bloggers and reach the intended influencers. They also put enough time and enough effort into the marketing collateral that I’m sure bloggers felt at least a little compelled to write about the product, if nothing else than to thank the brand for all of their effort, and for selecting them to be the recipient of such an impressive kit of materials. These days, it’s pretty much a no-no to try and buy influencers outright, but that doesn’t mean you can’t put a little money into the lure you’re using to catch the big fish.

In addition to catching the attention of bloggers, The Kraken press kits also helped to establish and spread the Kraken backstory, which was an important part of setting the brand apart from other spirits. By creating an aura around the brand and its origins, they were able to move the conversation away from tastes and flavors, which liquors typically chain themselves to, and instead focused on the unique experience of Kraken rum, which does a much better job of incentivizing a trial. As a consumer, you can be easily turned off by a liquor that sells itself as a flavor that’s not your usual preference, but it’s hard not to try a brand that challenges you to tame a mythical beast.

To launch the world’s first 94 proof black spiced rum, we developed an integrated campaign based on the sea-beast of myth and legend. We developed an “accurate” history and, quite possibly, real world from which The Kraken Rum, may indeed have come. We created “scientific” movies, a scientific journal and an interactive website to educate the public. – Charmaine Choi

My second encounter with The Kraken was when their online store was discovered by a group of design blogs. Kraken, realizing the demand that had been created by consumers who saw the press kits and lusted after the content, had decided to take that brand aesthetic and apply it to a variety of products that would further expand their design. With unique items like a Moleskine notebook (what better way to get the design geeks swooning?), shower curtain, desk lamp, and handkerchief, Kraken wasn’t just hucking t-shirts and coasters like a typical alcohol brand. Instead, they were avoiding the common trap of forcing crap on unsuspecting customers who hold on to it just long enough to throw it away in the nearest trash bin, and instead created a brand that people not only appreciated, but actually went out of their way to purchase items with the Kraken look and feel on it.

Lastly, to put the icing on the cake, Kraken released an iOS app that deftly combined a branded experience with game mechanics and an animated, comic book style history lesson on the beast that is The Kraken. Called “The Simulation Application for Nautical Maneuvering”, it’s billed by the makers of Kraken rum as a “near-accurate simulation, so that you may experience the perils they encountered in bringing their fine products to the world.”

With the brand already established as a force to be reckoned with in the liquor world, Kraken took the bold step of replacing their homepage (and as a result, their search results and inbound links) with a single page preview of the game, directing potential customers not towards additional information about the product, but instead towards an experience where they would learn additional information about the brand itself.

With the unique aesthetic and clever copywriting that is a staple of the brand firmly in place in both the game’s design, and its marketing collateral, Kraken once again turned the focus away from taste, and towards something that would set them apart. Phrases like “state-of-the-art 19th century technology”, “hand-etched art, etched by real hands” and “fall-off-the-edge-of-Earth accuracy”, combined with hand-drawn artwork that uses .gif style animation to create fun visual Easter Eggs, work together to further the brand and its push towards becoming not just a spirit, but a whole persona for consumers to adopt.

In the end, Kraken’s constant dedication to looking at the ‘brand’ not as a cost center, but as a differentiator in the market, and thus worthy of a few extra dollars here and there and a bit of experimentation from time to time, resulted in the creation of something that not only sells a product, but actually manages to sell itself as an aspirational lifestyle.

Photos Via: NOTCOT

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