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Being Clear on Tiers



On 2nd December 2020, England emerged from its second Covid lockdown into a 3 tier system.


On 20th December, a fourth tier was added.


If you were in tier 4, you could exercise outside. Alone. You could meet one person from another household outside. But no more. You couldn’t go to the pub.


If you were in tier 3, you could exercise outside. With others. But you had to avoid “higher risk contact activity”. Up to 6 people could meet. Outside. You could go to the pub. To get a takeaway.


If you were in tier 2, you could exercise inside. But only if there was no interaction between different households. Up to 6 people could meet. Outside. You could go to the pub. But you could only drink whilst having a “substantial” meal. Who can forget the scotch egg debate?


If you were in tier 1, you could exercise indoors. But the rule of 6 applied. You could meet people inside and outside. Again, with the rule of 6. You could go to the pub all day. As long as you ordered drinks from your table.


These were just a fraction of the rules. There were a lot more. And they kept changing.


Most people wanted to follow the rules. But the different rules in the different tiers were almost impossible to work out.


Why are we talking about this? Tiering in the grocery industry used to be really clear. Most retailers followed a “good, better, best” model.


But things have changed. In recent years, the tiering in many categories has become blurry.


Lots of different brands – brand leaders, challenger brands, tertiary brands, private label. Lots of different products. Lots of different pack sizes. Lots of different promotions.


This has led to much more choice. But much less clarity.


The less clear things are, the harder it is for shoppers. It increases the chance that they will make a choice based on price. Buy a cheaper option.


The more clear things are, the easier it is for shoppers. It increases the chance that they will make a choice based on value. Buy a better option.


So, how can you get clear on tiers?


Make it simple & intuitive. Making it harder for shoppers = too many products at too many price levels. Making it easier for shoppers = fewer products at fewer price levels.


Laundry detergent is a good example. Tiering is format led. Shoppers pay more for more convenient formats. Power = good. Liquid = better. Capsules & Pods = best. Crisps is another good example. Tiering is flavour and texture led. Standard Walkers = good. Sensations = better. Pipers = best. Discounters take this a step further. There are just two tiers. There is good stuff – e.g. fabric conditioner. Then there is better stuff – e.g. premium fabric conditioner. A lot of shoppers buy the better stuff.


Be Different. Making it harder for shoppers = small differences between tiers. Things that shoppers won’t see. Making it easier for shoppers = big differences between tiers. Things that shoppers will see.


Gillette is a good example. Fusion looks and sounds very different from Mach 3. Gillette Labs looks and sounds very different to Fusion. Nescafe is another good example. Gold Blend looks and sounds very different to Original. Azera looks and sounds very different to Gold Blend.


Shoppers will only pay more for a better product if it clearly looks like a better product.


Give Tiering Shortcuts. Making it harder for shoppers = over explaining the differences between tiers. Making it easier for shoppers = simple shortcuts that instantly signal the differences between tiers.


This could mean giving tiers a name. In Pet Food the really good stuff is called “advanced nutrition”. It could be through pack design. The body language of Fairy Platinum acts as a shortcut for performance. It could be through the product itself. Tomatoes on a vine act as a shortcut for better quality.


The simpler the shortcut, the more likely shoppers are to buy the better product.


Stay in Your Tier. Making it harder for shoppers = promotions that disrupt price tiers. Making it easier for shoppers = promotions that maintain price tiers.


Peroni is a great example. They promote often but at a shallow discount. Meaning they stay in their super premium tier. Bigham’s is another. They only promote with a shallow discount (e.g. £1 off a £9 product). They have a meal deal at £15. They can give shoppers value AND drive category and brand value. Sensations are a great example of how you can come off the deep discounting drug. From regularly being sold at half price to a maximum of 25% discount these days.


Shoppers won’t pay more if you keep encouraging them to pay less.


Tiering in a category often starts out being pretty simple. But it can quickly become complicated.


The harder you make it for shoppers, the less likely you will drive the behaviour you want.


The people making the Covid rules couldn’t even follow them. Right, Boris…?


Feel free to forward. Have a great weekend. Speak to you in a fortnight.


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