Espresso: James Watt, BrewDog: Why Price Laddering Is the Most UNDERRATED Growth Hack

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0:23So many challenged brands start as premium, and then they have to go across. And I think in the book you talked about price laddering as a way to kind of create perceptional value, which would actually drive more shoppers to the core, Punk IPA. could you kind of add some color to price laddering and how you used it across both on trade and off trade to create that perception that allowed brew dog to become premium craft but mass market i think price laddering is one of the most underrated tools in business and again with the business that i work with and help if their pricing is flat it's like the first thing i kind of work with them on to do so firstly what is yeah firstly what is price laddering just so yeah great question okay so um let's just take cans of beer if all our cans of beer cost two pounds we would have a flat pricing strategy and not a ladder pricing strategy if some of our cans of beer cost 150 if there was a special kind of beer that cost 125 if there was a few cans of beer that cost 195 if there was some cans of beer it cost 225 if there was a few cans of special limited edition beer that cost 325 and if there was these crazy one-off limited edition beers that cost 6 7 eight nine ten even 20 pounds that is price laddering so you can use that to give the customer choice give the retailer choice give people different entry points into the brand as well and a lot of the times because what we do is a little bit niche it's a little bit more expensive people's like no i'm not paying that so to give people an entry point to have a rurog experience that then can trade up to our most profitable things and at the moment we do loads with lost lager which is a little bit more accessible from a price perspective 35 of those people go into buy Hazy Jane or Punk IPA where our margin profile is significantly better but then also being able to offer the geeks, the aficionados, the connoisseurs something that gives them this kind of crazy immersive experience be it a beer that's Asian Scotch whiskey cast for 12 months or a beer that's made with special ingredients and a Belgian yeast that we got from a monastery in Belgium so you've got that kind of depth to the experience of there which gives credibility to your main mass market options because you're doing something that's geeky and cool and niche and kind of hype in that space as well so i think any business to have that laddering but i would also have that ladder in a trust not just price point i would have that ladder in a trust accessibility as well so what are kind of some more accessible things not just in terms of price point but in terms of the product offering because like so many small companies what they're doing it's niche they're trying to find a kind of core community they're trying to get mass market acceptance on the fringes which by default you're doing something which is kind of more elevated kind of more bespoke more artisan you've got to have a few hooks for people that love their brand that want to kind of come into your universe that are not quite so difficult to get in as well and that kind of helps you kind of draw the pond you're fishing and so i think ladder and important in terms of price but also important in terms of accessibility so with the accessibility so so yeah so these little hooks is that is that almost trying to convert say having a skew that you're going to get the someone who buys a fosters 100 so if you look at our portfolio at the moment we've got a beer called black heart that's to convert people who drink in us we've got a beer called lost lager that is to convert people who drink premium laggers heineken um heineken astrea peroni that's it we've got a beer called cold beer which is to convert can we're mass market beer drinkers into what we do so we've got those different now any category that we're in we want to do something that is so amazing from a historic quality perspective fantastic ingredients great taste great liquid non-pasteurized non-filtered super fresh super amazing but we want to give those people who are starting off there a way into a universe a way to kind of enjoy the passion that we have for a beer as opposed to being a closed shop and hey we're just for geeks we're just for aficionados we're just for somebody that wants a seven percent ipa that's got so much bitterness and hops it's going to hammer the pours out of your tongue yes and then also does it work so say say i don't know what the rrps are but let's say say punk ipa is three quid right can next to a foster's are two quid next to a proni at one pound right that looks fucking expensive but if you put it next to like another another say another skew of brew dog hazy jane which is four quid suddenly the the punk ipa looks much cheaper and it just drives more to the core it so what's a hundred percent there's so many kind of psychological experiments there's a classic one that's been done in the u.s with a menu and uh it's got a main course at 20 in the menu and that's the one that most people want now if all the other things in your menu are$16 and$18, the customer's value perception is very expensive.

4:59If the other things in your menu are maybe$18,$20,$22,$24,$26, the same$20 all of a sudden feels like much better value to the customer and all you've done is created some margin-enhancing opportunities for yourself and provided a better perception. Thank you so much for listening to That Espresso. I hope you enjoyed your morning coffee and are ready for the day. let's be having you boy and please do subscribe follow the podcast share this espresso on whatsapp if you liked it and also there's a link to our newsletter in the show description i spend 15 hours toiling and writing this bad boy it's full of wonderful wisdom from the biggest names in food and drink you're not going to get these in a business book so please subscribe and thank me later