Yep, you heard me right… When was the last time you savoured that feeling the bum on the side of the road gave you when he indulged you with his smile? If you’re like most people, then it probably didn’t affect you, did it? Well, that’s what I’m talking about. Do you think he has much in the way of value? Do you think he is able to give you what you want? Nope, and you know what? They can’t be truly generous to most people because they’re often financially and emotionally poor. Believe it or not this is a concept which many small businesses don’t realize and due to this, it could be losing them thousands of dollars in profits…
Have you ever heard someone say to you, “I want to make a business which sells the most valuable goods at the cheapest prices – That will make EVERYONE buy from me!†Now, in theory this should work but in practice, competing on price will literally kill your profits and your brand value. Allow me to give you an example:
Make em’ work for it
At the beginning of the year a friend of mine, knowing that I love marketing, lent me some books. Actually, “some books†would probably be an understatement, therefore because I had so many of these books which were lent to me for free I didn’t value them enough to invest my time into reading them. Yeah, I could have knuckled down and churned through the lot of them – but they had no value to me because they were so easy to obtain and they were aplenty.
On the other hand, a few weeks ago I bought a CD off the Internet (more marketing stuff :P) and because I spent a lot of money on it, I really dug into it – I really HAD to get my “Value for moneyâ€Â. Now for that, I’m thankful. Not for the fact that I’m 200 dollars out of pocket but for the fact that due to the price I paid to obtain the product I valued it so much more then the 200 dollars I spent. So what’s at work in the customer’s mind here?
Consumer Conundrums
Often when consumers make a complex decision to buy something, they have to look beyond the product to make assumptions about the quality of the product and the value it will offer them. So there they are, making judgments on the packaging, whether other people recommended it, if it’s produced by a leading brand, if it’s priced according to the value it promises and so on and so forth. In fact there are so many variables to consider, consumers make a good deal of their judgments based on their emotions – especially for complex, low involvement purchases like clothes, food, phones and books.
It doesn’t hurt to be a little greedy or cocky…
Now, the moral to this story is that if you have a good product – Tell people about it. Price it as you preach it. Or at the very least, make it as if they’ve earned it. Ultimately, by offering customers a higher price (or perceived price), they will believe your brand to be of higher quality than the rest of your competitors. Not only this, but they will secretly thank you for providing them with more value. I think Carlton Draught sums this up in an ad I saw the other day:
“What is Gallantry? Is it standing for a lady or is it standing for Prime Minister and making her First Lady?” – Carlton Draught.
So SBB’er, go and have some fun, you’ve earned it ;).
Best of Luck Branding,
Robert Kingston.
There is a speed reading course that I want in a BAAAAAD way right now. I honestly think that I want this particular course because its price is through the roof! My assumption is that if it’s so pricy, it MUST be good. I know I could find a similar course for less money – but damnit, I WANT THIS ONE!
You are so right Robert. Who would’ve ever thought that increasing prices would mean increased consumer interest?
bizMAVERICK…
Brad Williamson
Hey, that sounds interesting…
I’m such a slow reader! Do those speed reading things really improve your speed and comprehension? I notice sometimes when I’m reading as fast as I can I lose track of what I’m reading and by the end of the page I have no idea what I have just read… Mind you thats probably after a good 5 minutes per page at my fastest!
It’s amazing how people look to the price to help decide what sort of quality they can expect to receive from the product! I mean logically, if you pay $5000 for a course you would expect it to be more valuable than a $500 course.
Furthermore if a customer receives the product and expects it to be of high quality then they will actively look for attributes in the product which convinces them so.
You can’t take advantage of it completely, otherwise you could lose some valuable customers – I mean I couldn’t sell you my pencil for $20 and say it features all the latest in writing technologies.
Good luck getting that speed reading course, I might look into it a little more…
Rob
Hey Danielle,
I’ve just been told that it’s not Carlton Draught – It’s James Boag! Wow… just goes to show how easily we can mix up brand messages. They really should have branded it better, a lot of other people I know assumed they were Carlton Draught too!
Oh well…
Rob, I’m glad there’s other slow readers out there! That’s a good question about how speed reading courses affect comprehension. I know when I try to read really fast, I miss a lot of the meaning. Maybe I’m old-fashioned, but I tend to think it’s a bit like eating a meal – you can’t savour the flavours when you gulp it down. I love the aspect of reading something and then pondering it for a while. (Brad’s probably yawning right about now ;))
Also, with the pricing=value theory, I think you’re right on in terms of having greater appreciation for it. But I also think there’s a “tipping point”…once it goes that bit too far I’m out. Also, if I feel something is overpriced I won’t buy it on principle. But that’s just me, maybe other consumers aren’t so stubborn 🙂
P.S. I love the new Carlton Draught ads. I haven’t heard the one you’ve quoted, but the ones I’ve heard have a down to earth element that makes them (and the product) so “likeable”.
Danielle
Ahh, that explains why the ad you mentioned didn’t seem to “fit” with the other two I’ve heard 🙂
I think brands get mixed up all the time (I know I get them mixed up) which probably says a lot for being consistent. Brief and sporadic ad campaigns, even if they’re great, probably don’t reinforce a brand the way that being consistent does.
Very true. Another side of the coin is, however with these days with Internet people can research more and if they can find a better deal for the same quality then they would go to it.
Just a little hint all the really rich people I’ve ever met can speed read whether they know it or not
Yeah, that’s true David. Although its mostly for those big purchases you make. Nowadays, with all the clutter out there people are just too lazy to give a damn whether they’re paying an extra $5 more…
And yes Pete, I’m learning to speed read :).