We’re in the middle of a 4-part series about the 4P’s of marketing and how they relate to local and online companies. In case you missed Tuesday’s post, the 4 P’s are a framework that have guided marketing decisions for the last 50 years in most successful marketing firms and companies.
However, they’re good for every manager in an organization to be familiar with and have a clear knowledge of, as they relate to all the areas of a business. Today, we’re talking about Price. Now, price is probably pretty intuitive and obvious to you already, but have you considered how it affects your branding and marketing?
In the words of Joe Cannon (author of Essentials of Marketing):
“Price is the amount of money charged for the something of value. Price should include an understanding of costs, various tiers of pricing, discounts and allowances, etc.“
With that in mind, price is more than the sticker that you put on your merchandise or the landing page you filter prospects through. Price is a fantastic indicator of how your customers (and prospects) view your brand, store, etc.
You don’t go looking for a porcelain vase at a dollar store. Even if it were the best vase the world-round had to offer, you (and almost anyone) would have a hard time buying that it was, in fact, the world’s best-made vase.
The same rule applies to high-end items. You know that Gucci purse you (or your wife) have been lusting after? Is it REALLY worth $3,000? Did they really spend almost $3,000 on materials? Unlikely. But there are some big spenders out there that own it, and the price means it absolutely must be quality, right?
Price tells people how quality your item is in relation to your competition. If you’re significantly lower in price, than a sub-conscious decision is made that it’s likely made out of cheaper materials. If you’re priced significantly higher, then experience tells us that it’s likely made with more care and hand-selected materials.
This is one of the many reasons why daily deals can be devastating to a business. When you send out a daily deal, you’re telling everyone that you’re targeting that your product is really only worth half of what your normal pricing represents. It’s a dangerous slope to start down.
So, keeping your pricing in mind is essential to ensuring that your customer is getting the right message. Whether it be a “freemium” model like Flickr, or keeping your prices slightly higher or lower than the guy around the corner, you have to keep the psychological impact of your prices in mind.