I’ve been wondering about something for awhile, can a higher price (which is considered by many people in business a weakness) actually be one of your greatest strengths? I believe it can. Although there is price sensitivity in every business and market, that just means that most businesses have done an extremely poor job of telling the story of “why” their prices are higher.
It’s not the consumer’s job to figure out “value” – if I’m shopping for a car, there is absolutely no difference between the same make/model/year vehicle from one dealership versus another. They came out of the same factory, produced by the same workers, have the same retail “price”, etc. So how do I determine where to buy it? Lacking any other information, it’s probably one of two factors: either overall price or monthly payment. And if most dealerships use the same financial institutions to finance the care, then that only leaves one: price.
It’s the same story for almost all consumer products – from TVs to Appliances to Toys. Price is really the only differentiator available to consumers. No wonder, we have allowed ourselves to be lulled into buying products from Wal-Mart, Target, Best Buy, Home Depot, Barnes and Noble, etc. – because if you buy only for price, then it’s about getting the lowest price possible for a product.
But what about Value? That squishy, undefined concept that makes us want to pay more for something? Is Value even important anymore? Do consumers value Value? I guess, there needs to be a way to communicate to your customers about your value (for Big-Box retailers it’s simple – it’s about price).
Do consumers value you giving your employees health insurance? What about a living wage? Being “green” or earth friendly? Would customer be willing to pay 10% more on something for those reasons? How about the fact that every product you sell supports worldwide Free Trade? How about a local delivery company using only “eco friendly” vehicles, even though it might increase the delivery and handling charges? And do you have to adjust who your customers are if you choose this route?
I don’t necessarily have any answers to these questions. But my assumption is that most of us in the business world are taking the easy route – assuming our customers just look at price. The challenge is dig deeper, get beyond cost as the reason people buy from us.