Price versus value, cost versus value- Part 2

Apple is a perfect example of value in the mind of the user.

In my last post on this topic I had written about how value like beauty is in the eyes/mind of the user.

No one knows to exploit this better than Apple. You have seen photos of people queuing up in front of Apple stores hours before the opening to buy the newest iPhone to be launched.

I am not an iPhone user but we do use Apple computers at home. And when my last MacBook Air’s battery started giving me problems I decided to buy a new one. This was October last year. When we started looking, the first thing we noticed that Apple was intending to come out with a new processor based system soon. This processor would reduce battery usage by a fraction and performance was atleast 2 times more. So instead of immediately buying the readily available product we decided to wait because we saw value in that. Eventhough we also knew the price points would be much higher.

The M1 chip MacBook was launched sometime November last year in the US, but it was not available in India till April this year. And then the second wave of Covid hit India and everything was in lockdown. So again we waited. Finally we got our new Apple M1 MacBook Air in June end.

If you can create a position in the minds of the target audience, then cost becomes a secondary factor, it is the value that the customer perceives which makes all the difference.

Till next time then.

Carpe Diem!!!

Price versus value, cost versus value

differentiation, Marketing, Positioning, Product Management, Value, value proposition

This is a pertinent question in marketing or sales. I keep getting the statement – the price is too high – compared to what?

Does anyone going to a Ritz Carlton or a Four Season hotel say the price of the room is too high. Does anyone who is buying a Roll Royce or Lamborghini ever say the price is too high. For a lot of people the Mona Lisa is just another painting, but for a lot of others it could have huge value hence its kept under so much security unlike another painting in the Louvre museum.

I think its the marketing and sales teams’ responsibility to position the offering that they have, correctly. This does not mean that there won’t be competitive situations. Especially in technology marketing where the entry barriers are very low, the competition heats up very fast.

Even in technology companies though you will see that there are disruptors who come in and take away a large share of the market suddenly but companies like IBM , Oracle and others who continue working on giving more value to their customers and charging a distinct price differential.

The key point that needs to come out is Value. Like beauty lies in the eyes of the beholder, value is specific to the buyer. Unlike Gold which has a fixed value defined, most other things like houses, shares etc. all have relative value. For one person who is selling a share the value is less than the price he is selling it at, while the buyer is seeing more value than the price she is paying for it, hence she is buying it.

Similarly if the customer see the value that you offer for your product same as what someone else offers, then the only differential is price that the customer can work on.

One of the best ways to reduce the cost/price value argument is to educate the customer so she sees you as the authority on the subject. I have shared multiple posts on how education has eliminated the price discussion from the buyer’s mind altogether.

Other ways off course include things like the ecosystem – if you are part of a proprietary ecosystem than you have very little competition – IBM Mainframes , Apple and others have very strong ecosystems and the discussion on just price does not take place.

The key for any marketing or product management person is simple they have to be able to build the value of the product or service in the minds of the customer preferably through education. For the sales person its important to identify and understand the value that the customer is looking for before easing time on a deal.

As I said earlier “VALUE” lies in the mind of the person buying.

Till next time then.

Carpe Diem!!!

Marketing is Education – Part 5

differentiation, education, Marketing, Methodologies, Positioning, route to market, travel, Trust

In my first 3 posts I was talking about the concept of how education can elevate your position in the market. I have used consultants as examples, I have used Indian brands also. Yesterday I wrote about a French perfume company. Today I will talk about an internationally well known tourism industry brand Trip Advisor.

The best thing about TripAdvisor is that it never tries to sell you anything. You can go look at people’s reviews of hotels, places etc. You can figure out what people liked about a place, what were the best spots etc. All of this is very conveniently put up front. As a matter of fact if you will search about a given location or a hotel in a location – you will typically find Trip Advisor in the top 10 searches on Google. And this inspite of the fact that most of the other search results will talk about the cheapest fares etc.

Initially I used to look at the Trip Advisor ratings for a hotels. What were the other travellers talking about. Slowly I got hooked to the idea of going to the site for everything when I was planning a trip to a place which I had not visited in many many years.

Trip Advisor has a sister site called Viator. So while I was searching for the best places to visit, tickets and other possibilities in New York I also got an option to buy the Travel Pass from them. Guess what, I bought it from them.

If you go on the web to search, you would get a lot of deals giving the same pass at lower rates. But because Trip Advisor has created such a trust relationship because of their education and unbiased user reviews, I didn’t think of even looking for lower options. Now its a standard practice for me to see what Trip Advisor or Viator are offering , what are the user ratings and then buying it from there.

Now does it mean that everyone who comes on the TripAdvisor site also ends up buying from them or their sister site. Absolutely not. And that would be true of all education based methodologies. Not everyone will buy from you. But that would be true for any methodology / positioning that you use. You could choose to have the lowest cost methodology for your positioning, but you would still not get the whole market to yourself. These companies differentiate themselves with the education they offer and create what Jay Abraham calls as position of Pre-Eminence.

Since I like to work with and give business to people I trust, all the examples I have given, till date ,are of companies that have used education to create that trust with me.

Till next time then. See how you can use education to create a marketing pull for your product or service.

Carpe Diem!!!

Marketing is Education – Part 4

differentiation, differentiation, education, Marketing, Positioning, route to market

How many of you have heard of the perfume brand ….Fragonard

When we think of perfumes, the typical names which come to our mind are Nina Ricci, Channel, Givenchy, Boss etc. Fragonard…never heard of it, or at least I had never heard of it.

When we went to Paris, we had taken the Paris Pass. One of the coupons as part of the Pass was the visit to a perfume museum where they would show you how perfumes are made.

So we decided to take the tour because we had never seen perfume being made. They had various language guides and the moment they had a large enough crowd they would start the tour. Our guide was tremendous. Inspite of the fact that she was French, she spoke very clear English and explained the complete history of how the initial perfumes got made, then how the various flavours and fragrances are created etc.

After the history and the processes she spoke about how perfumes evaporate, how they should be kept, what kind of containers should be used, and the concentration levels if the perfume has to last long on your body.

All this information you need to understand was biased towards what they were offering. This is not to say they were giving wrong data. They were however showcasing data that got you oriented towards their offering.They also took up the issue of not doing mass advertising to create a brand awareness, head-on, and eliminating it as a objection, as part of the education process. This differentiation of using education rather than showing models has kept them in good stead. They have been in business for more than 100 years I think.

All the queries were so masterfully handled by the guide, it was as if she was an amazing teacher.

At the end of the tour then she came up with the offer, since we had spent time visiting them, only at that time (limited time / scaricity )from her (reciprocity)- because she had given all this education free of cost to us, quite a few of us ended up buying a lot of perfumes.

My family and I had not gone with any agenda to buy, we still ended up buying more than Euro250 worth of perfumes. And the bigger fact is that we didn’t have a buyer’s remorse, that we had been tricked. We were actually feeling so happy that we got such good perfumes.

As a sidebar – the perfumes are really good, they do last much longer than the other brands even in the hot weather of India because the concentrate level is much higher than others. Also since they are packed in metal containers , unlike most other brands which are packed in glass, these last much longer in the bottle also.

You see the benefit of the education they gave me, I have given you the exact things they taught me about what should be seen while buying a perfume. They have made a permanent client. Whenever I go to Paris, Fragonard….will be on my list of places to visit to buy perfumes.

Can you see how you can utilise education to create a strong image in the mind of the customer.

Till next time then.

Carpe Diem!!!