As CEOs, we often consider price discounts and sales to grow market share but, often, the opposite is what sells. As a graduate student at Northwestern University in the Medill IMC marketing program, I have studied the price to value relationship and found two articles you need to know about.
According to Maureen Morrison and Matthew Creamer's latest article How P&G, Ford and Wendy’s are Redefining Value from adage.com, those companies are trying to shift consumers’ perception of value from a product. The companies want to command premium prices for products which could offer convenience and high quality. The reason why they don’t choose the low price strategy again, because they’ve found value speaks directly and louder to what benefits a product or service could add to customer’s life. A good example in this article is Tide, a premium laundry detergent brand of P&G. Although its retail price is 35% higher than any cheaper offerings’ in Walmart, consumers still choose it when they find those bargain brands won’t offer the same effectiveness of cleaning clothes and they have to use three times of the dose of the bargain brands to reach the same effectiveness.
Another view of the Tide’s is from Jack Neff's Tide Pods Winning $7 Billion Detergent Wars By Redefining Value in adage.com, value means efficiency more than price. P&G innovative Tide Pods has already made a slash in a saturated new-product world where hits are increasingly hard to come by. They are the most expensive product in the laundry category but it has increased its sales without using any promotion. The successful sales performances have been contributed to the Tide Pod’s innovative technology and marketing strategy.
From these two articles, I have concluded three actionable recommendations for you to implement right now:
1) Technology Adds Value
Even in the tough times, consumers are still willing to pay for added value. Besides the cleaning efficacy benefits from Tide’s Pod’s innovation, the repackaging of its detergent into one-pack-per-load pellets is a smart technology innovation and benefit to the consumers because they help to avoid the messy measuring.
2) Quality Differentiates
Consumers would pay more because they can’t find the substitute for the same high-quality product. Greek yogurt is expensive than standard yogurt, but people would like to open their wallet a little bit more because of its higher levels of protein. In this case, value doesn’t mean the cheap yogurt. It is the premium yogurt, which will make you feel more healthy and live your life better.
3) Offer Convenience
In the laundry industry, we already have the liquid and power detergent. But Tide Pod’s has brought a new category in it-unit dose. They offer convenience to college students and apartment dwellers who need Tide’s Pod’s most for its convenience. The new target group would like to pay more for the convenience purpose.
Innovative marketers must have good insights of what their consumers need and how they could offer more added values to charge more. We can’t always be involved in the rug of price war in the long run, which seems to increase the sales volume in the short run but downgrade the brand value in the long run. We should take good advantage of technology innovation and product quality improvement to retain the old consumers and attract new ones. Being consumer-centric and valuing the customer experience are both important in today's marketing world.
Jin (Jerry) Zhu is a M.S. Candidate in Integrated Marketing Communications at Medill, Northwestern University. Her three-year experience was in product and branding management in fashion and luxury industry. Her focus is on brand strategy and marketing analytics. She will be graduating in December 2013. Follow her @Huaijerry
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