For many stock categories, having a somewhat higher price is part of establishing a capability image in the minds of those who buy and use the product. Companies which price their products based on costs will often miss this point, and hurt sales volume by having prices that are too low. How can you use price and non-price methods to improve the sales and profits of your offerings?
In the 1970s, Kentucky Fried Chicken normally offered two kinds of chicken, one produced agreeing to Colonel Sanders' original method and the other made like the typical "crispy" fried chicken found throughout the southern United States. Since the crispy chicken had been offered, both products had been priced the same. The concept behind this advent was that the company's competitors normally sold their crispy products at lower prices, and the less concentration on the price differential the better.
Black And Decker Dewalt
Original method was verily less costly to make than the crispy product. Colonel Sanders had designed his stock well. He had designed the stock to taste best and to be easier to prepare. Some people in the enterprise had been considering cutting the price on original recipe. This would lessen the price disparity with competitors.
The store investigate results showed something quite different. Customers felt that original method chicken was a best offering, and concept that it was worth a superior price. They reported being confused by why crispy and original method were priced the same. They also had some doubts about the capability of the crispy product, which created doubts about the capability of original method if it was sold at the same price.
A test was made of charging a five percent superior for original recipe, along with putting a blue ribbon on the containers. Volume increased for both original method and for Kfc. Consumers reported that the original method capability rose. And it may well have. Knowing that customers had to pay more for it, the cooks may have paid more attention. This victorious program ran for many years before parity pricing in the middle of the two products was reintroduced by a new administration team.
Introducing a premium-priced brand can make a similar determined impact on adding profitable store share. Black & Decker found this out when it added the more costly DeWalt line of movable power tools. While many people who do home-improvements want the least costly stock that will get the job done, others take pride in their work and enjoy having the feel and look of top capability tools while they are working. And those tool lovers will happily pay a hefty price superior for that sense of being well-tooled.
By offering both brands, Black & Decker can be more competitive on price with those who care about that highlight of a stock offering while being more competitive on image and capability for those who are more sensitive about those factors. As a result, the enterprise was able to gain store share and improve profits even faster.
Where can you use price changes to reinforce a capability perception?
Copyright 2008 Donald W. Mitchell, All rights Reserved
change Prices to Make Your Offerings More inviting in Non-Price Ways
No comments:
Post a Comment