How Marketing Affects Pricing
POINT: Paul Williams
In many organizations, we marketers don’t play a role in setting pricing. That is determined by the product, sales, or finance teams.
However, our efforts can affect the perceived value of products and services.
That is, what people are willing to pay for something, based on what they feel it is worth.
While your company may produce a superior product, if your potential customers have no trust in your brand, you won’t be able to command a higher price. Your brand and reputation, in addition to quality and service are factored by customers.
A crummy website, no awareness due to lack of advertising, a sense that your company is too big or too small… Each of these affect perception. Each of these effect how much you are able to charge
COUNTERPOINT: John Moore
Pricing tells a story. There is always a story behind the reasons marketers choose to price a product no matter if the pricing strategy is high or low.
The common story behind many low-priced products is the company buys in bulk and passes on the saving to customers. A valid story, but an uninteresting one.
A more interesting story behind a low-priced product is told by IKEA. Customers get high design AND low prices at IKEA.
When it comes to charging high prices, having a great story is mandatory. The rule of thumb is: the higher the price, the richer the story needs to be.
The role marketers must play in pricing strategy is telling a story to match the price.
Apple is the poster child brand for telling rich stories to match its rich prices. The iPad isn’t the cheapest tablet on the market. Thus, Apple must tell a more interesting story in how the iPad improves one’s life.
For lower priced products, the story doesn’t need to be all that interesting. (Ahem, Walmart.) But high priced products must always deliver an interesting story to justify the higher price.