Customers vote with their wallets and when they choose to purchase from you again speaks volumes about your services/products. It means you have the better price, quality, and value compared to your competition. This metric – the repeat customer – is how the market communicates to you.
So then how do you communicate to the market? Advertising aside, most businesses communicate through their price. It is in the price that the consumer is supposed to believe the reflection of quality and value are properly communicated when compared to your competition.
Yet, that is not always the case is it?
Age is just a number. It’s totally irrelevant unless, of course, you happen to be a bottle of wine — Joan Collins
A Tale Of Two Wines
Mmmm.... wine.
The region of where the grapes are grown, the year of the harvest, the fermentation process, and other factors are supposed to go into the quality of wine. Therefore wines from exclusive cellars have exorbitant prices and wines from huge vineyards are reasonably priced.
If you have attended a wine tasting class and/or you consider yourself a wine tasting snob (no offence as most wine-snobs are proud of the fact) then you are aware that the pricing of wines usually are inaccurate. Simply said: price means nothing when it comes to the quality and value of the wine.
That last sentence can be considered heresy in some circles. Okay, in most. Nonetheless it is true in the end. Many meals have been paired with fantastic wines that typically cost fewer than ten dollars a bottle. Whereas diners and wine drinkers wonder what all the fuss is about after they have dropped north of fifty dollars for a bottle of wine. They could not discern the different in taste.
The price means nothing in the communication of quality, taste and value (a great meal) to the wine drinkers market. Instead it is linked to the one human trait we all possess: the desire to show off. This is especially true to the more costly bottle of wines.
Perception is reality. — Lee Atwater
Price Communicates Perception
Most consumers, customers, and clients have been taught – correctly – that the pricing of goods in the marketplace reflects the quality, scarcity, and the value. It typically does when the products/services and your company match correctly with that price.
Adam Smith
This can be seen in many products from the Apple vs. PC, disposable cameras vs. Digital SLRs, and even in cars. When you compare a BMW to a Hyundai, they both get you from point A to point B. They both have internal combustible engines, they both have tires, and they both have some of the same standard features. Yet you are going to pay far more for the BMW than the Hyundai. The reason why is that you are buying in to the branding, myth, and perception when you handover a lot of that cash for that “German Engineering.”
Take a look at your business and the products/services you are offering. Does the pricing you have really match up with the brand image of your business? Are you the “German Engineering” or are you simply a dressed up overpriced bottle of wine? How does your price stack up compared to the competition?
What is your customers’ perception of you based on your price?
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