While I find it easy to remember that pricing is part of the product, I forget that you probably can't reach the correct price without some experimentation. So the best way is to produce various configurations of the product and see which one appeals to your target audience.
It is impossible to demonstrate the value of your product without a clear communication of its price.
Principle 1: Pricing is Part of the Product Suppose I place two bottles of water in front of you and tell you that one is $0.50 and the other $2.00. Despite the fact, that you wouldn’t be able to tell them apart in a blind taste test (same enough product), you might be inclined to believe (or at least wonder) whether the more expensive water is of higher quality.
Here, the price can change your perception of the product.
Principle 2: Pricing Determines Your Customers Pricing doesn’t just define the product but also your customers. Building on the bottled water example, we know there are viable markets at both price points. The bottle you end up picking defines the customer segment you fall in.
Principle 3: Pricing is Relative In their seminal book on Positioning – The Battle for the Mind, Al Ries and Jack Trout describe the concept of a product ladder which is how customers organize products into a mental hierarchy. Your job is understanding what alternative products occupy the top 3 spots in their mind. These alternatives provide reference price anchors against which your offering will be measured.
Alternatives can be real or extrapolated. In both cases, they help when applying the relativity principle.
Advertising is not an efficient way to find customers. When businesses like Apple and Verizon are throwing off a ton of cash, it makes sense to use that cash to cement awareness of their products and services.
For the rest of the world, acquiring customers is a dialogue. You need just enough attention to get a conversation going. And you can't converse with 100 people, so why spray thousands of messages out there? Yes, we need to promote our businesses, but start where you live, and make sure your friends and family understand your business. Once they can explain it to others, then you've begun advertising.
This article from Kontny offers sound advice on many issues confronting an entrepreneur.
I remember sitting across from the owner of a bar in my neighborhood. He didn’t have a need for the product I was selling, but in that conversation he outlined exactly what he had a need for that he would buy from me. That conversation was great feedback to help me mold who I was trying to help, and if I had given up on that idea, this guy had just given me the next thing to work on and he would have been my first customer.
New research by Professor Byron Sharp, which is valid, shows that the bulk of purchases do not come from "loyal" customers. His marketing theory is that business growth must be based on attracting the attention of non-loyal customers and non-customers. He also spends quite a lot of time making fun of marketers who promote brand loyalty as the path to success.
So I feel compelled to respond. If you share my fascination, do watch this 15-minute video from Professor Sharp.
You'll notice that his criticism is that marketers become focused on creating and catering to "brand fanatics." But also notice that he recommends marketers focus on the "light buyers." So he isn't really saying "don't market to customers." At the point of purchase, most people are influenced by "top of mind" awareness. In the Financial Times, Ian Leslie points out that it comes down to support for traditional mass advertising, away from highly targeted (digital) campaigns.
As a marketer, I'm amazed at how Sharp and his supporters have taken well-known facts about the economics of marketing and turned them into a platform for ridiculing marketers for trying to make marketing more effective.
There's not a marketer in the world that wouldn't place a commercial on the SuperBowl if she could afford it. Higher brand awareness is wonderful, solving so MANY of our growth problems.
Sustaining a brand is not a simple procedure of building brand awareness and availability among the potential users. Using the resources we have, we have to find leverage which will allow us to grow profitably. Converting light users to heavy users is a strategy even Professor Sharp can endorse. The most cost-effective way to do it is to find out exactly who those light users are and target the marketing to them. Oh wait, that's customer marketing. Hmm...
Sharp’s first law is that brands can’t get bigger on the back of loyal customers. Applying a statistical analysis to sales data, he demonstrates that the majority of any successful brand’s sales comes from “light buyers”: people who buy it relatively infrequently. Coca-Cola’s business is not built on a hardcore of Coke lovers who drink it daily, but on the millions of people who buy it once or twice a year. You, for instance, may not think of yourself as a Coke buyer, but if you’ve bought it once in the last 12 months, you’re actually a typical Coke consumer. This pattern recurs across brands, categories, countries and time. ...
Brands are not the rich sources of differentiation marketers like to think of them as, but short cuts through the complexity of decision-making. Most consumers aren’t aware of, or interested in, the difference between Nescafé and Kenco and don’t want to spend longer than they need to thinking about which they prefer. They just want to get coffee and get home. Marketers are usually surprised to hear this and find it hard to accept — they like to imagine that people who buy their brand are deeply attached to it. But the data show that even people who regularly favour one brand over others will pick a competitor if it happens to be more easily available or cheaper that day. In the words of Sharp’s mentor, Professor Andrew Ehrenberg: “Your customers are customers of other brands who occasionally buy you.”
GameStop is always getting grief from market analysts who say they will fail as did Radio Shack with their mall stores and their focus on selling games in boxes. But the 32 million people participating in "PowerUp Rewards" provide GameStop with up-to-the-minute data about customers. Over the last year, GameStop has followed these customers into mobile:
GameStop first launched its mobile app in 2014. But as [VP, Multichannel Jason] Allen says in the webinar, GameStop listened to its customers and then delivered what they really wanted — not what GameStop believed they wanted.
“Our customers were asking for three to five things they wanted to do on the app,” he says.
These included the ability to look up trade-in value for games and consoles, finding the nearest store, and other simple capabilities that allowed GameStop to develop one-on-one relationships with some of its most loyal customers, says Allen.
Says GameStop CMO Frank Hamlin...
Loyalty 360: GameStop is Thriving in Brand Loyalty, 2015-Nov-11 interview by Jim Tierney:
“There is an organization-wide level of attentiveness to the attitudes of our core customers, particularly as it relates to console gaming,” he said. “So as a result, we have to keep our ear to the ground. Through the power of our rewards program, we are tracking 75% of our sales and, through that, we have a strong electronic relationship with most customers...."
And GameStop continues to build customer engagement:
Mobile Strategies 360: GameStop Refreshes its mobile assets, 2015-Oct-28 by April Berthene:
Also new in the GameStop app is the onboarding process. GameStop asks a consumer when he creates his profile in the app to choose his favorite gaming platforms. GameStop then personalizes the app for him with those games’ theme colors and backgrounds, and suggests new games for him based on what he likes.
We recently went through the painful process of creating journey maps for a newly identified set of personas with one of my clients. Persona development was not tough because feedback from a recent increase in communications had demonstrated that customers had different information preferences. We couldn't afford to verify with research, but we did layout a foundation to future research.
Mapping turned out to be very messy and confusing. Finding free or low-cost tools was hard. Several meetings with staff who interact directly with customers was required to identify touchpoints and customer requests. Then sorting things out into a map was VERY confusing.
Nevertheless, when completed, the maps helped us quickly sketch out two items: the major communication needs of the customers, and the overlooked opportunities for the organization. What a relief! It would have been helpful to have had the tip below when we started...
Most professionals are confused about CRM. They see it as a piece of software that helps them collect information about customers and remind them what to do next. Actually, customer relationship management is a mature business practice, similar to financial accounting. In fact, you could think of your company's CRM as the way you track your marketing and sales results.
Recently I was shocked when talking to a CRM consultant about working with this team. I asked him who his top customers were, and he fumbled around, pulling up his accounting software to see the customers table. If we believe in CRM as a practice, then our most important customers should be pushed at us by our applications so often, that the names are seared into our mind, in current rank order.
In the article below, Brian Solis is talking about companies needing to make all our process more supported by integrated, always available software. NOT because it will make our business more efficient, but because our customers expect it.
But at the heart, digital transformation is the story of how people are changing.
Whether we realize it or not, the way customers and employees make decisions, the technology they use, and how preferences and expectations evolve or detour, are stories for us to discover. These are the insights that guide the transformation. Technology adoption is not the solution: it is merely an enabler for transformation.