Oct / 09

The Psychology of Pricing in the Digital Age

Navatalk Blogging, News 0

Case Study: How Price Affects Purchase Decisions

Price *** The most talked about element of just about any product or service. Good value, or too much? High or low? A sign of the product quality, or lack of? Marketing puts the price at the centre of the process. There used to be the 4 Ps. Product, Price, Place and Promotion and the greatest of these is Price.

Why? Because the price is the dominant communicator. I had a client once that sold 4 pies for £1.00 in Dunnes Stores. That price sent out multiple messages. The quality of the pies, you wouldn’t expect to have the best cuts of beef at that price. The market. Who is going to buy this product? The place, wherein the store were they stocked, alongside what other brands? Promotion, the pies were a price message, that the store had pies at competitive rates.

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How do you know what wine to buy? There are so many vineyards, countries, grapes and colours that remembering from one wine or one week to another is tough. SO you want a good bottle to drink at home. Is the £6 bottle going to do, or will we treat ourselves to something a bit better, which is £8? We are going to a dinner party, so we need to bring a better wine to they don’t think we are cheapskates, so get one for £15. (The hosts will never know, and if you drink it late at night it is a waste of a fiver!)

Take coffee. Tesco has a tin, well packaged, at £2,95. It will make about 30 cups of coffee. Or a packet of ground for £4.00 that will make between 15 and 20 cups. We look at the shelf to get the best value and mentally quibble over 50p. Then we pop across the road, order a cappuccino and happily pay £2.80 (OK maybe not happily).

The biggest change in the digital age is that price comparison is available to us all. We go to shops and look at products, photograph them, record the brand names and model numbers, then we pop outside, Google them, and find out if the price in store is anywhere near the lowest available. If not then we go elsewhere or place an order online. What is noticeable is that a lot of the times the prices are almost identical, so the retailers, whether on or offline are checking their prices to see what they need to be selling it to get customers. It is also why retail chains are suffering, as overheads kick in to eat away at profits.

We have a new client, The Artisan Cheesemonger, a startup selling really wonderful cheeses. Sam or his son Adam will let you taste them, will tell you their progeny, and you will walk out with the cheese but also a good piece of conversation for when you serve or eat it. But it is not the same price as the cheese next door in Tesco.

So how does Sam address this? How does he become the cappuccino and not the tin of coffee?

Marketing, information, education.

The cheeses take months to ferment. They are transported from all over the world. They are made by experts often with generations of experience. The ingredients are nurtured to make the flavours sing. They are stored properly. They are very different from mass-produced cheddar. They taste wonderful.

All of these messages are going to play a part in the social content for Sam. Giving the customer a better knowledge of cheese, and why the cheeses in The Artisan Cheesemonger have a different price proposition than bulk cheeses delivered within Northern Ireland.

The same type of questions applies to most businesses, our own included. We are constantly finding that people undervalue what we do because they can get something very different for less. The people at Navatalk are experts in digital marketing, have passed numerous tests for Google and Facebook, have years of experience in marketing, have in-depth technical knowledge. We track all the activity. And deliver results.

But we are seen as a cost, not an investment. Numerous businesses want instant coffee, not cappuccino. They do not understand the variation in quality and the difference that makes. It is difficult to get them to taste our products like Sam gets potential customers to try a cheese.

But the outcomes are the same. Better ingredients, more experience, better results. So if you are in Holywood drop into Sam for your Cheese or Navatalk for your digital marketing.

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