Price Sensitivity

With gas prices higher than they’ve ever been (and the obvious consumer discontent associated) it got me thinking about the threshold that exists for price increases. Gas is obviously a commodity that people need to get around, but at what point do people get so frustrated with the cost that they look to alternative forms of transportation? In some cases high prices are bearable and not worth the additional effort necessary to change a daily routine. However; there has to be a threshold at which people decide enough is enough. In most cases that threshold will probably be dependent on the cost of switching to a different brand or in this example, method of transportation.

Often publishing companies that operate on a subscription model battle with the best approach to annual price increases. As a product’s readership decreases the price needs to increase to maintain consistent revenues. But at what point will the customers that purchase the product look for an alternative because the cost of the product is simply no longer worth the value they receive in return?

The Van Westendorp Price Sensitivity Meter is an approach to researching pricing that asks the following 4 key questions to set a range within which people will continue to purchase the product in question:

1) At what price do you begin to think a product is too expensive to consider?
2) At what price do you think a product is so inexpensive that you would question the quality and not consider it?
3) At what price do you think a product is getting expensive, but would still consider it?
4) At what price do you think the product is a bargain?

In the digital age, one thing publishers have struggled with is putting a value on “content”.    Most consumers expect that the cost of a book be significantly less on a tablet because there are no costs associated with a physical product.   By implementing a Van Westendorp Study, you can more effectively use customer feedback to set prices in the range that optimizes sales and keeps customers satisfied.

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Guy Kawasaki: Enchantment

In the video below, marketing guru Guy Kawasaki talks about his latest book “Enchantment:  The Art of Changing Hearts, Minds and Actions”. Guy discusses what he views as the pillars of enchantment; likability, trustworthiness and great cause.

It’s clear that while marketing contributes to the bottom line, it’s great products that are the cornerstone for any company’s success.  Marketing can optimize the success of a product offering, but without quality products it’s unrealistic to expect enchantment be achieved. What makes your products great?

The Key to the SME

The key to the SME?  Turn-key, easily implemented solutions.

Small to medium sized enterprises generally do not have the time or the man power to focus attention (or scarce resources) on functions that fall outside of their “core business”.  In these types of organizations the marketing manager may have responsibility for the company’s human resource function, or the CFO may also serve as general counsel.  With more responsibility, each employee is forced to prioritize the tasks they believe contribute most significantly to the bottom line. 

Companies that cater to the SME market need to provide affordable solutions that save their clients’ time.  Groupon has found a way to turn group buying power into an opportunity for consumers to test products and services that they would not typically have the opportunity to experience.  Group buying networks exist for some B2B products and services as well, but could a similar concept be applied to a wider range of offerings?  While this could account for the “affordable” part of the equation, easy implementation and fufilment might be more difficult propositions.

The SME continues to be a relatively underserved market.  Though they do not have the same resources as a large multinational, they will spend their money on solutions that they believe will improve their businesses.  With over 2 million small businesses in Canada – they may still be worth your time.

History Channel on Four Square

Is anyone still convinced that location based services like Four Square have little application for marketers?  While the correct way to use the services most effectively may not be completely worked out, the potential is promising.  Time and greater use of the applications will go a long way in determining exactly how and to what extent they will be used to promote products and services going forward.

The History Channel is engaging viewers through Four Square as a way of promoting their April 25th, twelve hour television event, featuring the story of “how America was invented”.   Four Square users around the United States are encouraged to ‘check in’ to historical landmarks in their cities to unlock free tips (historical facts) and to earn a limited edition History Channel badge.  Those that participate are also entered into weekly draws to win history channel prize packages.

While it is still clearly a learning process as companies try to integrate location based services into their promotional offerings, those that work out the kinks early will more quickly determine how to connect best with their customers and reach wider audiences around the world.

The Internet and Search Engine Optimization

This weekend I came across some pretty staggering statistics regarding the state of the Internet. With internet use and information sharing more prominent than ever, search engine optimization (SEO) has become an increasingly important initiative for companies hoping to take advantage of the masses searching online.

There are many ways to improve your search engine optimization and many people claiming to know the most effective ways to do it. As an organizational decision maker it is important that you understand different techniques being used by SEO marketing professionals and what your company can do doing to improve its online positioning.

For example, we should all be aware of the differences between black hat and white hat SEO and the implications of their implementation within an online marketing strategy.

Black hat tactics, such as ‘stuffing’ Meta Tags and hiding links, tend to achieve quicker results, but are less effective long term. Search engines will look out for spammed Meta Tags and are likely to penalize those who engage in black hate SEO regularly. White hat techniques are generally free of deception and conform to search engine guidelines. While they may take more time, the long term results will have a much more positive impact on your company’s goals. A few examples of white hat tactics include; quality content, keyword research and effective keyword use and quality inbound links.

For a more full comparison of these techniques and the ethical implications of black hat SEO, click here.

It’s extremely important that you take the necessary steps to improving your company’s search rankings, but also important to remember that there ARE ways to do it without hiring a consultant. Increasing your company’s online presence can be as simple as engaging in social media platforms and creating backlinks to your corporate site. Many organizations are missing out by not engaging in social media because they don’t recognize the hidden search related benefits of being involved in the web on a wider scale.

Justifying the Price of an E-Book

I read an article today which suggested consumers are upset that e-books would be priced anywhere near the price of a hard copy.  Part of the argument was that publishers no longer had to spend money to put a physical product together.

“Consumers see unfairness in publishers pricing of e-books compared to physical books when they subtract out the raw materials, printing, binding, and shipping of e-books. It’s hard to make an argument against such obvious conclusions, and publishers have not done a very good job of making such an argument.”

While I can understand how this might be a person’s initial reaction, we must not lose sight of the fact that a book’s real value has never been in the material with which it was made.  For a publisher to mass produce a book, production costs are admittedly low.  I have never gone to a book store because I really wanted to get my hands on paper and a hard cover, though.  I have; however, purchased books for the unique stories and perspective that they provide.

It is the content that will always be the most valuable piece of a book, whether it is online or not.

Different tools will continue to enhance the way we view and absorb information, but the content will always be the focal point of a publisher’s offering.  Strong content justifies a fair price and the fact that it is now being made available online should not reduce its value.  In fact, search functionality and the transportability of an e-book might even justify a higher price point.

The consumer perception of a book’s value is more likely to be affected by the huge amounts of free content being made available online today.  While some publishers might use this as justification that price decreases are necessary, I’m a strong believer that value should be measured by what a product provides beyond alternative options.  Generally, a publisher can provide a more comprehensive product at greater convenience than information a consumer can find online.

Advancements in technology and online navigation; however, are rapidly changing the way publishers do business.  Going forward, the publishing industry will need to continue to find ways to provide additional value to consumers to ensure they justify current standards for pricing.

Using Social Media for Customer Interaction

In a time when many companies have begun providing information for ‘free’ through blogs, webinars and other online channels it can be difficult to put real a value on published content.  There is a fine line between providing information for free and providing additional value to existing and potential customers. The consumer perception of something that is free is that it’s more disposable than something they’ve paid for. Providing too much (or the wrong content) for free could act to devalue your existing products and services rather than promote your company’s position within its industry.  It’s important that you understand these online channels as not only an opportunity to build your brand, but as an opportunity to provide better value and improved service to your customer base.

Online channels are special because they provide an opportunity for communication and interaction to scales never before achievable offline.  As I pointed out last week, 81% of holiday shoppers read customer reviews online.  What people can learn about your products and your brand online is an important part of the selling experience and acquiring new customers.

Do not be afraid of negative comments or feedback.

Many companies shy away from what are actually huge opportunities to build a more prominent presence online, simply because they are concerned that negative feedback will damage their reputation.  The truth is, if customers have a problem with your product, they’re probably talking about them anyways.  By avoiding feedback, you’re missing an opportunity to improve your products and learn what customers really want.  Truly progressive companies are the ones that aren’t afraid to tackle criticism and feedback head-on.   If customers have insights that aren’t being properly communicated, one could actually make the argument that, by avoiding regular feedback, organizations aren’t properly servicing their customers’ interests.  In most cases, customers will appreciate a company’s efforts to get to know their needs and will be happy simply knowing that they are being listened to.  

This Pizza Tastes Like Cardboard

Domino’s Pizza is an example of a company that used negative feedback to improve their product offering.  Despite being ranked first in pizza delivery and value, feedback received by customers helped management recognize the need for an improved taste and renewed product image.  One of the most frequently heard comments they received was that their pizza tasted like cardboard.  Domino’s has since gone back to the drawing board to create a new, better tasting pizza they believe will help improve their product’s reputation. They’ve embraced social media outreach to help reinvent their brand (see video below). If they hadn’t asked though, they never would have known what people really thought. 

For more on the online project visit:  www.pizzaturnaround.com

It’s not enough to listen to only the people who happily purchase your products on a regular basis, because they’re probably going to buy your products anyways.  When it comes to social media we need to embrace the opportunities it creates to get to the heart of our customers problems and figure out what we can do to alleviate their pain points.