Feelings are facts and perception is everything when it comes to many things. But nowhere is this concept more intriguing than when trying to differentiate your product in the market place. You can have a great product but the public perception is that it is not and that makes job number one to fix the perception rather than the product. Too often we look at our tangible product and we try to innovate with new features and better performance as the only way to satisfy the needs of the user. This is great when you can truly do it, but sometimes the issue of price and the perception of value is really the best opportunity to innovate. Your customer doesn’t always need more performance they just need help choosing which product or brand to buy and want to have reassurance that they got great value afterword. Every buying experience is at least in part an emotional and psychological journey and that part of the product needs to be understood in order to truly be a product innovator. When a company like Apple has such great brand recognition in the market place it solves the problem of reassurance of value after the purchase because there is so much social approval. Sometimes, the average user is not able to truly discern the performance differences between brands, but an easy value measurement is price. (I am not technically savvy enough to even need half the features my computer can provide.) Some people are wanting reassurance that they got a great deal and want the product price to be low, in order to prove it to themselves and to be able to brag about it to others. That is one way to differentiate. But another buyer might want reassurance that they got the best value possible by buying the highest price, which must mean high value to them. These customers will use the higher price of your product to reassure themselves about the value and to brag about it to others. We all know that the reason to own a Ferrari in most places is not necessarily so you can get somewhere faster because many speed limits prohibit that, but it is bragging rights, image and the fact that you have access to that performance. It is visual proof to others but also to themselves that they are successful. Is a Sub Zero refrigerator able to refrigerate food 3 to 4 times better than a GE or Kitchen aid? Or is the price more of a product feature than the product itself?
Make no mistake, price is a very, very important part of your product. There have been numerous experiments about the affect our expectations have on real outcomes and it is very applicable here. What is the expectation for value your price is setting? If I attend a free class on marketing my expectation for results is not as high as it would be if I spent $2000 dollars and there is no loss to me if I don’t put it to work. On the other hand if I do spend the $2000 dollars for that same class I am more likely to make sure there are results that come from it so that I don’t waste my investment. It is a good exercise to ask yourself if the price expectation of your product is reaching the customer you want to serve? Remember, the higher up the value chain you go the more creative you can become with actual product features because you hopefully have the added profits to work with. People do expect more and pay more for brand name products than for generic brand products even when some of the generic products are manufactured by big brand manufacturers. Getting higher prices for my services will actually affect my quality because it enables me to spend the time to be more attentive to the customers’ needs and pay attention to details. (Operative word being pay because attention does have a cost.) So, price can actually influence quality from the production side as well.
Next time you want to create new innovative value in your product spend some time discovering how pricing can become a product feature rather than a necessary evil.
Make no mistake, price is a very, very important part of your product. There have been numerous experiments about the affect our expectations have on real outcomes and it is very applicable here. What is the expectation for value your price is setting? If I attend a free class on marketing my expectation for results is not as high as it would be if I spent $2000 dollars and there is no loss to me if I don’t put it to work. On the other hand if I do spend the $2000 dollars for that same class I am more likely to make sure there are results that come from it so that I don’t waste my investment. It is a good exercise to ask yourself if the price expectation of your product is reaching the customer you want to serve? Remember, the higher up the value chain you go the more creative you can become with actual product features because you hopefully have the added profits to work with. People do expect more and pay more for brand name products than for generic brand products even when some of the generic products are manufactured by big brand manufacturers. Getting higher prices for my services will actually affect my quality because it enables me to spend the time to be more attentive to the customers’ needs and pay attention to details. (Operative word being pay because attention does have a cost.) So, price can actually influence quality from the production side as well.
Next time you want to create new innovative value in your product spend some time discovering how pricing can become a product feature rather than a necessary evil.
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