Sunday, September 27, 2009

Price Points



The PriceSpy model takes a new twist - research widely, purchase as cheaply as possible. Dixon's, a price discounting retailer sends out an only marginally tongue in cheek message to customers. Of course Dixon's will have been affected by the web themselves.

The challenge for retailers who sell at full margin is to close the deal before the customer has a chance to go elsewhere. What kind of mechanisms and strategies are available to them?

Make it personal.
In the good old days customers were known by name to vendors. Of course that's not always practical in the 21st century, but it would be possible to harness technology and strategies to make customers feel they are indeed valued by the retailer. An old favourite amongst restaurateurs is to greet guests with 'Nice to see you again…" (even if they have never been to the place before), it elevates the customer's feeling of being special. Not being one to advocate disingenuity, I only use the example to make the point that people like to be acknowledged personally. When social connections are made then there is an emotional tie between the participants in the transaction.

VW PhaetonYears ago I worked on the Volkswagen advertising account. One the most interesting marketing initiatives was the introduction of the ill-fated Phaeton, a super luxury vehicle from the makers of 'The People's Car'. When a buyer ordered the Phaeton they would be sent a key to their vehicle with an invitation to be present at its 'birth' the final moments of its construction at the Die Gläsernen Manufaktur (The Transparent Factory) in Dresden. When the owner passed through the factory gates the key would send a signal and an elaborate welcoming procedure would be initiated. The whole process would not only reinforce both VW's commitment to the buyer's status and good taste, but also the sophistication of the technology inherent in the car.

Add value.

Adding value to a customer's experience doesn't necessarily mean giving them something tangible. One of the aspects of the ad (above) that spurred my thinking on this subject is the implication that the shop assistant (or clark, if you are North American) is actually indifferent to you - the pitch implicates that you ought not to be in their domain - a populist/tabloid pitch. The truth is that anyone's money is as good as anyone else's - a dollar/euro is a dollar/euro whether it is wielded by your mum or a footballer's wife. Your job as a marketer is to get your money out of their purse, whoever they are.

Of course value, as anyone who has studied Zen and the Art of Motorcycle maintenance will know, like 'quality' is an a priore concept. It is subject to prior experience and expectation and will, therefore, mean different things to different people. If you know you are paying a higher price than Dixon's will undoubtedly charge, what are the things you will value? Do I have to carry my purchase home - or will you deliver? If I buy a new flat-screen TV that is bigger than an iMax will I have to install it myself? If the picture quality of my new Sony Bravia is the reason I selected it will you help ensure I have the best settings and reception at home?

If I have chosen a Phaeton, or a Lexus with the idea that it sets me apart, makes me a member of an exclusive club of people with better discernment and taste, will you facilitate introductions to other people with similarly good taste through exclusive events and information.

If you are a wine merchant competing with low cost volume wine in the supermarket will you share your expertise with me, so my post purchase dissonance is balanced out with an uncanny knowledge about the habits of the winemaker or the specifics of the terroir. The Wine Vault in Auckland's Grey Lynn suburb does a fine job of this via Wine Vault TV

Make premium service exclusive.

If there are additional benefits for shopping with you (per above), merchandise them. Don't leave customers with the assumption that a higher price is simply extra profit for you. Reposition the competition with your own meme that emphasises why to buy from a store that doesn't just 'stack 'em high and watch 'em fly' (if I might indulge in a nostalgic retail expression.

Of course highlighting the added extras might also take a leaf from the Internet marketing book. To receive the care and attention of our sales staff you must register with us. This could take the form of discrete technological process - log on to the store's iMac and, fill out a short from and become a priority customer then and there. Old fashioned sales technique might also be of use. Qualifying a prospect before spending valuable time with them (our service is a premium offer remember), "if we can match you up with the right TV today sir, how will you be paying - cash, visa or would you care to apply for our store credit scheme' that will help sort the tyre kickers out from the people who genuinely intend to buy.

When all is said and done customers are people. They are as vain, insecure and proud as the next person. They want to be liked and treated with kindness and respect and not viewed simply as an economic unit. People will, ultimately, value what you value. If you take service and product knowledge for granted then so will your customers. Apple computers have created a theatrical retail concept that helps promote the idea that everything in store is worth the premium that Apple seems to command. The concept of Genius Bar in store - knowledgeable staff who will help you to choose a product or overcome a tech problem is, well, genius. It synthesises almost every point I have made.

Remember, wherever you sit on the price spectrum - no one buys anything from people they don't like.

Dixon's ad via Eaon Pritchard's blog Never Get out of the Boat

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