The Wrong Hero
Tuesday, May 4th, 2010Marketing messages must be great stories…
…about the true hero.
I wish I could remember the source of this elegant language for the person certainly deserves the credit for this incredible bit of wisdom. (more…)
Posts Tagged ‘price management’
Walmart: A Victim of Its Strategy
Tuesday, April 27th, 2010Walmart has reverted to lowering prices.
Is that an effective strategy?
Walmart’s recent price cuts indicate that its attempts to change its business model aren’t faring well. (more…)
Setting Prices
Tuesday, April 6th, 2010How do you decide what price to charge?
How well is that working?
As I sat down to write this piece the lyrics of an old Johnny Lee song, Lookin’ for Love, came to mind. (more…)
Flying Blind
Tuesday, March 30th, 2010Flying Blind
What does aviation have to do…
…with your pricing strategy?
Break the bonds of industry pricing!
Get compensated well for the value you provide.
Imagine that you’re a seasoned pilot. You’ve filed your flight plan when a massive snow storm hits. Visibility is zero and the winds are gusting up to 30 knots. Are you going to take off? Not unless you have a death wish, right? You know the dangers of flying blind.
Yet business owners fly blind time and time again. How? Let’s say that your competitor comes out with an improvement to its offering. Your sense that the enhancement is going to give them competitive advantage so you scramble to provide a similar enhancement. You just took off in a blinding snow storm.
First, you don’t know whether their customers, or yours, will value this enhancement. Unless your competitor raised its prices to reflect the additional value the enhancement provides and their customers are paying that price, you don’t know whether the enhancement has any value to the customer.
Second, many business owners give away these enhancements without ever asking for higher prices. Their rationale is that they’ll gain “competitive advantage” and garner a “larger share of the market.” How often has that really happened in your industry? Isn’t it more likely that there was little, if any, shift in market share?
If that’s true, your competitor drove up its cost structure without gaining any additional revenue. That means its margins just dropped. Worse yet, you followed them blindly. Your costs are going up as well, without the benefit of additional revenues. If that weren’t bad enough you just made additional investments to do so. Ouch!
It’s counter-intuitive, but following a competitor’s lead in enhancing their offerings without evaluating their approach and the impact it will have on their bottom line is the equivalent of abandoning your flight plan and taking off into a blizzard. The results can be devastating.
For more information on how you can command higher prices for your products and services, please post your questions or comments below, send Dale an email at dale@furtwengler.com or call him at 314-707-3771.
To see how counter-intuitive thinking can be applied to other business issues, visit Dale’s blog, The Invaluable Leader at www.furtwengler.com/theinvaluableleader/.
What does aviation have to do…
…with your pricing strategy?
Imagine that you’re a seasoned pilot. You’ve filed your flight plan when a massive snow storm hits. Visibility is zero and the winds are gusting up to 30 knots. Are you going to take off? (more…)
Do You Know What You’re Selling?
Tuesday, March 23rd, 2010Do You Know What You’re Selling?
Are you sure?
Are you really, really sure?
Break the bonds of industry pricing!
Get compensated well for the value you provide.
Here’s a test. Can you tell me what these well-known businesses are selling?
Mercedes Benz?
JCPenney, Macy’s and Nordstrom?
Anheuser-Busch?
Gillette?
Johnson & Johnson?
Based on my experience in working with business owners, here are the answers I usually get.
Mercedes Benz – luxury cars
JCPenney, Macy’s and Nordstrom – clothing
Anheuser-Busch – beer
Gillette – razors and razor blades
Johnson & Johnson – healthcare products
Were these answers fairly close to yours? If so, then I’m going to suggest that you don’t really know what you’re selling. Here’s why.
While Mercedes does sell luxury cars, what their customers value is the image enhancement that the Mercedes name brings with it. Certainly customers enjoy the luxury, comfort and safety their Mercedes provides, but the real value is that a Mercedes in the drive says “I am extraordinarily successful at what I do. Here’s the proof.”
Even though JCPenney, Macy’s and Nordstrom all sell clothing their pricing varies dramatically. How can that be if they’re all selling clothing? The reality is that they, too, are selling image – albeit varying degrees of image. The JCPenney image offers current fashion trends at affordable prices. Macy’s image is based on some designer names and more customer service than you get at JCPenney. Nordstrom’s takes image to a whole new level with its store’s ambience, attentive sales force and, as with Mercedes, brands that say “I’ve arrived!”
“The King of Beers” says it all. Anheuser-Busch is in the business of selling the idea of a premium beer. It doesn’t matter that people’s tastes in beer vary widely, Anheuser-Busch is selling that premium-beer concept and it serves them well. In China, their products are gaining market share despite staggering price premiums over the Chinese beers.
Gillette does sell razors and razor blades, but that’s not the secret to their market domination. They focus their attention on two value proposition for their customers – image (the best a man can get) and innovation. Every few years Gillette comes out with something new to enhance the comfort and effectiveness of their razors. A far cry from razors and razor blades, isn’t it?
Johnson & Johnson is a household name that breeds confidence despite its recent Tylenol recall. J&J has a long history of quality and quick, effective action to remedy problems that arise. The reason many buyers choose J&J products over competitors’ offerings is the confidence they have in J&J – in other words, its image. This image allows buyers to save time while shopping.
With these examples in mind, what are you selling? Is it the same thing you thought at the beginning of the article?
It’s counter-intuitive, but the key to commanding higher prices is understanding that it isn’t the product or service itself that attracts buyers. It’s the intangibles associated with the buying experience.
For more information on how you can command higher prices for your products and services, please post your questions or comments below, send Dale an email @ dale@furtwengler.com or call him at 314-707-3771.
To see how counter-intuitive thinking can be applied to other business issues, visit Dale’s blog, The Invaluable Leader at www.furtwengler.com/theinvaluableleader/.
Copyright 2010, Dale Furtwengler, all rights reserved
Are you sure?
Are you really, really sure?
Here’s a test. Can you tell me what these well-known businesses are selling? (more…)
