How Do You Know You Just Wasted $4.5 Million on a Super Bowl Ad

is super bowl advertising worth it
While most of you watched the Super Bowl last night, I was tracking the game of Facebook (my Twitter feed just moved too fast) – mostly for mentions of Super Bowl ads. And, if Super Bowl advertising success mapped to mentions on Facebook, Nationwide won, hands down.

Now, you might ask why an ad that created so much discomfort was my pick for the winning Super Bowl ad, it’s because folks mentioned the ad so much. It doesn’t really matter that folks didn’t like the ad or thought it was a real “downer”, they talked about it. And, 2 days from now, the association between Nationwide and a dead kid will fade, leaving only the memory of having seen Nationwide mentioned a lot by people you know and respect.

Question: What is success for a Super Bowl Ad?

This is really the $54 Million question — how do we define success of any ad — a Super Bowl ad, in this example?

By certain metrics, a Super Bowl ad, even at $4.5 million, is a deal. For that $4.5 million, you get over 100 million viewers (or 200 million eyeballs). Certainly, that number doesn’t approach the 1.25 billion users on Facebook, which begs the question of why advertisers don’t just scrap their Super Bowl ad in favor of spending $4.5 million on promoted posts on Facebook (and I’m sure Mark Zuckerberg lies awake at night trying to figure out this conundrum).

Which brings us back to our initial question — how to define the success of a Super Bowl ad?

Super Bowl ad success

Obviously, the ultimate measure of success for a Super Bowl ad (or any ad) is whether it makes the cash register ring. And, some Super Bowl advertising hit a home run (sorry to mix metaphors) when it comes to ringing the cash register.

Apple’s 1984 Super Bowl ad capitalized on the book, 1984, by George Orwell and saved the brand from the debacle cause when John Scully (and the Apple board) thought running a technology company like a soft drink business (Scully was formerly at Pepsi) made sense.

Coke hit the ball out of the park with their commercial featuring “Mean” Joe Green during the Steelers heyday.

ROI of Super Bowl ads

But, overall, the ROI of a Super Bowl ad is a mixed bag with some winners and many losers. GoDaddy, for instance, produced the worst Super Bowl ad for several years running and their misstep this year (scrapping their planned commercial at the last-minute when faced with overwhelming criticism from animal rights groups led to a last-minute replacement that fell flat — again).

According to CNBC, perennial winners Budweiser and Coke pulled of wins again this year, with their cute ads we won’t forget any time soon. Of course, with the pressure both face from competition, this might not be enough to save the brands from their downward spiral (Coke faces pressure from waters and teas as health conscious consumers swap out high calorie drinks and Budweiser faces threats as the market falls in love with craft brews).

Yahoo Sports hated my choice of Nationwide as the winner because it was a downer. Others recognize what I did — that folks are talking about Nationwide specifically because the ad stood out and did it in a positive way. Time will tell which of us is right.

Remember, the goal of a Super Bowl ad is to make money, not friends. Just like the popular QB on your high school football team often traded his cleats for a hard hat and the geeky nerd ends up owning a multi-billion dollar company, it’s not popularity that gets rewarded in the long run, but skill. Putting all your marketing effort into creating a popular Super Bowl ad might fade from memory when it comes time to open your wallet while a more memorable ad moves the brand into your consideration set where it influences decisions far into the future.

The changing tone of Super Bowl ads

In the past, funny ads won the hearts of Super Bowl watchers and pundits. In yesterday’s game, advertisers focused on going straight to the hearts with ads full of positive (and negative) emotions.  Recent research suggests these emotional tugs pull at our collective wallets and storytelling reigns supreme as an advertising technique that gets us to buy.

Several Super Bowl ads worked on our hearts yesterday, especially Coke’s effort to highlight the devastating effects of digital bullying and the NFL’s commercial countering recent publicity about domestic violence.  Unilever (Dove) and Budweiser produced ads with less of a social message, but still hit an emotional cord with viewers.

Another change in Super Bowl advertising is social integration. For instance, the Budweiser ad had 42 million views before the kick-off of yesterday’s game.

Surprisingly, more folks watch the Super Bowl for the ads than the game. I remember when I first started teaching asking our A/V department to take my VHS of the game and edit out the game, leaving just the commercials. They thought I was insane. Now, 78% of respondents said they watch for the ads, not the game, according to USAToday.

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5 Tips for Helping Your New Product Score Big!

new product
Courtesy of CES

As we’re embroiled in the circus that is CES (consumer electronics show), I thought it made sense to give some tips on how to help your new product score big. So. let’s dive right in.

Tips for helping your new product score big

1. Solve real customer problems

Of course, I could be done at this point, since the biggest single factor in new product success is meeting customer needs, but that wouldn’t be much of a blog post.

Consumers don’t buy products.

I know that sounds insane as we all know consumers buy products and it’s this factor that ensures our survival or failure.

But, consumers don’t buy products. They buy solutions.

The first step in creating a successful new product that flies off the shelves is to start by solving a consumer problem.

What do consumers need? By all means, don’t ask them or you’ll get some gobbledy gook that’s meaningless. Consumers just don’t know what’s possible and it’s not their job to think up new products for you. Sometimes they can’t even articulate their problems because, without a solution, they don’t often think about something as a problem.

A good example is the new lift gate on many SUVs and Minivans that opens using your foot or by pushing a button on your key fob. If you asked consumers about their biggest problem with these products you probably didn’t get that it’s hard to open the lift gate with your hands full of kids and groceries. But, watch them for a couple of days and you see them struggling — a big problem.

Ask consumers about what they need and your new products will also be derivative rather than transformative. Derivative products require a strong brand image and expensive marketing if they’re to have any hope of succeeding, while transformative products can come from 2 guys in a garage with no marketing budget.

If I see one more startup pitching a dining app, I’m gonna scream. Grubhub and several others own that market. Unless you have something transformative, a derivative product enhancement isn’t gonna fly against the $$$ they’re investing in advertising.

If you’re a big brand, like Proctor & Gamble, you can develop a derivative new product like Tide Sensations to build on your powerhouse brand (and still flop). But, if you’re like most startups, you can’t afford a mistake like that. Even if Tide Sensations were successful, it’s unlikely its sales would have resulted in a strong ROI.

Instead, take a page from the Apple playbook and give consumers products that solve problems they didn’t know they had. Take the iPhone, for instance. iPhone was so successful it survived rampant criticism that the phone element is almost useless and other features were, at best, substandard. Part of iPhone’s success is certainly due to the reputation of Apple for “cool” products, but much of it is based on first mover advantage — iPhone made the market for smartphones when none existed.

Now, if you’d asked the average mobile phone users if they wanted something to connect them to the internet and allow them to play fun games on their phones, most would likely say no. An even bigger group would have nothing to say if you asked them how to improve their existing mobile devices. But Apple execs were smart enough to see problems we faced in our daily lives, problems they could solve by creating a transformative product that combined traditional phone features with the things we needed most from a laptop on the go.

Witness the power of transformative new product development. Facebook did the same thing — Zuckerberg and his buddies wanted to find women (hot women) to date — like almost any red-blooded 20-something male. His first attempt failed because it created more problems than it solved. His second attempt, Facebook, flew around campus as each man invited his friends to the experience. Today, Facebook boasts over 1 billion users.

2. MVP

MVP stands for minimum viable product.

Let’s say you discover a great problem and develop the perfect solution. Asking consumers if that’s something they want is fraught with danger. Asking them if they’d be willing to buy it is even less likely to produce accurate results.

Instead, develop a prototype representing an MVP and test it out with real consumers to validate your idea. Even though you’re solving a real problem, you may need to tweak your idea based on this customer feedback. Not only will testing result in a much better fit with your customers, it helps dramatically in convincing investors to provide working capital to get your product to market.

3. Protect your product

You need to file for patent protection because anything you created can be copied by someone else. And, if you’re a tech startup, Google or someone can come in an recode your new product, putting their cadre of smart developers to recreate your solution in a couple of hours instead of the weeks it took you to create the original.

I know it’s expensive, but hire a really good patent firm, don’t use your cousin the tax attorney. I think the phrase: “penny wise and pound foolish” was created for just this case.

4. Marketing is not an option

Money comes into the firm in 2 ways — and only 2 ways. You either borrow it (or get it from investors, which still places restrictions on the firm) or you make it. There’s a limit to what you can borrow, but you can make an infinite amount of money. Making money requires effective marketing (not selling) and tracking to improve marketing performance of your new product.

And, unless you have about 10 years of marketing experience, don’t try doing it yourself (see above about hiring an experienced patent attorney). Despite what many seem to think, marketing does have rules and tools. It’s really expensive to discover those rules by making mistakes rather than hiring someone who already knows them.

If you really have a tight budget, hire a consultant to develop strategy and provide oversight, then implement the marketing strategy yourself. Bring the consultant on early in the process to help identify problems using social media and other conversations — such unstructured data is where disruptive, transformative new products come from. Involve them in the development of your idea and in testing your MVP. Then, have them create a marketing strategy that bootstraps your existing resources to build interest in your new product and stimulate sales.

Likely that strategy involves using content marketing (the new SEO), social media marketing (especially engagement that amplifies your messaging), and building relationships with customers that drive loyalty. You can implement these strategies internally (if you have time) rather than paying an agency to do them. While this isn’t optimal, it can save you a ton of money.

On a routine basis, bring the consultant back to review the market performance of your new product — not just sales, but intermediate steps along the customer journey. A good consultant uses these metrics to suggest tweaks to your initial strategy focusing efforts on what’s working and using performance to identify additional strategies that might improve performance.

5. What’s next?

Lather, rinse, repeat.

Certainly you’ll want to carefully monitor what consumers say about your new product and make improvements on it to better fit consumer needs. But, you should already be thinking about the next transformative new product you’ll develop. Instead of resting on your laurels and spending all the profits, resolve now to recycle a portion of your profits back into the next new product.

Need help?

We welcome the opportunity to show you how we can make your marketing SIZZLE with our data-driven, results-oriented marketing strategies.  Sign up for our FREE newsletter, get the 1st chapter of our book – FREE, or contact us for more information on hiring us.

Hausman and Associates, the publisher of Hausman Marketing Letter, is a full service marketing agency operating at the intersection of marketing and social media.

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Are You Pushing the Right Emotional Buttons?

in-store sales from tweetsproduct categories suggest appropriate strategypushing the right emotional buttonsDespite what you learned in your economics class, we’re really not all that rational. Pushing the right emotional buttons nearly ensures a successful sale.

If you don’t believe me, maybe you’ll believe science. In his studies of folks whose emotional brain centers were damaged, but had fully functional rational brain centers, Damasio found emotional damage made it impossible to make decisions – not just buying decisions, but all kinds of decisions.

Peter Noel Murray, PhD goes on to say this about why consumers prefer brand names:

A nationally advertised brand has power in the marketplace because it creates an emotional connection to the consumer. A brand is nothing more than a mental representation of a product in the consumer’s mind. If the representation consists only of the product’s attributes, features, and other information, there are no emotional links to influence consumer preference and action. The richer the emotional content of a brand’s mental representation, the more likely the consumer will be a loyal user.

So, instead of being the rational utility maximizers envisioned by economists, consumers are a bundle of emotions about the products we buy and pushing the right emotional buttons ensures a successful sale.

Pushing the right emotional buttons

According to Geoffrey James at INC, consumers respond to 6 emotional buttons:

  • Greed
  • Fear
  • Altruism
  • Pride
  • Shame
  • Envy

Of course, sometimes the right emotional buttons involve more than 1 of these six.

A more science-based attempt to understand the right emotional buttons breaks down emotions into 3 types —

  1. Reptilian emotions such as sexual arousal and aggression
  2. Individualistic emotions like curiosity, boredom, and surprise
  3. Social emotions including love, guilt, shame

Whatever the emotions, we know pushing the right emotional buttons works.

Look at Apple. Why do millions stand in line to overpay for the newest iPhone or iPad, when similar products sell for less? This, despite the fact that, arguably, Apple technology isn’t always the best option. Part of the answer lies in the long-term strategy of Apple — to be simple and intuitive — thus avoiding frustration.

Part of the answer lies in humanizing the brand. I mean, take a look at this ad comparing an Apple to a PC and you’ll see how effectively Apple evokes an emotion of trust in Apple products. Plus, the attractiveness of the “Apple” versus the stinginess of the “PC” visually reinforce positive emotions about Apple products.

 Using the right emotional buttons to motivate buying

Obviously, humans aren’t machines and they don’t respond automatically when you push the right button — not to mention that machines don’t have emotions. That’s why traditional advertising aimed at mass markets is challenging. Not everyone responds to the same emotional button.

Mindlessly pushing emotions and thinking you’ll send sales through the stratosphere isn’t gonna work. Instead, you need to understand your target market and their values. Then, combine emotion with those values to hit a home run.

Like Dove.

What could be less emotionally evocative than bath soap — and not some celebrity-endorsed expensive bath soap. Just humdrum, boring bath soap.

In hitting on the campaign for real beauty, Dove pulled at emotional heartstrings and meshed with the values of their target audience — everyday women. Many women are concerned that the media present an idealized image of what a woman should look like and that these images make real women feel unattractive and damage the self-image of millions of young girls. Instead of talking about soap — totally devoid of emotion, they talk about how beautiful real women are — something their target audience feels. And, soap flew off the shelves.

If you want the sell your brand, the first step is figuring out what makes your target market tick. What’s important to them?

Then, make your target market “feel” something about your brand. Don’t spend all your effort creating reports showing your brand superiority, make your target audience feel your brand is “for them”. History is littered with the corpses of superior products that didn’t survive while their less adept competitors thrived. Don’t fall for that trap.

You don’t have to hit your target market over the head in your emotion-driving efforts. Sometimes images are much more powerful in pushing the right emotional buttons in your target audience. For instance, Coke used a campaign a couple of years ago featuring families gathered around the dinner table with a bottle of Coke positioned prominently. Later made into a series of TV commercials aired around the globe, the message embedded within the theme of family togetherness translated into every language. In an age when families often don’t have time to eat together or hide behind individual screens, the emotions locked into the family gathering still have tremendous meaning.

Social media and emotion

Just as images evoke emotion, celebrities symbolize emotions. When the sexy star of Private Practice asked” When you turn on your car, does it return the favor” in a Cadillac ads, she’s evoking primal emotions of sexual arousal and when the District Attorney from Law and Order suggests we consider TD Ameritrade, we trust him. In each case, the actor is imbued with the emotions from the character they portray.

In social media, we talk about micro-celebrities — folks who show up in your social feeds so often, they begin to become celebrities. Just like actors in traditional entertainment, micro-celebrities gain a public image and we form an emotional bond with them. Micro-celebrities turn their status into $$$$ for themselves and the businesses they represent. Finding influencers who believe in your brand and harnessing their influence to create positive emotions surrounding your brand does more than a 1000 studies showing your brand’s superiority.

Add to this, the power of social networks to work our emotions. I mean, take a look at your Facebook feed right now. I’ll wait. Are you back?

If your Facebook feed looks like mine, right now there are posts about the poppies for all those who died in war, some really cute baby pictures celebrating premie day, some kids and parents mugging for the camera, and, of course, a cat. Need I go one.

A veritable cornucopia of emotion!

We’re now primed for positive evaluations of whatever product we see promoted (or advertised — if we’re adventurous or bored enough to look in the sidebar). Of course, we have want these products.

But, brands can go even further in priming the emotional pumps on social networks by engaging with folks online. A little validation of your complaint or recognition of your efforts to talk to the brand go a long way in pushing the right emotional buttons.

Need help?

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Hausman and Associates, the publisher of Hausman Marketing Letter, is a full service marketing firm operating at the intersection of marketing and social media.

 

 

 

 

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Brand Strategy 101

brand marketingbrand marketingunique selling propositionWhat do Apple, Coke, HP, Oreo, McDonald’s, Wal-Mart, P&G, Starbucks, and Nike having common? They’re all iconic brands. These great brands stand out from competitors and are household words across much of the planet.

What do you need to build a great brand strategy?

But, how did they become great brands?

Will they always be great brands?

Building a great brand strategy

Building a great brand strategy has little or nothing to do with logo design, despite the contentions of thousands of “branding” agencies whose main product is logo design — or brand names. Great brands take careful and consistent marketing strategy, with logo design comprising only 1 small part of that strategy. Relying on your logo to propel your brand is very expensive.

David Aaker has this to say about iconic brands:

Brands are an accepted part of our daily lives. But some brands seem to transcend their product or service categories to become part of the popular culture. What distinguishes these iconic brands from the rest of the pack, and what can marketers learn from them?

How does a company go about building a great brand strategy to be like these iconic ones?

Great brand strategies all share 3 things:

1. High quality

It goes without saying that all great brands provide great quality, not just from the perspective of performance, but in terms of solving consumer problems. While simply providing high quality isn’t enough to make a great brand, no company creates a great brand without providing consistent high quality products (or services). In marketing, we call is a necessary, but not sufficient condition for being a great brand. Deliver high quality as part of your brand strategy.

2. Unique product offering

Brand strategy requires careful consideration and follow-through on delivering a unique product offering.

You don’t have to think very hard about the iconic brands listed above to detect their unique product offering (in marketing we often call this the brand’s unique selling proposition – USP or value proposition – VP). Sometimes, the USP has little or nothing to do with the brand’s core product.

Starbucks is a great example of a company offering a USP having little to do with its core product — coffee. Instead, Starbucks’ USP is its cozy store environment and corporate culture that provide a welcoming “third place” — home, work, Starbucks — for folks to linger over a cup of coffee, work or meet friends, of simply waste a few minutes between appointments. They have comfy chairs, clean bathrooms that are never locked, a table to work on, a roaring fire in the winter, and friendly employees. Starbucks also offers affordable luxury — selling overpriced coffee which allows us to feel like elite celebrities.

Forbes attributes the prominence of iconic brands like Apple and Nike with their USP designed to celebrate the user, not the brand.

The importance of creating a USP is highlighted in a Huffington Post article predicting the demise of once-iconic brands including Red Lobster, Blackberry, and Zynga.  In each case, the brand’s fall from grace followed a prolonged period when either competitors matched or exceeded the USP provided by the brand or consumers’ taste changed, devaluing their USP. These brands developed a brand strategy, then ignored it as the world changed around them.

Thus, great brand strategy not only create a USP, it constantly checks the pulse of competitors and consumers to ensure the USP evolves to exceed in consumer solutions.

3. Myth or storytelling

Douglas Holt, now CEO of Cultural Branding and former professor at Harvard Business School and Oxford, argues it is myth-making and storytelling, not USP or product quality, that propel a brand to the rarefied heights of iconic brands. He contends this occurs because brand strategy focused on developing these myths:

People have always needed myths. Simple stories with compelling characters and resonant plots, myths help us make sense of the world. They provide ideals to live by, and they work to resolve life’s most vexing questions. Icons are encapsulated myths. They are powerful because they deliver myths to us in a tangible form, thereby making them more accessible.

The best cultural myths not only resonate with consumers because they’re embedded in deeply shared cultural awareness, but position the consumer, herself, as the hero of the myth.

The Marlboro Man is a great example of such cultural myth that resolves tensions in our every-day lives. As part of their brand strategy, Philip Morris created the myth of The Marlboro Man, portrayed as a ruggedly handsome cowboy, represents independence, strength, power, and control over his environment that feeds into tensions consumers feel in modern living where they lack these desirable qualities. The cowboy myth, indeed a myth spread through hundreds of western movies featuring the likes of “Big” John Wayne, belies the reality that most cowboys were mainly illiterate, mostly minorities (a full 1/4 were black) who followed large herds of cattle as they made their arduous journey to markets.

It’s particularly appropriate to discuss this particular myth in an article about branding, since it’s the early open range that necessitated brands to distinguish 1 owner’s cattle from another’s. Of course, Holt goes on to write:

When a brand creates a myth, most often through advertisements, consumers come to perceive the myth as embodied in the product. So they buy the product to consume the myth and to forge a relationship with the author: the brand. Anthropologists call this “ritual action.” When Nike’s core customers laced up their Air Jordans in the early 1990s, they tapped into Nike’s myth of individual achievement through perseverance. As Apple’s customers typed away on their keyboards in the late 1990s, they communed with the company’s myth of rebellious, creative, libertarian values at work in a new economy.

Apple’s myth likely traces back to the “1984” commercial inspired by George Orwell’s novel featuring a dystopic future where thoughts, ideas, and even history were controlled — as an aside, the commercial only aired publicly once — during the Super Bowl, before George Orwell’s estate successfully enjoined further broadcasts. Despite this, the commercial was hugely successful in aligning Apple with this myth ethos resulting in a huge sales bump for the then fledgling Mac. According to Forbes, the Apple 1984 commercial became the standard against which all future commercials were measured.

Recent commercials depicting Apple as the young, stylish actor while PC is the slightly portly and less appealing actor successfully continued building the brand and supporting the existing myth to modern audiences.

Building the myth is only part of the job. The myth must resonate with consumers by empowering them to overcome tension in their world. This means the myth must reflect a consistent image that belies reality — like The Marlboro Man depicts the cowboy myth — where the consumer is the hero of the story.

To an extent, using celebrities as a spokesperson for your brand serves a similar role — it identifies the brand with the brand of the actor. Of course, that danger with this alignment is when the celebrity commits acts not consistent with the brand, most recently Tiger Woods and his numerous affairs.

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Product Pricing: Back to Marketing Basics

pricing
Copyright: stuartphoto / 123RF Stock Photo

Product pricing is a rather thorny issue that most of us deal with from time to time: How much should I charge for XXXXXX? Charge too much and potential customers avoid your brand; charge too little and you’re leaving money on the table. But, how to you figure your product pricing — especially for a new product?

Product pricing

Price is one of the 4 P’s underpinning marketing: product, price, promotion (advertising), and place (distribution/ logistics). In reality, product pricing is integral to market performance including profit, market share, and ultimately success (or failure) of your venture.

Many think consumers make simplistic pricing decisions — buy the cheapest product. And, while that might be true for commodity-type products, that certainly NOT true for differentiated products like the ones dominating store shelves and online etail sites.

In fact, consumers based product purchase decisions on VALUE, not absolute price. And value is a function of BOTH price and benefits related to the product. Basically value is:

value = what you get – what you give up

What you get

You get any number of benefits from buying a brand:

  • performance
  • convenience
  • durability
  • bragging rights
  • enhanced ego – status
  • etc,

What you give up

In addition to product price, you also give up:

  • option to buy something else (opportunity costs)
  • time
  • decision-making effort
  • hassle
  • etc.

Because consumers buy based on value, product pricing is particularly complex. For instance, Coke might sell for about $.25 when purchased on sale at the local supermarket as part of a 12-pack and $1.50 in a vending machine, and $4.25 at the local theater or sports venue. That’s because you have lots of options that are equally convenient at the supermarket and few convenient options at the sports venue. Thus, consumers have different valuations of the product in different situations.

Product pricing as part of brand image

Product pricing impacts how consumers view your brand — it’s brand image. And, most consumers buy brands based on seeing a brand image that “fits” the way they see themselves. In a way, consumers are consuming the brand image as much as they’re consuming the product itself.

Apple case study

That’s why Apple products — iPad, iPhone, Mac — command significantly higher prices than competitive products, in some cases 30-40% price premiums. Certainly, Apple products possess no better objective quality than competitive brands, so why is their product pricing so high and inflexible (have you EVER seen new Apple products on sale?). In fact, it won’t take long to find serious complaints about Apple performance, from the poor video quality of their iPhone to the poor battery life of their tablets. And, industry experts question the value of Apple products relative to HP and other competitors.

So, why do Apple enthusiasts stand in line to plunk down a serious price premium for the latest Apple gadget? Because Apple products possess the “coolness” factor — something consumers are willing to pay for. Sure, they may not be the best products on the market, but Apple innovations are the first products in tech categories. They invented the MP3 format (at least in terms of being the first to commercialize the technology effectively), the Smartphone (again, in it’s current format with those all important apps), and the tablet. Not only is Apple the first to introduce products we didn’t know we wanted, but soon grow to find indispensable, but their products are intuitively easy to use and sleek  — much cooler than boxy, unattractive offerings from other brands. Even their advertising, “I’m a MAC, you’re a PC” emphasize coolness in their juxtaposition of hip actors against a drab model.

Thus, product pricing is more than just pricing as low as possible and hoping to capture market share from consumers looking for a good deal.

Want another example of how product pricing impacts brand image?

Indian jewelry

Cialdini starts his book, Influence, by sharing a story about how product pricing impacts brand image. He relates a story of a shop owner selling Indian jewelry in a little gift shop near an Indian reservation. The jewelry was priced better than competitors in the area and the shop owner couldn’t understand why it sold so poorly. Before leaving on vacation, she leaves instructions for her manager to reduce the price by 50% so she could get rid of it and use the shelf space for something that might help turn a profit.

Upon her return, she found her strategy worked — the jewelry was almost all gone. She congratulated herself for a great pricing strategy and thanked her manager for following instructions resulting in eliminating the poor-performing jewelry. The manager turned the color of a sheet and explained she misunderstood the message left by the owner and marked the jewelry UP by 50%.

Hence, jewelry seen as cheap at it’s original price, was seen as authentic Native American treasures at the inflated price. Consumers gobbled up the now precious jewelry.

Product pricing strategy

So, how do you, a business owner, use these case studies to set prices for your products and services? Well, I think they demonstrate 2 clear lessons.

Consumers pay for brands that “fit” them

In the case of Apple, consumers pay a premium because the coolness of Apple products translates into their image as cool. It’s important to note this works best for products used in public where others see how cool your products are and figure you’re cool, too.

Spending resources to stay innovative, to care about style as well as function, and sophisticated messaging to reinforce the image of your brand pay off in terms of product pricing — allowing you to charge a price premium.

Consumers use pricing to tell them how good something is

Of course, this only works when consumers can’t judge the objective quality of something, like in our jewelry example. But, frankly, there are lots of situations where consumers can’t judge the objective quality of something – especially services. I mean, think of an attorney. How do we KNOW he’s any good? We use his pricing, the opulence of his offices, etc as surrogates for how good he is.

For my colleagues who offer social media marketing or other marketing services, this is a serious consideration. If you give your services away too cheaply, folks don’t expect much in terms of quality and it’s harder to get bigger clients.

 

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