A recent article in the Wall Street Journal written by Daniel Akst (“I Once Was Chic, but Now I’m Cheap”) caught my attention. In short he explained why he had passed on buying another Mac and went with a PC. The bottom line? PRICE – end of story. In his article he articulated his thoughts on how cool is too often connected with price. And mentioned the usual companies often associated with pricey products and cool customer experiences like Apple and Whole Foods.
By definition, the 4 P’s – Product, Price, Place and Promotion – represent the elements of the marketing mix. And the marketing mix represents the controllable variables an organization puts together in order to satisfy a customer need. The typical marketing mix for a given product is not necessarily right for all situations, and what is right at one point in time may need to be adjusted when the marketing environment changes.
Hmmm … has your marketing environment shifted in the past few months? The fact that the Dow is at its lowest level in 12 years and that consumers are rapidly becoming thriftier as the current recession deepens suggest that adjustments are called for. In fact, in order to manage inventory, many luxury brands were thrown under the bus during the past holiday season.
Will an exceptional “customer experience” take pricing completely off the table in the current economy? Well, it’s difficult to get unified agreement on what defines the customer experience. What would you consider an exceptional customer experience? For some, the customer experience is equal to the level of customer service. But in general,
… The perfect customer experience is one which results in customers becoming advocates for the company, creating referral, retention and profitable growth.
In my opinion, based on the definition above, the perfect customer experience is interlaced through the marketing mix. And that means you cannot take pricing completely off the table, particularly in the current economic environment. My guess is that more organizations will begin focusing on pricing objectives and demand analysis solutions in order to gain a competitive edge through the recession.
But that’s just my two cents … and all I can spend right now!
Alan
Let’s not forget that there is more to marketing than the 4Ps. (Indeed, the 4Ps are already a reduction from 12Ps which was thought to be too hard to teach to marketers). But price is usually a big factor in the purchase decision, particularly in a downturn. There is always a price at which someone will switch to a rival product. And that price is lowereed in a recession.
I am not too sure about the perfect customer experience proposition though. It is hard enough to make these assertions for individual touchponts, (without resorting to wishful thinking), let alone all for the many touchpoints in the end-to-end experience. At this point in time, we just do not know if it is true. And the experiencescape’s dynamics just changed because of the recession. Back to square one!
Graham Hill
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Alan, When it comes to the relevancy in one’s marketing mix, I see price having different applications as you and Graham listed.
One is that, for some, price is used as an excuse of why other things don’t fit what they customer is doing, planning to do, what they would like to do. Rather than get into an argument about why it does not fit, they just say it’s too expensive. If it fits, price becomes less of a factor other than relate to my further comments.
The second application is that for commodity purchases i.e. purchases of things that do the same thing or can accomplish the same end, why pay more”
The third application is that at some point the customer will be wanting to get confirmation that they bought they right thing or justifying their decision to buy.. Price can be either to high or, even, to low.
The fourth application of where price comes into play is that everyone has the fear of being embarrassed for making the decision to buy so they need to believe they can talk with confidence an intelligence about their decision to family, friends, associates, acquaintances, customers/clients or their own conscience.
In my growing years in retailing, my mentors taught me that price or the format for presenting prices is a form of teaching, thus presenting the price information in a way they can use before the decision is made and, yes, after it has been made.
So, look in stores, look at web site, look at trade show booths, look at showrooms and you’ll begin to see that price is in all types of one’s marketing mix, as stated, a form of teaching
Alan
Alan J. Zell, Ambassador of Selling, Attitudes for Selling
Recipient of the Murray Award for Marketing Excellence
Attitudes for Selling offers consulting, workshops and speaking on all business topics that affect sales.
He can be reached at [email protected] or through his web site http://www.sellingselling.com