One of my favorite marketing strategies of all-time is decoy pricing. In this strategy, you offer 3 products – a low price, medium price, and high price option. What’s the catch? The medium price and the high price option are promoted in a near identical fashion. This makes people think the “mama bear” option is the best value; therefore, some that would’ve bought the low price item, bump up to the medium because of the perceived value.
Finding the right price can sometimes feel like you're on a game show
- High Price, High Quality: These are your luxury buyers. They are interested in highest end products. If you are competing in this market, talk more about additional features and especially about benefits. Avoid sales as this could cheapen your brand image.
- High Price, Low Quality: Why on Earth would someone fall into this category? Brand loyalty. These buyers are all about the perception of the company. Think about how many coffee chains are able to charge a premium without delivering a truly premium cup. Telling prospects how many other people use your product can help create this following.
- Low Price, Low Quality: Just Do It. That's the motto of this group. As long as it get's the job done they're all for it. They make quick decisions and are easily persuaded by sales, discounts, and reward programs.
- Low Price, High Quality: This group will probably take the longest to convert. They are cautious buyers and will shop around, identify all options, and may even create a spreadsheet that compares all products. Whereas they may take a while to decide on a purchase, they can usually be sold additional products once they are convinced you're the best option. Make sure you tell them about / display complimentary or additional suggested products.
Come back soon to see the next post - I promise the price will be right!