4♣️ Framing: Command premium prices

This tip applies to any business leader struggling to sell their product at its true value. Are you facing aggressive competition on price? Do customers baulk at your price point?

Problem or challenge

Many businesses fall into the trap of competing solely on price. They highlight how their product is "better" or "cheaper" than similar offerings. This approach commoditizes your product and makes price the only differentiator.

Complexities

Consumers make buying decisions based on more than just logic. Emotions, perception of value, and brand image all play a role. Simply touting a lower price might not resonate with your target audience.

Solution

The key is to frame your product in the marketplace effectively. The challenge lies in shifting your marketing strategy from highlighting basic functionalities to emphasising the value proposition of your product. 

This value proposition goes beyond just utility; it encompasses the emotional connection, convenience, or experience your product offers.

Reframe how you position your product in the marketplace. Focus on how your product compares to premium alternatives, not the budget options.

Benefits

By framing your product against a premium competitor, you achieve several benefits:

• Justify a higher price point: Customers are more likely to perceive your product as valuable if they see it as an alternative to a more expensive option.

• Highlight unique selling proposition (USP): Focus on the specific benefits your product offers that differentiate it from the premium competitor.

• Create a perception of exclusivity: By associating your product with a premium brand, you create a sense of desirability and exclusivity.

Why it works

This strategy works because consumer behaviour is not always entirely rational. People are influenced by emotions and perceptions of value. Highlighting the connection to a premium brand creates a positive association with your product, making it seem more desirable and worth a higher price tag.

Case study: Nespresso

A classic example is Nespresso's launch of their coffee pod system. They didn't position it against instant coffee, a cheaper and readily available option. Instead, they framed it as an alternative to Starbucks, a premium coffee experience enjoyed "out and about". This comparison emphasised the convenience and affordability of enjoying a similar quality coffee at home.

Measurement

The effectiveness of your reframing strategy can be measured by:

• Customer feedback: Talk to your customers and gauge their perception of your product's value.

• Sales figures: Track changes in sales volume and average selling price after implementing the strategy.

• Profit margins: Monitor your profit margins after the price adjustment to see if they improve.

My story, sources and references

I learnt this from one of three great speakers on Pricing that I booked to speak on a number of occasions for my MD2MD groups. I honestly can’t remember which as they all helped my members understand this same point with different examples. So I’ll give credit here to Cliff Burgin, David Abbott and Mark Blackmore, all of whom are great speakers on pricing and related topics that I’d recommend strongly.

Their messages are consistent with ideas you can also read about in two great books.  Influence, The Psychology of Persuasion by Robert Cialdini and Thinking Fast and Slow by Daniel Kahneman.