Price vs. Value

Back in school we were taught the 4 P’s of marketing. Product, Price, Place and Promotion. It was an easy way to remember that marketing basically consisted of four focus areas. If you have the right product, at the right price, in the right place, and with the right promotion, you’re going to be successful in business.

But getting price right has always been an issue…especially lately as we face record inflation over the last three years. How can you market on Price if the prices keep rising?

Brands that market a price-first strategy are generally at a disadvantage, even when the economy is good. To be “the lost-cost leader,” a brand has to constantly find ways to reduce costs — labor, services, quality, and sometimes they’ll cut corners on safety. These measures usually come at the expense of employees, suppliers, and ultimately customers. 

Brands like Walmart, Spirit Airlines, and Temu are known for being cheap…not customer service. As a result, we tolerate them… we may even buy from them… but deep down, we actually hate them.

The reason? These brands look at price and not the price/value relationship. Price is tangible and value is intangible. And therefore, the price/value relationship is akin to the marketing/branding relationship.

A company can market itself as “the cheapest,” but brands that also provide value will achieve greater success in the long run. Value can be delivered in a number of ways; friendly customer service, for example, doesn’t really cost more. It’s usually rooted in the culture and defined as a value proposition. 

As a result, I will shop at Publix because the quality of products are better and the employees are friendly and helpful. I will pay a slightly higher price than Walmart, because my time is valuable and I’d rather have a friendly face at checkout. I will buy tickets on Southwest airlines, because the price includes a seat, a bag, and a helpful — not angry — flight attendant. I will order online from anyone else but Temu, because the product will not be cheap and defective. 

Smart consumers, loyal customers, and brand ambassadors are gained with a value proposition. Your company probably has a mission statement and a vision statement, but does it have a “value proposition?” Hmmm. Looks like you might have some homework this weekend.