Pricing Games and Perceptions

What is the price of this bottle of wine?
This post is part marketing education and part consumer reports alert. Do any of us know the price of things in reality? For big ticket items it is really easy to compare online or with your phone. But what about Supermarket Items? Amazon Price Check won’t help. Do you have time to check 50 items to see if thy are cheaper down the road?
1] Discounts and Club Cards
I often wonder when a club card special says On Sales for $3.59 regularly $4.19 if maybe it is always $3.59 but goes on sale and they change the regular price to make it look like a savings. This wine is an example. I originally was going to blog about this bottle always being on sale for $5.99 and thus Pepperwood would be viewed as $5.99 to me going forward. But I checked online it is a $5.99 bottle of wine. The Market has it priced at $9.99 on their own. No idea why! But my future Mother-in-Law was drinking it as her go to wine. It had a yellow On Sale tag at $4.00 off. It sure seemed like a total deal until I started to write this post.

2] Partnership Steals and Deals
In the Albany, NY area Sunoco Gas and Price Chopper Markets have a long running special. For every $50 you spend at Price Chopper you get $0.10/gallon up to 20 gallons off at Sunoco. Which really means if you buy 20 gallons represents a 4% discount/rebate on your Price Chopper sending per $100.
How easy is it for Sunoco to mark up their gas by 2% and Price Chopper their goods by 2% and have it a wash? Will anyone know? But when you see people check out at Price Chopper and are told they have $1.20/gallon built up they go ballistic like lottery winners. They forget that to earn that they had to send $600 at Price Chopper! And the discount is actually more valuable on a per mile basis when gas is cheaper vs $4.00/gallon. So as gas goes up your gas savings actually goes down.

Perception is everything:
If you can create an outsized value perception with your pricing or cross promotions it will be a positive on your bottom line. Most people sadly don’t know if you do this. But a savvy marketer will work to find such scenarios. This should be your goal with every promotion and discounting campaign if your products or business aren’t in the upper end of the price/value matrix.
But these can backfire. Beware you might be eroding margins not just today but future pricing power. In example 1 with the wine if it really was a $9.99 bottle I would view it as $5.99 because the store discounted it so long. It is possible as a brand that you can be crippled by a reseller or distribution channel without your permission. If you use such channels you can prevent this if you have some sort of contractual relationship with your partner.
Advertisements

About chiefalien

Howie Goldfarb with 20 years of Sales and Marketing experience founded Blue Star Strategic Marketing in central Vermont to serve as the objective and strategic adviser of brands to help them grow and thrive. His Degree in Finance and 14 years of B2B sales to Fortune 500 companies gives him a CFO’s view of marketing. Thus bringing a dose of reality to the confusing world of jargon, spin, and hype. Also playfully known as the Chief Alien of Blue Star Strategic, Howie relishes his role as an industry outsider. A native New Yorker and former Angelino, he currently lives in the Green Mountains of Vermont and is still seeking his first moose sighting. His passions are living life, art, music, the outdoors, he tries to cook and loves the Vermont Fresh Network – local sustainability initiatives like farm to table and buying local.
This entry was posted in Marketing, perception, pricing. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s