Why businesses should choose quality over price?
When you visit a hardware store to buy paint and you see a low-cost brand, what would you do? The chances are high that you would opt for the brand which has proven quality over the cheap counterpart.
According to a study by IBM, more than 72 per cent of consumers are more concerned with the quality of products they buy rather than price.
The notion of choosing quality over pricing has been embedded in our minds throughout our formative years. However, in the current corporate environment, that same notion is like fitting a square peg in a round hole. Brands and especially startups are established just to generate revenues at a faster rate. Even if some choose the quality during the initial years, down the line it all boils down to working at the highest possible margins.
For a larger part of the decade, in order to entice consumers into adopting e-commerce, brands have been showering them with discounts. This had led to thinking among consumers that
- Everything should be on sale now.
- You can get everything for less.
- They need the business, so see if we can negotiate the price downward.
People have started to just focus on the price, rather than thinking about the quality. The cheapest price surely attracts a lot of attention than a high-quality one. In order to ensure that online businesses do not lose business, they have started to compromise on their quality to bring cheaper products to the market.
Why do brands nowadays focus more on pricing than quality?
In the current age of consumerism, creating a high-quality product tends to be expensive and time-consuming. It further results in inflated prices, which is less attractive to the average customer. On the other hand, lower quality or inferior products tend to be far profitable and offer attractive pricing to the consumers.
When it comes to eCommerce, there has been a long going debate concerning quality and pricing. As the consumer cannot foresee the quality of a product before making the purchase, the only metric in front of them is price.
Another aspect is counterfeit products, where non-branded product looking identical to branded product is sold at cheaper rates. Over a short period, this would mean better margins, but it comes at a huge cost to customers’ trust.
Even the big brands have paid the price of wrong pricing!
The eCommerce market in India has been growing at a phenomenal rate with numerous startups mushrooming. eBay has been in this sector for a long time. However, in order to compete with the competition and bring down its prices, it had to bring down the quality of its service. In the initial days, it did bring good business to the company, but over time people started to associate the brand with low-quality products. This proved to be detrimental for the brand and it lost a big chunk of the market.
Quality Items Actually Cause Consumers to Spend Less
Most of the time, if they opt for quality items, they will pay less overall. Consider this; consumer A is buying low-cost bag that costs $10, while consumer B buys a quality bag, which costs $15. Initially, consumer A does pay a lot less, but when that low-cost bag runs down within a short period of time, the customer will have to make another purchase. However, the quality bag will go on to serve the purpose. So in the end quality items do tend to cost consumers lesser.
Going with quality actually means less hassle
Other than money, a noticeable issue related to choosing price over quality is the hassle of replacing the product. How annoying is it to have to replace something on a regular basis? It is tiring, especially if something breaks right after the warranty has expired. This is why quality is always paramount and one should not compromise just because of price.
How to ensure that your consumer understands the importance of quality over price
Considering the fact that the bulk of the consumers still focuses on pricing when buying a product, most of the businesses tend to bring the quality down in products in order to offer economical pricing.
This must change!
The best way forward is to educate the consumers on the importance of quality and why they should not base their decision just on pricing.
Why is it that German cars enjoy a substantial premium over their Japanese or American peers?
Why do Apple devices cost a lot compared to other devices?
It is because they have focused on quality and not compromised to ensure economical pricing. The bottom line is that quality will always trump pricing.
If nothing else works, incorporate pricing strategies.
One of the biggest hurdles in front of businesses in the current time is to change the perspective of the consumer. The fact of the matter is that it does not happen overnight. However, it does not mean that you overlook the importance of quality. If nothing else works you can always use pricing strategies. Let us look at some of the examples.
Price Anchoring – It is one of the most widely used pricing strategies across the globe. As the name goes, price anchoring means placing a high-value item alongside the item you want to sell to make it value for money. For example, the best way to sell a $300 watch is to put it next to $1500 watch.
Reframe product value – Most of the consumers know how much value they are receiving from $75/month subscription than $900 yearly subscription, even though they cost practically the same.
Trivialize the cost – Studies have shown that when people were asked to buy a product from two websites; one priced at “$10” and the other showing it as “Just $10”, the consumer chose the latter. In fact, the sales are expected to rise up to 20% if such a strategy is used.
End it with 9 Rule – This strategy has been in use for a long period where brands specifically price their product ending with 9. Product prices ending with nine generally tend to outperform prices ending with other digits.
Conclusion
The fact of the matter is that sacrificing quality for bringing down prices may grant you a few short-term profits, but in the end, you will end up losing repeat customers. On the other hand, favouring quality over price will increase your brand’s reputation and increase product loyalty among the consumers. This will definitely be beneficial in the end.
Word Of Mouth Marketing - How important is it?
Word of Mo
uth Marketing (WOMM). Isn’t this really the original social media platform? I grew up with the famous Faberge commercial that showed a woman who “told 2 friends” about the product and how “they told 2 friends … and so on … and so on”. Hasn’t WOM always been a powerful way to influence business results?
I attended a conference where I heard several experts on different types of social and mobile marketing present. Suzanne Fanning, President of WOMMA (Word of Mouth Marketing Association), gave a very interesting, data-based presentation on the power of WOMM and contemporary efforts to create experiences worthy of being passed from person to person. What follows are thoughts she shared with me regarding the importance of WOMM and examples of how marketers are taking advantage of its power.
Why should Marketers care about WOMM?
If you could master what has been identified as the most valuable form of marketing—the one that consumers trust above all others and the one that is most likely to drive sales for your company — would you instead choose to ignore it or leave it to chance?
Why would you simply choose to sit back and hope conversations will just happen organically about your brand? If you want to win the marketing race in 2015, you need to unleash the power of word of mouth.
Let’s look at the facts. According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising. WOMMA and the American Marketing Association (AMA) decided to find out exactly what brands were doing about that fact. In a recent study, 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing. However, only 6% say they have mastered it.
If consumers value word of mouth and marketers believe it is effective, then why aren’t marketers more focused on it?
The problem is that for the last few years, marketers have been focused on “collecting” instead of “connecting.” In other words, brands are too caught up in collecting social media fans and they are forgetting to actually connect with them. Having 100 really passionate fans that love your brand or product is exponentially more effective than having 10,000 “fans” who signed up just to win a free iPad from you.
Just like in life—if you have to buy your friends, are they really your friends?
And why should we stop at likes anyway? Why not shoot for LOVE.
Marketers used to focus on the 4 P’s. You probably had them drilled into your head as you pursued your marketing degree. Well, now marketers need to focus on the three E’s: Engage, Equip, Empower. If you can master these, you can become the most beloved and talked about product in your category, which will ultimately lead to increased sales. We’ve seen a good WOMM campaign generate thousands of conversations, recommendations and triple sales in just a year (yes, even for the boring products).
Can you explain the Three E’s in more detail?
Engage—Give your fans the gift of you. Engage with them. Listen to what they are telling you. Be part of the conversation about your brand. Be a presence in your fans’ lives. @NikeSupport is a prime example of customer service done well. They constantly respond to followers on Twitter, whether it’s about their apparel, Fuel Band or other products. Every few minutes, you can watch them respond to someone new.
Equip—Give them reasons to talk. It can be amazing products, great service, insider knowledge, social elevation, incredible stories, unbelievable facts or even funny disclosures. It’s on you. It really depends on you understanding your consumers and what they like about you and providing whatever it is they need from you. Apple revolutionises technological devices and delivers amazing products to its consumers, allowing them to naturally raze about the newest iPhone. Another area to excel in and that’s on the rise is social customer service.
Empower—Give consumers different ways to talk and share. Let them know that they are important to you and that sharing their opinions is important to you. Help them find ways to share within their circles and find ways to help move their conversations around. Lay’s is an excellent example to highlight how they empowered their fans to “Do Us a Flavour,” and allow consumers to create a new flavour of potato chips to hit store shelves. Over 3.8 million submissions were sent in 2013 making it one of the biggest marketing campaigns for PepsiCo owned Frito-Lay.
If WOMM has been around for a long time, why should it be a focus now?
You are right. It has been around, well, since cavemen roamed the earth. It’s likely that one caveman told another about a popular hunting area (… and so on and so on) and ultimately that turned the site into the most popular hunting area in their cave community.
It worked then, and it will work now. However, technology has increased social connectivity making it easier than ever for consumers to do your marketing for you. A post that takes just a few minutes for a fan to write will be seen by hundreds of friends who trust them, and it can rapidly travel out to thousands more. Very well planned messages have been shared by millions within the span of days. Look at the Epic Split video by Volvo featuring Jean-Claude Van Damme, the video was released on YouTube on November 14, and on the first day, the film was viewed over 6.5 million times and shared over 32 thousand times. Then in four weeks, it was shared over 6 million times across social networks. It quickly became the most shared film on YouTube. The clip has received extensive media coverage from all over the world as well and has been the subject of approximately 20,000 editorial pieces online thus far. No disrespect to our cave friends, but it was not possible to achieve those kinds of results without technology. You should also consider the fact that those who read the post could potentially have millions of offline conversations with friends, families, acquaintances or even consumers looking perplexed in store aisles.
Fueling conversations and driving passion will make a huge difference for your brand.
Are there any consistent characteristics that successful WOMM campaigns tend to have?
Keep in mind that a good WOMM strategy is credible, social, repeatable, measurable and respectful. Dishonesty is NEVER acceptable.
Do you have any case studies you can share?
These three unforgettable WOMMY winners can help showcase the power of word of mouth.
Marina Maher Communications won a WOMMY in the Influencer category for their Kimberly-Clark campaign. The Depend team created The Great American Try On to take the issue out of the bathroom into the most public of places, recruiting celebrities and football players -- who don’t need Depend – to try it on, tell America how they felt, and ask them to try it too and support two relevant charitable causes. Sampling requests increased by 720% vs. sample requests for a new product launch a year prior.
M Booth received a WOMMY in the Introduction category for their work on Canvas Lands’ End. The brand launched Canvas Lands' End - a new collection geared to the younger millennial segment of the population by partnering with eight established bloggers to create the first-ever virtual "blog-up shop" series. The campaign earned $105K in sales and generated 60 million earned media impressions on blogger partner sites.
WOMMA recognised Zeno Group with an Engagement award for their Seattle's Best "Black Friday Coffee Break" campaign, which focused on a segment of the target - retail workers - by offering free coffee to those working on Black Friday. Consumers leveraged the program through an interactive Facebook application. New fans were encouraged to "like" the page and choose from the following options: Have a free sample of Seattle's Best Coffee sent straight to your mailbox, stop by a participating retail location for a free cup of brewed coffee on Black Friday, or print a $2 off coupon. The brand received 125 million total impressions in two weeks and 6 million YouTube impressions.
Being talked about requires a strategy and a plan that goes beyond “likes”. It requires a deeper insight into your customers. As John Moore, a marketer for Starbucks and Whole Foods says, “If people are not talking about you, they are forgetting about you.” The WOMMA’s mission is to help marketers master this method, so take advantage of their expertise.
Kimberly A. Whitler