How important is price in marketing? Some people think it's everything. They're watching their competitors' every move so they're not underpriced. Others feel the price is the last thing their customers worry about. The product and the brand are everything. Who's right?
The answer, of course, is that they both may be right. Or both may be wrong. It depends.
We have to realize that setting the price is about the only place a company can make money. The product itself, the distribution, the advertising, the P.R. don't make money. They cost money. Price is where you can get it back, at a profit.
Even in businesses where price may not seem important, it is. What if Chanel cut the price of Chanel No. 5 in half, overnight. What would you think?
Maybe you'd be happy. But wouldn't you wonder why? Is No. 5 not selling? Is Chanel in trouble? Did they cheapen the product? Have I been ripped off all these years?
Price is especially important where we have few ways to know what's good and what's better. For most of us, price is a main determinant of quality. Cheap wine versus good wine. The name, the price, the label --- what else is there? Most of us don't read wine reviews. Or at least, didn't.
At this point, it's worth noting the role social media now play in this. Now we can get instant reviews from friends and experts. We can dig deeper and get more product information. We can check the ratings on Yelp before we spend our money.
Still there's no denying the importance of price in our decisions. Companies that base their entire futures on being the "low price brand" always put their fates in somebody else's hands. A competitor can drastically lower their price, and your position is gone.
Right now, JC Penney is fighting the price battle in customers' minds. They lowered all their prices about 40%, and eliminated their thrice-weekly sales. Will their customers be grateful or turned off? People like bargains, and the thrill of the hunt. Penney is taking the fun away.
How you market your product will make it or break it. Your pricing decisions are critical. But that's the price you pay for being in business.