Are you sure?
Are you really, really sure?
Here’s a test. Can you tell me what these well-known businesses are selling?
Mercedes Benz?
JCPenney, Macy’s and Nordstrom?
Anheuser-Busch?
Gillette?
Johnson & Johnson?
Based on my experience in working with business owners, here are the answers I usually get.
Mercedes Benz - luxury cars
JCPenney, Macy’s and Nordstrom - clothing
Anheuser-Busch - beer
Gillette - razors and razor blades
Johnson & Johnson - healthcare products
Were these answers fairly close to yours? If so, then I’m going to suggest that you don’t really know what you’re selling. Here’s why.
While Mercedes does sell luxury cars, what their customers value is the image enhancement that the Mercedes name brings with it. Certainly customers enjoy the luxury, comfort and safety their Mercedes provides, but the real value is that a Mercedes in the drive says “I am extraordinarily successful at what I do. Here’s the proof.”
Even though JCPenney, Macy’s and Nordstrom all sell clothing their pricing varies dramatically. How can that be if they’re all selling clothing? The reality is that they, too, are selling image - albeit varying degrees of image. The JCPenney image offers current fashion trends at affordable prices. Macy’s image is based on some designer names and more customer service than you get at JCPenney. Nordstrom’s takes image to a whole new level with its store’s ambience, attentive sales force and, as with Mercedes, brands that say “I’ve arrived!”
“The King of Beers” says it all. Anheuser-Busch is in the business of selling the idea of a premium beer. It doesn’t matter that people’s tastes in beer vary widely, Anheuser-Busch is selling that premium-beer concept and it serves them well. In China, their products are gaining market share despite staggering price premiums over the Chinese beers.
Gillette does sell razors and razor blades, but that’s not the secret to their market domination. They focus their attention on two value proposition for their customers - image (the best a man can get) and innovation. Every few years Gillette comes out with something new to enhance the comfort and effectiveness of their razors. A far cry from razors and razor blades, isn’t it?
Johnson & Johnson is a household name that breeds confidence despite its recent Tylenol recall. J&J has a long history of quality and quick, effective action to remedy problems that arise. The reason many buyers choose J&J products over competitors’ offerings is the confidence they have in J&J - in other words, its image. This image allows buyers to save time while shopping.
With these examples in mind, what are you selling? Is it the same thing you thought at the beginning of the article?
It’s counter-intuitive, but the key to commanding higher prices is understanding that it isn’t the product or service itself that attracts buyers. It’s the intangibles associated with the buying experience.
For more information on how you can command higher prices for your products and services, please post your questions or comments below, send Dale an email @ dale@furtwengler.com or call him at 314-707-3771.
To see how counter-intuitive thinking can be applied to other business issues, visit Dale’s blog, The Invaluable Leader at www.furtwengler.com/theinvaluableleader/.
Copyright 2010, Dale Furtwengler, all rights reserved
Are you sure?
Are you really, really sure?
What are these well-known businesses selling?
- Mercedes Benz?
- JCPenney, Macy’s and Nordstrom?
- Anheuser-Busch?
- Gillette?
- Johnson & Johnson?
Based on my experience in working with business owners, here are the answers I usually get.
- Mercedes Benz - luxury cars
- JCPenney, Macy’s and Nordstrom - clothing
- Anheuser-Busch - beer
- Gillette - razors and razor blades
- Johnson & Johnson - healthcare products
Were these answers fairly close to yours? If so, then I’m going to suggest that you don’t really know what you’re selling. Here’s why.
While Mercedes does sell luxury cars, what their customers value is the image enhancement that the Mercedes name brings with it. Certainly customers enjoy the luxury, comfort and safety their Mercedes provides, but the real value is that a Mercedes in the drive says “I am extraordinarily successful at what I do. Here’s the proof.”
Even though JCPenney, Macy’s and Nordstrom all sell clothing their pricing varies dramatically. How can that be if they’re all selling clothing? The reality is that they, too, are selling image - albeit varying degrees of image. The JCPenney image offers current fashion trends at affordable prices. Macy’s image is based on some designer names and more customer service than you get at JCPenney. Nordstrom’s takes image to a whole new level with its store’s ambience, attentive sales force and, as with Mercedes, brands that say “I’ve arrived!”
“The King of Beers” says it all. Anheuser-Busch is in the business of selling the idea of a premium beer. It doesn’t matter that people’s tastes in beer vary widely, Anheuser-Busch is selling that premium-beer concept and it serves them well. In China, their products are gaining market share despite staggering price premiums over the Chinese beers.
Gillette does sell razors and razor blades, but that’s not the secret to their market domination. They focus their attention on two value proposition for their customers - image (the best a man can get) and innovation. Every few years Gillette comes out with something new to enhance the comfort and effectiveness of their razors. A far cry from razors and razor blades, isn’t it?
Johnson & Johnson is a household name that breeds confidence despite its recent Tylenol recall. J&J has a long history of quality and quick, effective action to remedy problems that arise. The reason many buyers choose J&J products over competitors’ offerings is the confidence they have in J&J - in other words, its image. This image allows buyers to save time while shopping.
With these examples in mind, what are you selling? Is it the same thing you thought at the beginning of the article?
It’s counter-intuitive, but the key to commanding higher prices is understanding that it isn’t the product or service itself that attracts buyers. It’s the intangibles associated with the buying experience.
For more pricing tips visit http://www.pricingforprofitbook.com.
