Can you use pricing to create name awareness?
You can, but it may not be how you want to be known.
One of the more common reasons I hear for using a low-price strategy is that “we don’t have the name awareness the big boys have.” Typically this reasoning is used by organizations in their first three years of existence or by established companies entering a new market. Is it sound reasoning?
Here’s the approach I used with a homebuilder who was using low prices to create name awareness. First, let me give you a little background information. This homebuilder was adamant, and rightfully so, that his quality was better than the big boys.
I asked him whether he advertised in the real estate section of the newspaper. He did. Then I asked him to envision that he and two well-known, well-respected builders had subdivisions in the same area with the same style homes of comparable size and amenities. Finally, I asked him to envision that his and his two competitors’ ads appeared side by side and his price was 10% lower than his competitors (it was).
My question to him was “If you were the buyer and saw these ads, what would you think about your homes?” He said, “I think we were taking short cuts to keep costs down - that our quality was inferior.” Indeed, the message this homebuilder was sending was exactly the opposite of what he believed.
It’s counter-intuitive, but name awareness should be created by your marketing efforts and supported by your pricing. Whether you’re touting high quality, quick delivery, innovative ideas, image or productivity make sure that your price supports your marketing claims.
Incongruity between your marketing claims and your price leaves buyers in a quandary. Do they believe your marketing claims or the price? Which would you believe? Given our natural skepticism toward what others tell us, especially if they’re trying to sell us something, we’re going to believe the price.
This homebuilder was struggling to generate sales and profits because he was sending conflicting messages to the market. Are you? If not, congratulations! You’re ahead of many businesses out there. If you are, now you have a more effective approach to employ.
For more pricing tips visit http://www.pricingforprofitbook.com.
Dale Furtwengler is a professional speaker, author and business consultant. His latest book, "Pricing for Profit," is dedicated to helping organizations break the bonds of industry pricing.