For anyone who is agonizing over the details of pricing and selling physical products, some essential fundamentals can help in those processes. Obviously, one of the central and most important aspects of the business model is attention to pricing and competitive offerings to a customer base. With this in mind, there are many different approaches that companies use to market products, and many different kinds of ‘value propositions’ that they rely on to present their products and services as fairly and attractively priced.
Considering the “Extra” Value Propositions
One of the most useful concepts in even moderately advanced pricing models is the idea that there are price points outside of the actual value of the physical item itself. These are often expressed in the form of the following:
• free shipping·
• customer support·
• troubleshooting resources·
• warranties·
• guarantees of satisfaction·
• compatibility with additional products
In any of these cases, marketers who are trying to appeal to a target audience have something to work with. Again, though, companies do this in different ways.
A Traditional “Cheapskate” Approach
A model that is arguably fading from the marketer’s handbook is the idea that companies can get by offering cut-rate prices and skimping on the extras that they provide to customers. In the days before the digital age, it was often hard for customers to bring grievances about inferior or sub-par products. As industrial processes began to globalize, companies saw opportunities to offer price as a kind of ‘single value’ without much context or nuance. The ‘low bidder’ was more likely to attract a large audience.
Nowadays, many markets are moving away from this approach, particularly with advanced products like hardware devices or complicated appliances. Companies are realizing that customers are willing to pay for extras, so rather than not investing in these, they are adding them and selling them as an additional value services.
This works differently in every industry. Companies do a lot of market research to see what their customers crave most after they make the sale. They look at complaints and grievances brought against themselves and competitors. They try to project what kinds of additional services, like support, provide the most value. They then bring these into the marketing message and fold them into the product or service offer that they are proposing.
Support is one of the most prominent examples of this kind of market behavior. With business items like CRM, supply-chain software and other ERP solutions, vendors are showcasing their reputations for support. For consumer items like hardware devices, telecom services and more, many other kinds of marketers are following suit, with big results for a customer base that wants to be able to rely on purchases over the long term. These are the kinds of ‘extra selling’ that can prepare businesses for popularity in a target market.
