How we change what others think, feel, believe and do
The Price Triangle
When customers look at something, they will often look carefully at the price. There are other factors also against which they balance this.
Price for many is a critical element, although some are more price-sensitive than others. The first question in pricing is at what point does price become a complete turn off, such that the person would not buy at any quality and availability.
Price can be varied in many ways, for example with bulk discount, special offers and financing options (particularly common on higher-priced items such as vehicles and furniture).
The goal of many sales and marketing people is to take attention away from price. As such, various methods are used, such as increasing product information and hiding the price.
Quality is what is really being bought. It is a combination of the functionality and aesthetics of the product.
There is a metaphor that price is related to quality, and when people spend more they certainly expect more from their purchases. Higher quality is also commonly used by sales and marketing people to excuse a higher price.
When people are price-bound, they will likely be less sensitive to quality and may deliberately seek out lower quality products (for example with less features) in the assumption that these will be cheaper. Likewise, manufacturers may sell stripped-down products as a basic entry-level product. Such low-end products can also help position higher-level products, demonstrating the price-quality equation.
Quality, or lack of it, is strongly related to failure. Product or service problems are a key reason why customers go elsewhere and complain loudly to all who will listen.
It is said that the 'quality is remembered long after the price is forgotten.' This can be both a sales point and a stern admonishment to get the quality right in the first place.
The third leg of the customers assessment triangle is where and when they can get the product. In most retail situations, the answer is here and now, though at many other times, including with online ordering, when the buyer gets their hands on the product may vary. Service sales may also be spread out in when they are delivered.
The ideal product is free, with no quality issues and is available immediately. While this can seem a strange proposition, it also can be used both as an ideal target and as a marketing ploy. As many computer games and other giveaways have shown, making the product free can lead to all kinds of later revenues.