Every entity needs to make a decision at some point to sustain the pursue of their goal, or for the betterment of their life-cycle. Even machines need to make a choice. People make choices based on their own character or personality. It is also certainly true for their purchase of goods and services.
Nowadays for the same category of item, we are most likely to encounter numerous products being marketed with various brands. It doesn’t matter whether these items are fast moving consumer goods, fashions, electronics, or software-and-apps, there will always be multiple choices of products (or vendors).
So, what will be picked by the customers? Why would they prefer ‘A‘ over ‘B‘? Why would others prefer ‘B‘ over ‘A‘?
In my opinion, there are three attributes in every product that are directly influencing customer consideration:
- Price: products with lower market price are more favorable for customers rather than those of higher price.
- Quality: higher product quality appeals more to customers rather than its lesser counterparts.
- Brands: products that are well renowned will attract more customers rather than the unknown.
Although the brief explanation given above are caeteris paribus, all three of them without a doubt have their share and proportion in influencing a buyer. Yet, the ideal mantra is: price should go down, quality up, brands up.
However, it is not wise to invest in all three of them, unless you have infinite resources. For the sake of efficiency, you need to manage the “trade off” between those product’s properties. As what we frequently encounter, seldom we find a high quality well manufactured item with low price. Nor a low price everyday item with stuck-to-mind brands.
The customers themselves react differently for each category of product. For some item, they will prefer lower price with no regard of brand or quality. Yet for other set of item, the same group of people want high quality product regardless of price. I would like to call it product sensitivity. Hence, there will be price sensitive, quality sensitive, and brand sensitive product. Let me try to give some example of it as follows.
Common example is from raw or agro products. Suppose you are searching for chicken eggs in a local supermarket and find that they are selling two types of chicken eggs (so there are two suppliers). Most of us will prefer the ones with lower price, because we know that all chicken eggs taste the same (It’s up to how we cook them and as long as they aren’t yet expired) and all eggs should have the same nutrition. This is the quality attributes of chicken eggs, the taste and nutrition. Now what if other eggs have more lavish packaging? We crack the eggs open eventually. Should we worry about throwing the package or label in the shell? So if you happen to have a chicken farm and intend to sell the eggs, what strategy would you use to gain market share? Lower your price, attempt genetic modification to alter your chicken eggs taste, or try to advertise and sponsor celebrity to eat your eggs?
I believe we can find plenty of examples in consumer electronics market. One of those examples is the early-generation iPods. Although they are very pricey in comparison to other music players at the time, it was well designed and built. No wonder it was an instant hit.
We’ll take a look at another Apple’s products. After successfully launching high-end quality product: the first iPod, iPhone, and the new Macbook, their successor line of product continue to sell well, even though other competitors have responded well with their high end products with mirroring specs (phone: Samsung, HTC, Nokia; laptop: Asus, Sony, Lenovo). The latter groups have eventually gained significant market share, thanks to their rigorous pricing policy, while Apple’s pricing is still as expensive as ever. The price is higher, yet the quality is still the same (more or less), and it’s still competing well. The Brand compensate for their product’s other properties. One can also say the same regarding the fashion industry.
As the producer/manufacturer, it is a major competitive advantage to know the preferences of your customers. Once you have a glimpse of the sensitivity of your product, either through research, insight, or instinct, then you can surely better position your products in the market ecosystem.
- Posted by admin
- On June 18, 2014
- 0 Comments