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Price Based on Value Delivered

Elements of the Marketing Mix

Your marketing mix is a combination of marketing tools that are used to satisfy customers and company objectives. Consumers often call the marketing mix "the offering." Your offer is controlled by the following variables, often referred to as the “Four Ps” in marketing:

  • Product
  • Price
  • Place (Distribution)
  • Promotion

By using variations of these four components, you have the ability to reach multiple consumers within your target market.

Pricing: It’s About Value!

Too frequently, graphic communications service providers rely solely on price as the most critical element of their marketing mix and let it carry the weight versus leveraging “product,” “place,” and “promotion.” In this highly competitive marketplace, it can be difficult to persuade customers to buy from you when you offer a similar product to your opposition, but with a higher price tag. Trying to beat competitors on price alone is a cut-throat business, very risky, and not recommended. It attracts bargain hunters who are all too ready to defect to competitors for a better deal. It also does a disservice to the industry as a whole.

Graphic communications service providers are beginning to understand that it is time to compete on the “value” of their offerings. Customers buy a product because of its value proposition and not its low price. As graphic communications service providers reach this realization, they are beginning to communicate what they are delivering in very different terms. They are talking to clients about the net benefits they will realize in terms of improved ROI, reduced inventory cost, brand protection in marketing materials, and improved services to dealer channels when they complete the exchange. They are also learning that today’s print buyers are looking for with a package of products and services delivered when and where they want them.

What is Value?

Marketing guru Philip Kotler explains that the most important concept in today’s market is customer delivered value. He defines it as follows:

“Total customer value is the bundle of benefits customers expect from a given product or service. Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining, and using the product or service. Customer delivered value is the difference between the total customer value and total customer cost.”

Graphic communications service providers are discovering that they can maximize customer value by increasing the benefits or reducing the overall costs. There is no reason to get hung up on just the cost (price) aspect of the equation.

From a pricing perspective, print service providers could learn a lot from New York City street vendors that sell umbrellas. These savvy sellers understand their customer base and the price they are willing to pay based on the value they receive from a product. As a result, at the first hint of rain, these vendors double their umbrella prices. This increase has nothing to do with cost—it is all about the increased value that customers place on the ability to stay dry in a thunderstorm.

For print service providers, the moral of this story represents a shift in the way they typically think about price. The insight of the fluctuating value of an umbrella is not just relevant to street vendors—it is applicable to every company in the world. In challenging economic times, there is increased value associated with return on marketing investment. This means that print service providers need to clearly communicate their value proposition in terms of perceived customer value (as well as optional features). Even minor features (e.g., custom or rush jobs) that may not cost you very much more to offer are like thunderstorm clouds on the horizon - they signal that customers are willing to pay higher prices.

This value needs to be sold to the right person in the organization. The purchasing department is interested in a transaction sale and focuses on price. The marketing executive is looking for a service provider that can deliver solutions that link to increasing returns on marketing investment, brand asset protection, and reduced cost for lead generation.

Price versus Value

Graphic communications service providers need to understand that price problems are rarely pricing problems! Although many companies face demands for lower price, this does not always mean prices are too high. Demands for lower price may be caused by inadequate competitive differentiation, bad negotiating policy, failure to communicate value, and even by neglecting to ask for higher prices. Companies who grant price reductions in the face of aggressive customer buying behavior train their customers to seek even more price concessions. In today’s market, it is important to:

  • Clearly target customers where differentiation can be achieved at competitive advantage and ensure that you are calling at the right level
  • Understand that print alone is a commodity and it needs to be embedded in a value-base solutions offering that customers understand
  • Sell the concept of customer delivered value, which equates to improved ROI for marketing, reduced inventory cost, brand integrity in marketing materials, and improved services to dealer channels
  • Focus the entire organization on the creation and delivery of value to its target customers

The preceding is an excerpt from InfoTrends’ report Developing a Strategic Marketing Plan…The First Step. For more information or to purchase this report, visit our online store or contact Robyn Wuori at +1 ext. 103 or e-mail .


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