Droz Knows Positioning
Positioning is what you do and say to differentiate yourself from the competition. …what you do to create the perception of value and difference by the appearance of the product (design) and the words you use (framing) to describe it.
Design: The Gift That Keeps on Giving
A lot of companies believe that when something doesn’t sell, you lower price to increase the perception of value. The problem is that lowering price actually has just the opposite effect. It lowers perceived value. By lowering price, you not only reduce value, but reduce your margins and increase your cost of acquisition by at least the amount of the cost reduction. Not a very good way to reduce acquisition cost and increase perceived value.
A lot of companies believe that when something doesn’t sell, you lower price to increase the perception of value. The problem is that lowering price actually has just the opposite effect. It lowers perceived value. By lowering price, you not only reduce value, but reduce your margins and increase your cost of acquisition by at least the amount of the cost reduction. Not a very good way to reduce acquisition cost and increase perceived value.
Often, the reason you have to lower price is because people don’t think your offering is valuable in the first place. So, what’s the easiest way to increase perceived value? By focusing on the thing that helps people perceive value: the way it looks and feels. Design is the process of defining the appearance and attributes of an offering that creates a high perceived value relative to cost. It uses visual cues that communicates value and meaning. Sometimes it’s the form of a product, the aroma, the color or the type style. Design deals with the emotional component of perception…what makes something desirable. No matter how much your product or service ‘does,’ if the design doesn’t convey value on an emotional or sensory level, you’ve lost your first line of attack: perception.
Framing: Littlearth Case
An example is Littlearth, a company that manufacturers fashion accessories and purses made from recycled products like old license plates and bottlecaps. It turned out that when they framed their message as selling “recycled” products, people thought they shouldn’t cost a lot, because the word “recycled” was the connotation of being low priced. The result was that they had a hard time raising their price and conveying a high level of value for their products.
An example is Littlearth, a company that manufacturers fashion accessories and purses made from recycled products like old license plates and bottlecaps. It turned out that when they framed their message as selling “recycled” products, people thought they shouldn’t cost a lot, because the word “recycled” was the connotation of being low priced. The result was that they had a hard time raising their price and conveying a high level of value for their products.
So they picked another word to frame their value: “collectibles.” By calling their products “collectibles,” they conveyed a higher perceived value. Now, each purse comes with a certificate of authenticity, representing the uniqueness of each purse. By reframing, they increased the perceived value and were able, with hardly any additional cost, to raise their prices by 30-50% and increase unit sales as well. So using the right words, framing your message, is an important lever.
The Real Value of Design and Framing.
Because design and words you use don’t cost anything after you’ve developed them, they are truly gifts that keep on giving in the sense that there is no incremental cost for use. That not only increases the perceived value, but through continued use, actually decreases your acquisition cost. Dan Droz is Chairman and CEO of Droz & Associates: Marketing, Branding, Design, Public Relations, Advertising, Web Design, Interactive Marketing for Pittsburgh and surrounding regions.
Because design and words you use don’t cost anything after you’ve developed them, they are truly gifts that keep on giving in the sense that there is no incremental cost for use. That not only increases the perceived value, but through continued use, actually decreases your acquisition cost. Dan Droz is Chairman and CEO of Droz & Associates: Marketing, Branding, Design, Public Relations, Advertising, Web Design, Interactive Marketing for Pittsburgh and surrounding regions.
Tuesday, April 29th, 2008
An example of how companies provide solutions to problems is Starbuck’s. Howard Shultz built a huge company by understanding a simple problem we all have and providing a solution. And it’s just not getting a good cup of coffee. Shultz traveled all over the world to understand why people in other countries spend so much time and money in coffee houses and he uncovered a universal problem: what he ultimately called the third place problem, ie, a place to meet outside of the home or office for a meeting, a date or just being alone.
The biggest marketing problem that most businesses face is differentiation. No matter how unique you think you are, your prospects and customers have many choices, and often can’t see noticeable differences between you and your competitors. How many ads or brochures do you see where companies say their service is “customer-driven.” I would hope so. Or you product or service delivers “results.” Or you’ve got a “hands-on” approach. These are not statements of difference. They’re statements of similarity.
There’s an old story about two guys on a hike in the woods. They see a bear, and one of the hikers carefully goes into his backpack and starts putting on his pair of running shoes. His friend looks at him and says, “What are you doing…you’re never going to outrun that bear….” To which his friend says, “I don’t have to outrun the bear. I just have to outrun you.”