Will I Situations: Pricing Foundations 4
In the blog titled Foundation 3: Will I Products, you learned about the types of products that you could build where there typically isn’t competition, meaning the buyers are less price sensitive. In this blog, you will learn about which one products, meaning there is usually competition, that is in a will I situation. This means that in these situations, buyers typically don’t consider a competitive alternative and hence are less price sensitive.
Here are some categories where you can find which one products in ‘Will I’ situations:
Often when a buyer makes a relatively large purchase, the accessories are a simple afterthought. For example, if you go to Best Buy to buy a new TV set, they make a very low margin on the TV because most buyers shop for price. However, as you’re checking out, the associate asks if you would like an HDMI cable with that. Their margins on cables are huge because in that situation you are not shopping around for the best price on a cable. You just want your TV to work. What else can you sell at the time of purchase that buyers may be willing to buy them for the convenience
What’s the price of gas in your city today? Let’s say it’s around $2.89 a gallon at most stations. One station is charging $5.00 a gallon. Would you buy there? Of course not. You would simply drive to another gas station. However, what if you are in the middle of nowhere, you see the sign that says, “Last gas for 75 miles” and your fuel tank indicator is very close the “E”? Now you’ll buy, it doesn’t matter what the price is. That’s why gas stations far from other gas stations charge so much. Can you find a way to distribute your product all by itself.
A diet soda is a diet soda is a diet soda. Except … back when I drank diet sodas I would only drink Diet Coke. Of course I would try to buy it on sale to get a good price, but if it happened to be more expensive than Diet Pepsi, I would still buy Diet Coke. I was loyal to Diet Coke. When you can build loyalty, buyers don’t consider your competitor’s products.
Some people really want a specific brand. Maybe you have always wanted a Rolex watch, but couldn’t afford one. You finally land a great paying job and decide to reward yourself with a nice new watch. Guess which one you’ll buy? The Rolex of course. There are other brands, but this is the one you always aspired to have. Can you build such an awesome brand that people want to do buy from you, when they can afford it.
Sometimes companies make a limited time offer. Of course they are trying to get buyers to take action quickly, but it also often keeps buyers from considering other alternatives. They are forcing buyers to answer the will I question without giving them the time to do any which one research.
As you look through this list, it seems obvious that marketing is typically in the best position to create will I situations for which one products. Regardless of who owns it, can your company find or create situations where your product is not being compared to your competitors? In those situation, your buyers are less price sensitive and you should be able to charge a little bit more.
Mark is a pricing expert who helps companies understand value, how to create it, communicate it and capture it. He has a PhD from U.C. Berkeley and an MBA from Santa Clara University, plus 25+ years pricing experience. As an educator, speaker and coach, Mark applies innovative, value-based pricing strategies to guide growth and increase profits for large and small companies.