Why Advertising on Price Alone is Often a Bad Idea
People like to say that money talks. Everyone assumes that consumers make buying decisions based solely on price. So, a lot of companies fight tooth and nail with their competitors to drive their prices down as low as possible.
But think about this. If customers made buying decisions based on price alone, why do more people by Coca Cola than Big K Cola? Why do more people buy Hellman’s Mayonnaise than the Target generic brand of mayo?
The truth is that it’s not usually about price. It’s about value. People will often pay more if they feel they’re getting better quality and better value.
Why do I feel that advertising on price alone is often a bad idea?
- The fight to the bottom is never-ending—Unless you have some type of groundbreaking technology or process that allows you to kill your competitors on price (like Netflix did), you’ll always be fighting with the competition to get the lowest price point. It’s like when 2 gas stations are located directly across the street from one another. They compete with each other to get their prices down to the bottom penny.
- Customers who buy on price aren’t loyal—If a customer’s only reason to buy from you is that you offer the lowest price, guess what’s going to happen when a competitor comes around offering a lower price? They’ll leave you. Customers who buy on price alone have no loyalty to your brand. The only ties they have are based on your pricing, and that’s just not enough to keep them devoted.
- Price doesn’t reflect quality or value—Leading with price in your advertising doesn’t really tell customers anything. It doesn’t show that you have a quality product, and it doesn’t show that your product is priced at the best value.
Do you really want your entire brand identity to be wrapped up in pricing? Do you want customers to think you’re a discount brand or a company just interested in getting the sale by any means necessary?
What do you think about advertising on price alone?