|
People don't buy based on quality or price. They buy based on perceived value. You can have the absolute highest quality product available and people will still buy your competitors product if their perceived value of your product is bad. On the other hand people will also buy your competitors more expensive product if they perceive that the value of the product is worth the additional cost.
Case in point, I recently read about a new restaurant that opened in the area so I wanted to give it a try. One day driving to work I saw a billboard advertising the new restaurant, the billboard was awful, no clear message, no images of the food - It had the restaurants name in red on a terrible brown background and multiple lines of text which included the address and phone number among other text that I didn't read. For weeks, I didn't visit the new establishment. Every time I saw the billboard, it left a bad taste in my mouth. My sub-conscience had won, my perceived value of the restaurant was bad. The billboard looked cheap so I immediately assumed that the restaurant was bad - bad food, bad decor, bad service.
About a two months later I was invited to lunch and the chosen place was this restaurant. I agreed to meet there and as I approached the parking lot, my expectations for the restaurant were far greater than they should be. "They better be amazing," "The service better be better than any other restaurant."..etc. They had no idea that they had so much to prove to me based on the horrible image I preconceived in my mind.
To my surprise the food was very good, and service was great. On the other hand, the menus where cheap copies, the decor was okay, and they were only near 25% capacity at noon.
Great food and great service, why weren't they busier? Perceived value! The design of their advertising and marketing media was killing their business and they had no idea. In their defense, the cook was the owner, he knows about being a great cook, it was very apparent that he knew nothing about marketing and advertising and that lack of knowledge eventually will be his restaurants downfall if he doesn't make drastic changes soon.
In any situation, perceived value out weights quality and price. It doesn't matter what you charge. It is the customers' perception of your price and quality that matters. If the people think the price is too high in relation to their perceived value for the product or service, they won't buy.
In the case of the restaurant the food was worth every penny, but the presentation made it look like it wasn't, and the end result is loss in profit. Focus on building consumers' perception that match both price and quality. Great design is the key to success. |
