December 3, 2010 § 2 Comments
“Hi Jake,” I greeted. “Our lesson, as mentioned last week is prestige pricing.”
“It sounds good already,” Jake responded.
“Oh, this is really good if you can pull it off,” I said.
“What do you mean?” Jake asked.
“This is the toughest to execute,” I said. “You must deliver the highest possible quality known out there. If it is a product, the best materials and craftsmanship. If it is a service, the customers should feel like royalty.”
“If these are done, one can price very high?” Jake asked.
“Not enough though,” I said. “If one uses prestige pricing, the quality is assumed. As we discussed earlier, you never mention quality. There is still one very important element.”
“What’s that?” Jake asked.
“Positioning!” I said. “You have to position the brand very high in the mind of the market, including those outside the target.”
“How high?” Jake was seemingly amused.
“Out of reach by most. Sometimes ridiculously high like a ladies bag with a price tag similar to a car,” I said. “Or a piece of jewelry that is the price of a mansion. A meal more expensive than a plane ticket.”
“Wow!” Jake said. “Why would anyone buy stuff like that?”
“It is meant only for the few who can afford it,” I said. “Or the crazy few who can buy it.”
“Yup, I get it. That is why it is called Prestige Pricing,” Jake said. “It is meant to make you feel privileged.”
“Right! and make everybody else feel envious,” I responded. “The advertising strategy, the ambiance of the store, the scarcity, and the ridiculously high price all contribute to the feeling of prestige.”
“So in prestige pricing, one is not simply selling a product or service,” Jake said. “One is also selling prestige.”
“That is correct,” I said.
“But this does not apply to me yet,” Jake said.
“Of course, you are just starting,” I said. “Maybe one day it will.”
“I don’t think so,” Jake said. “I am very comfortable with value for money pricing.”
“Maybe so but who knows…” I smiled. “Bye Jake.”
“See you next week Coach.”
© Eduardo R. Pilapil Jr. 2010