The Promise of Price
April 15th 2007 13:21
What price ever promises is value. And a high price implies an equally high value.
Did you ever faced the prospect of giving a lot of money for something? If you went ahead, was it because it felt you would get a lot out of it?
In fact, when we pay we expect to get something for it. When we are asked to pay a lot our expectancy then grows.
This is in part what I think is behind buying cars such as Ferrari and Porche. One would expect to get much out of it.
When, though, Henry Ford marketed his model T to the US and the world, he priced it as a commodity. That was unusual for his time, a time when most producers marked their products as the market could bear.
Ford made it his mission to sell his product cheaply to the masses. He assumed a social mission on that, but it is equally true that he was aware that by pricing his model T low he would substantially increase its sales.
There are not many Henry Ford(s) around now-a-days, but what Mercedes Benz and BMW are doing now resembles his strategy. In fact, these are marketing some of their models down to the middle classes. This strategy is supported by Mercedes and BMW’s prestigious brand names and is being highly successful.
The trick with Ferrari and Porche was to market for a niche – the wealthy. And they succeeded, but neither has the clout of General Motors or Toyota.
Did you ever faced the prospect of giving a lot of money for something? If you went ahead, was it because it felt you would get a lot out of it?
In fact, when we pay we expect to get something for it. When we are asked to pay a lot our expectancy then grows.
This is in part what I think is behind buying cars such as Ferrari and Porche. One would expect to get much out of it.
When, though, Henry Ford marketed his model T to the US and the world, he priced it as a commodity. That was unusual for his time, a time when most producers marked their products as the market could bear.
Ford made it his mission to sell his product cheaply to the masses. He assumed a social mission on that, but it is equally true that he was aware that by pricing his model T low he would substantially increase its sales.
There are not many Henry Ford(s) around now-a-days, but what Mercedes Benz and BMW are doing now resembles his strategy. In fact, these are marketing some of their models down to the middle classes. This strategy is supported by Mercedes and BMW’s prestigious brand names and is being highly successful.
The trick with Ferrari and Porche was to market for a niche – the wealthy. And they succeeded, but neither has the clout of General Motors or Toyota.
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