Communicate value to command price premium

Last month the press reported that Gujarat Cooperative Milk Marketing Federation, the owners of Amul brand were sued by Unilever for claiming that unlike others they used real milk in their ice-creams.

The merits of the case aside, it points to the well know marketing rule that you need to communicate about benefits of your product. A good product sells by itself, is at best an exception and at worst a myth.

While employing marketing communication to gain market share is well practiced phenomenon, in this article we will explore the use of marketing communication to command price premium.

People buy value not price. But the customers do not have enough tools to evaluate all the features by themselves. So a company needs to communicate value. With consumers being constantly bombarded by advertising, they have limited attention span. This complicates the communication problem. How should a company craft its message to signal a premium value?

B2B – Show me the money: If your product or service is targeted at businesses, then it is best to show the monetary value of your product. It could be in terms of money saved or additional revenue.

B2C – Stick to dominant benefit: In the consumer market, it is hard though not impossible to put monetary value on the product usage because consumers have different usage intensities. However, a firm can communicate the most important benefit, which will get the user to pay the price premium. The communicated benefit should be such that it can not be copied by the competitor easily.


Some of the examples of dominant benefit are

  • Intuitive design : Apple has patented designs that appeals to the users

  • Robustness: LG gives 10 year warranty for a some washing machine motors. It will be very hard for the competitors to offer it without investing in high quality motors

  • Convenience: Luxury car makers offer services all around the world along with 24 x 7 roadside assistance.

Tactics that make the message sticky: While celebrity endorsement is quite common, it is discounted by the consumers. However, there are many other ways to make the message sticky

  • Endorsements by super users : Black & Decker, for its drills, went to building sites and  gave product demos and held competitions. When professionals loved the brand, the amateurs too followed.

  • 100 % money back guarantee: Some companies charge a higher price and offer full discount if the promises are not met and offer to pay the price to any competitor who can do a better job.

  • No Discount: Premium providers should shy away from promotions because discounts can give an impression of lower quality and also reduce the resale value to the product which may the one of the reasons why people are attracted to it.

  • Superior Experience: Premium products offer a rich buying and consumption experience. One way to ensure it to sell the products through high end stores with well trained staff.

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