Something for anyone in the retail and service industry.
My business got me thinking! One of my aims at Jewel Affair is to design, stock and sell high-quality imitation jewellery but at an affordable price. When I say affordable I mean something which is not too expensive, yet not to cheap. Something that may be seen as a luxury but not so luxury that you\’re worried to use it so as not to damage it. This vision came to me when I was getting married in 2016 and the cost of my imitation jewellery cost me an arm and a leg on top of all the other costs I endured. It seems unfair that there are some places, which charge extortionate prices because they know they can and some places that feel the competition is too high and therefore sell similar items and a cheaper price but don’t have the same brand awareness as the business selling it at an extortionate price.
These are my views on low prices and high quality in the retail and services industries.
When looking at business strategy, many business owners and strategists wonder which is more effective at satisfying the customer. You may be thinking, “well both”, if so, you\’re definitely onto something but that would be a very easy answer in retail.
Shoppers in any retail businesses as well as those looking for specific services, are usually looking for the right mix of quality and value with price points becoming more of an influencing factor since the recession. Price has always been, and will always be, a significant indicator of quality, so making a high-quality product affordable and valuable is a fine line.
If we take a department store such as Nordstrom in the USA for example, you will see that they set the bar high with high-quality products and superior customer service, this tends to keep them above most of the other department stores and usually attracts a certain type and style of customer. Whereas in the UK a department store like Debenhams for example, keep their prices and customer service at an average level compared to that with The House of Fraser who attracts a different style of customer.
The balance between price and quality, and the conscious decision-making behind it, has always been a challenge for businesses. This is because one of the factors in the marketing mix that always causes trouble is pricing. The marketing mix consists of a set of four decisions which need to be addressed before launching any new service or product. These are known as the four P’s of marketing and are the variables that help businesses make strategic decisions, which are necessary for any smooth running business.
In summary, these are the four P’s that make up the marketing mix:
1) Product – What is the company’s product or service?
2) Price – what is the pricing strategy used by the business?
3) Place – where is the company selling its products and services?
4) Promotions – How is the company promoting the product?
With Pricing being so diverse in its nature, it can most definitely make or break a brand. This also goes for the quality of product or service. At any given point of time, there are many different elements which need to be factored in when deciding a pricing strategy for the business.
Years of research have shown that pricing is a strong psychological component, which can manipulate the customer’s decision-making. For example, if the price is kept high then the customer will think that the quality must also be high. This particular expectation of the customer is because he wants to receive value for the money he is spending. Therefore, if he is spending more money, he is expecting to receive higher value. On the other hand, if the product/service is of high quality, and you are keeping the price low, the customer will not see the value in it. His thinking process would allow him to wonder If the product is actually up to the right standard or if the quality will still be high at a low price.
When trying to reach a harmonised balance between quality and price, it is important to decide on the type of customers you are going to target but also need to analyse your competition. Many times, customers will decide the value of a product based on the competitors and what they offer in the market.