By Danielle White
Iron Bean strives to always bring the best value to its customers. Finding the right balance between cost and quality versus other brands. The only issue is that value is based on individual perception, what is considered valuable can vary wildly from person to person. There are lots of marketing tricks that companies partake in to manipulate the perceived value of their product in order to boost sales. Marketing and psychology often go hand in hand. An understanding of these tactics is a good thing to have when evaluating where your hard-earned money should go!
One of the basic indicators of a product’s value is the price, right?
Well, not necessarily. When people don’t know the true value of something, we tend to default to using the price to make a value judgment. If we see a $65 coffee on the shelf, we would likely automatically assume it’s some good stuff, but many of us aren’t going to shell out that much dough and may opt for a more reasonable $20 coffee. Not everyone is wired that way though and to some the $65 coffee automatically becomes more desirable because it’s exclusive, simply because of the price tag.
At this point we know nothing of the package contents, no idea the roast or bean origin but we’re still likely to assume the more expensive coffee is better. Conversely, if we saw a $10 bag of coffee next to the $65 bag and the $20 bag we’d make the automatic assumption that this coffee was less desirable.
Interestingly studies have shown that those initial perceptions often hold up almost like a placebo effect. The more expensive coffee will often taste better and the cheaper coffee often worse simply because we expect it to. When we don’t know the price at all, taste perception often changes drastically. Perception is a powerful force.
Luxury brands often benefit from this perception and are able to markup inexpensive items astronomically.
Companies with big marketing teams realize this and when wanting to boost profit margins the most logical step is to raise prices. Raising prices is tough if the price has always been low, but over time a company can work on its image and perceived value and edge those prices up.
One of the benefits of raising prices isn’t only higher profits but also the increased perception of value that comes simply from having a higher price tag.
One of the most alarming parts of this strategy to a small company like Iron Bean is that some companies don’t mind losing customers at all when raising prices. If raising prices 20% will cause 10% of the customers to look elsewhere then they’ll do it. The bottom 10% of customers are considered less desirable and aren’t a big loss in their eyes. Raising prices is often seen as a way of weeding those customers out and only marketing to those customers who will be willing to pay a higher premium, making a product more exclusive. There are many marketing books and websites that recommend these strategies for companies looking to grow.
To a company like Iron Bean, those strategies are everything they don’t want to be. It may not always be the right business decision but integrity is just that important. Iron Bean definitely needs to make money to keep operating but is committed to keeping items fairly priced. Just because a company can charge an outrageous amount doesn’t always mean it should. Pricing items higher than necessary in order to gain more profit isn’t worth it if it pushes out and excludes a group of customers.
The value that Iron Bean wants to bring isn’t just phenomenal coffee, but the value of integrity. Iron Bean is a brand that one can purchase and know that they’ll always get a fair deal and a quality product. There’s lots of competition out there and making money is great, but feeling good about how that money is made is 100% as important. Some of the marketing strategies that exclude certain customers may make sense for the big guys, but Iron Bean doesn’t want to be so big that individual customers lose their inherent value.
Customers are the backbone of Iron Bean and each customer matters, not just the big spenders.
Overall Iron Bean reads about many marketing strategies and receives many solicitations for products that would boost sales but none of them are appealing if they compromise integrity at all. There’s a way of doing business that is right, and it doesn’t always mean the highest profits.
Iron Bean will strive to show why their product is worth the price tag and keep that price tag fair and reasonable even if that means its lower cost may seem less desirable next to the ‘high end’ brands. Hopefully, the true value will show through.
Some companies rise to success quickly because they have a passion for marketing, but Iron bean has a passion for coffee first. Growing too big too fast would compromise the quality and integrity of what makes Iron Bean special.