A collection of short stories and journalistic commentaries depicting my simple life
and how I fit in with the modern day universe of our times

There’s no excuse for staying sober these days… there really isn’t.

Let me explain... I went into my local mini-market the other day, to find the cheapest bottle of booze in the shop. I did have my reasons, but they’d take far too long to explain. Suffice to say that it had nothing to do with me falling on hard times or being a raging alcoholic.

Anyway, I didn’t have to look too far to find exactly what I was looking for… a two litre plastic bottle of 7% proof white cider for just a measly £2.18. And this was in a leading supermarket chain like Sainsburys! Now I’m sure that those ‘in the know’ will tell me that I’ve been had… that I could have got it a lot cheaper from somewhere else… but to me, it seemed a ridiculously small amount of money to pay.

And given that quite a large proportion of the average population only drink alcohol with no higher ambition than to get drunk and possibly fall over, you’d probably expect that this is exactly the sort of stuff which everyone would be buying for those purposes. It probably doesn’t even taste much different to the alternatives, (no I didn’t drink it) and will certainly fulfil the brief as far as getting drunk is concerned. And yet the only people I’ve ever seen buying this sort of thing, are youths in hoodies and middle-aged blokes wearing second hand suits who promptly drink it straight out of the bag.

So why is this?

Well from when I studied economics, many years ago now, one of the few useful things I remember is the concept of the reverse elasticity of demand. Explained, this means that with most products, as price increases, demand falls. But some products are somehow different. If you lower the price, then you also lower the demand as well – particularly amongst certain groups of consumers. And there can be several reasons for this:

A low price is often equated with unacceptably low quality.

Image is a key factor with many products. And cheaper products usually have a poorer image.

Products are often bought as gifts. And nobody wants to look a cheapskate.

I mean, would you want to take a £2 bottle of booze to a party? I did, but then I’m a little bit strange and tight fisted too. I must confess though, to being just a little bit embarrassed while buying it in the shop.

You see, the point I want to make is all about price.

And most specifically the prices you can happily charge for your products or services. It’s very easy to get locked into a mindset that says that lower prices will lead to higher sales, or conversely that higher prices will result in lower sales. But the truth of the matter is far more complex than that. It very often depends on the characteristics of your particular product, how it’s marketed and whom you’re attempting to sell it to.

And very few of today’s businesses do enough
testing of the effect of a change in price.

Those that do are very often surprised to find that the effect is seldom what they expected. Look, I know that it’s totally counter-intuitive to think that an increase in price might actually boost sales, but in the right circumstances, it can and often does do. And unfortunately, you won’t know whether this applies to you and your own products, until you go out and test.

Now you might decide that you’re quite happy to continue selling to your own market’s equivalent of the hoodies and the vagrants. It might be a very lucrative market for you. But the option to do something different - to find an even larger market share at a totally different price point may also be there too.

In the case of the white cider I bought the other day for example, it might just take little more than some new fancy packaging and a more sophisticated label to double or even treble the price, and find you a whole new market to tap into…

Because quite often where pricing is concerned, image and perception usually matter more than the actual product itself.

HIGHER OR LOWER?SocialTwist Tell-a-Friend


Post a Comment

Post a Comment

Thanks for reading this blog entry, feel free to leave your comments

Some of my more popular posts

Search This Blog

About This Blog

Its my own fault really, its all about what I see in the world, and how it all translates for me.

Please, please, please, dive in and enjoy this blog and all that I will ever ask in return, is you add a few comments whilst passing through.

And if you've enjoyed reading the contents as much as I have compiling them, help spread the word through your friends.

Thanks again for dropping by, hope to see you again real soon.

Need a little more?

  © Blogger template Shush by Ourblogtemplates.com 2009

Back to TOP