Why I Choose To Pay The Price
There is a running joke in my family that if you send me to the supermarket for eggs with a $20 bill, don’t expect me to come back with change. This may be because I happen to be a firm believer that a $4 bottle of Essentia Water tastes far superior than a $1 bottle of Poland Springs. I’ll be first to admit that I fall victim to the power of branding, and am easily intrigued by retail displays, new snack flavors, and the highest quality oat milk regardless of what the price tag may be. I am basically the ideal customer for a brand, but I also appreciate quality appreciate when a product provides value.
While not everyone shares this — what I like to call- personality trait, we now live in a world where we have the option to choose from a variety of almost every item. These choices we make on a daily basis usually come down to two factors- price vs. quality. When setting a price for a product, brands ask themselves- “how much will an average consumer pay in exchange for the quality they receive?” As I previously mentioned, I’ll be first to admit that for many products the higher price is largely due to branding, and not always how good the product is, but there is also a quality element involved in many of the purchasing decisions we make.
When Brands Build a Name
For certain products, brands have established such strong brand identities that consumers associate a product with its brand name. Brand associations become rooted in the minds of consumers, and allows a brand to charge a higher price because of their loyal following. For example, Band-Aid is a brand that sells a variety of adhesive bandages. The brand has established such a strong brand association, that consumers generally associate a Band-Aid with the product itself. This allows brands like Band-Aid to charge higher prices for their products, and allows for no name labels to sell cheaper alternatives. While consumers have a choice, many choose the name brand Band-Aid despite the higher price point. Similarly, is the brand Kleenex, who makes facial tissues. Consumers have come to associate the name Kleenex with the facial tissue product. In summary, when a brand makes a name for themselves it often allows them to charge more because they know their consumers will pay for the brand name.
When Less Isn’t Always More
Last week I suffered a minor kitchen injury that resulted in an urgent trip to the pharmacy. As I searched the aisles for what I needed, I realized that nearly every product had a brand name item at a higher price, and an off- brand option at a lower price. Following in my typical behavior as a consumer, I chose to buy the Advil brand of pain reliever, the Band-Aid branded bandages, and Polysporin antibiotic ointment. While each of these items had a cheaper alternative, I chose the items based on brands that I trust, despite the higher price. While I’m sure the alternatives would provide equivalent healing properties for my injury, the brand name items provided me with value through their associations with being higher quality and trustworthy. Past experience, advertising, and brand recognition of these brands are all elements that conveyed value to me as a consumer when making my decision at the pharmacy.
As one of the 4P’s of marketing, price plays an integral role for a brand. Price conveys value, it’s used as a competitive edge, and is directly related to how much revenue it will drive for the company. Off- brand labels are created to compete with brands on price, giving consumers the autonomy to choose how much they would like to spend on a given product, in exchange for how much value they expect in return.
