I am reminded again that in any market customers look for value and that does not necessarily mean low price. (For more on my discussion of the miuse of the term “value priced” you can download a free white paper.) The AP reported today that discounts on products where the consumer finds true value are non-existent, even in this economy. They cite products like the iPhone, iPod and Wii which are selling well at full price. (In fact, Apple reported higher profits becuase of their ability to hold price and volume.) They note that Avon is raising prices and Nike just released the latest Air Jordan for $190 a pair.
Candace Corlett is quoted in the article as saying, “If you infuse enough value into the product, people will pay full price.” Well no kidding. And if you don’t then the product is mis-priced … by definition. Saks and Neiman Marcus took it in the shorts this last year and maybe too many of their shoppers are questioning whether they offer enough value at their price point. And don’t say, well all the high end is suffering. That’s not true. A jeweler I met in Indianapolis a few weeks ago had terrific sales over the holidays. Lamborghini had record sales last year.
Does that mean everyone can charge full price in a downturn … no. Some items become discretionary and you may have to lower prices to allow the customer to not defer. But then again, is an iPhone not discretionary? You see, too many items are just “me too” and survive (and maybe even appear to thrive) in a good economy because lots of stuff is being bought. As I have said for years, if you are in a canoe in a fast moving river you may think you are fast, but when that canoe hits the lake, then we find out if you can row.
The only hard and fast rule is this … value is providing What the customer wants to buy for a fair price. And value works in any market.