Ideas Pave The Way For Products
You wouldn’t pay $30 for a can of soup. Or $80 for an undershirt.
Yet many of you reading this have paid upward of $300 for jeans.
What happened to the Lee Jeans era?
In a flash, our price threshold for jeans has increased from $50 to $300. And it’s not just jeans that have gone ultra-premium, it’s markets as varied as bourbon, workout clothes, and even peanut butter.
Could we live in a world seven years from now where “normal” people (including you) would pay $300 for, say, a pair of socks? If so, how would it happen?
Products make the leap from pedestrian to premium when their creators think of them as ideas.
Some products are heavy on ideas: perfume, spa treatments, life coaching, alcohol. Others are practically idea-free: mailboxes, fax machines, oil changes. Notice anything about those two sets of goods?
You make mega-margins on the first and mini-margins on the second. Margins feed on ideas.
Part of the underlying reason for consumers being more receptive to this morphing of products into ideas is that our concept of luxury has evolved.
Luxury has become more about personal pleasure and self-expression and less about status. In the 1980s, people generally stuck to their social class, says Zain Raj, executive director of the ad agency Euro RSCG, Chicago: “You wore $200 pants with an $80 shirt and a $65 tie.
There was a relative order to the world in terms of value. Today, it’s all personal.” That’s why it’s not surprising to see people wear $300 jeans with $8 T-shirts. Or to see folks who can barely make rent pay $15 a pound for Costa Rican organic coffee.
Read more.
Photo by Malcolm Brown.
Andrew on September 13th, 2007 6:56 am
Diamonds are another perfect example here, “…a girl’s best friend” is one of the greatest marketing ploys ever.
Creative Financing on September 13th, 2007 10:40 pm
A good understanding of pricing strategy opens up the door to all sorts of profit opportunities. Why limit yourself in terms of customers you can appeal to?
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