“He lines up for the field goal. In most situations, this one’s a gimme. Just a 30-yarder. But this one’s for the Super Bowl. If he makes this kick, it caps the greatest comeback of all-time.”
“Here’s the snap. Looks good. The kicker lays into the ball…and it’s…wide right!”
“That’s gonna sting him for a loooooooong time.”
Football games sometimes end that way. And unfortunately, it’s the perfect metaphor to describe the relationship between senior retail execs and consumers.
But that’s not just us saying this based on our own perceptions.
Data from “The Pricing Disconnect Between Senior Retail Executives and Consumers” report by First Insight supports it.
What’s Going On?
So, what’s the confusion here? What do senior retail execs think that consumers do not?
Well, for starters, consumers still want lower prices. Execs think consumers want higher quality products.
And actually, the execs are right too.
It’s just that consumers also want the lower prices.
Only 20% of senior execs in the survey found low pricing important, compared to 40% for consumers.
Yes, it’s difficult to pull off high quality and low prices. Those two seem like opposites. But it’s what the market wants, so you have to figure out how you can best fulfill that demand.
Consumers Think Prices Are Increasing
Now here’s where the disconnect widens. Retail execs believe just 20% of consumers think prices are increasing overall.
However, the study found 51% of consumers believe prices are increasing.
And again, 20% of senior retail execs believe prices are increasing in-store, but 60% of consumers believe the same.
What Can You Do About This?
So you have a long-standing retail problem: consumers want the best in quality, but they don’t want to pay too much for it.
How do you make that work?
Well, here’s a couple of ideas, as suggested by Marco Bertini at Harvard Business Review:
1. Clarify the Advantage of Your Price Structure
Goodyear had a hard time selling its tires, even though they were in fact superior to the competition.
Their marketing, for some time, focused on the engineering of the tires.
When they shifted their marketing to focus on the number of miles the tires would last, customers could make easy comparisons to competitors, see the difference, and justify the purchase.
Sounds simple, but if Goodyear can make that mistake, so can a company of any size.
2. Consciously Overprice to Win Attention
Say a certain vacuum costs $300, and that most companies price their vacuum right around that mark.
Then, you swoop in with a vacuum at $400.
Research shows customers respond by thinking,”Wait a minute! What’s this?” And they want to take a further look.
To justify the higher price and keep sales healthy, you must offer more value. But, you will gain attention for a while.
It’s the same strategy Apple uses on a massive scale.
More tactics are available. But, this at least helps you understand the disconnect between what business leaders understand and what consumers think. And, you have some idea of what to do about it.
So, now you can strategize your reaction to this formerly perplexing retail challenge.