What are you doing to address the millions of new consumers exploring the low cost/high value of the product spectrum?
Investing in the low end of your product line — or below it — will pay off many ways over if done right. Done right means not engaging in mindless price cuts or selling cheap product that weakens your overall brand. Unfortunately, many companies haven’t learned this lesson, says Harvard Business School retail expert and historian Nancy Koehn:
“It seems the only single tool in the toolbox we’re seeing now is to slash prices,” Koehn tells the Chicago Tribune. “In the end, that’s a no-win situation for every single retailer.”
The Right Way to the Low End
Guitar maker C.F. Martin has hit the right note at the low end. Martin has sold out of its new sub-$1,000 guitar — half the price of its more traditional all-wood instruments.
Other examples of top brands heading down market:
- Vera Wang is reducing the asp of its wedding dresses by 30 percent next spring, from $5,500 down to $3,800.
- Coach in June introduced the new Poppy line, which is retailing in some outlets for an un-Coach like price of under $200.
So you are ready to consider investing in the low end of your market with a new product or service. Innovation expert Scott Anthony, writing on Harvard Business Publishing, recommends you ask yourself three questions:
- Is there a large pool of potential buyers of your much lower-priced product?
- What would it take to cut the cost of your product or service by 50 percent or more?
- What other benefits could come from loving the low end?
For more detail on attacking the low end, read Anthony’s Cheap Guitars Strike a Chord with Consumers.
Are you considering expanding your product or service offerings down to the value end? What questions are you asking yourself as you contemplate this strategy?
