One Size does not fit All
Henry Ford once said about the colour range of his cars “They can have any colour they want, as long as it is black”. His strategy was built around price. Choice was a cost to his business and he wanted to mass produce so he could get economies of scale.
If you have a low price strategy, you may also offer a one size fits all solution as introducing choice also increases cost.
If, however you wish to increase your margins, having a wider range creates value for your customer.
When our son was young, we took him into a Baskin Robins ice cream store where they had 31 flavours. He thought this was fantastic. He took his time going over the range to work out which flavours he would choose. He asked about different combinations. He even sampled a few flavours. In the end, he chose vanilla.
You might think that this proves you don’t need range, but he appreciated the choice. The process of choosing heightened his anticipatory experience. It certainly meant that price was not a factor (although of course he didn’t pay).
When you provide choice, you create value for your buyers, value they are prepared to pay for. How can you repackage what you sell to provide a choice to your buyers?
The choice does not have to be in colour, it could also be in level of service at different prices. Often when you have 3 levels of service, people opt for the middle, not the cheapest one, where if you just offer one, they may not take it at all. This turns the conversation from cost to scope, so if someone is initially cost focused, their mind is refocused on value as they can see transparently the difference between the options offered.
The premium offer is an anchor point that justifies the prices of the lower cost options. Yes, you don’t get some of the features of the premium option, but perhaps you don’t really want or need the platinum plating. The lowest price option is missing some highly desirable features. The middle option, which you might call the Goldilocks option, is just right.
Do have a range strategy for your business or do you just offer “one size fits all”?
May Your Business Be – As You Plan It.
Dr Greg Chapman – The Profit Whisperer
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