MidwestLandlord
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- Dec 6, 2016
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This may help...
Notable! - Pricing and Psychology
Def read Kolenda's thread and article. He knows his stuff.
Your examples though, they go way beyond simple pricing and into branding, limited supply (Ferrari), operational differences, and Productocracy.
Like Starbucks versus McDonald's.
I agree that McDonald's coffee is better, but at the end of the day it is not a STARBUCKS.
You don't see memes about McD's coffee. You don't see girls posting selfies with McD's coffee.
You don't buy a "coffee" at Starbucks. You buy a "Starbucks Coffee" at Starbucks. People identify with it, they own it, it's part of them.
"I'm a Starbucks coffee drinker" is, well, part of who they are.
Yeah, they both sell coffee. And coffee is a commodity so it's a difficult space to be in.
But are they really the same product? I would argue that most people think they are NOT the same product. People are willing to pay more for the privilege of buying from Starbucks thanks to the perceived value of their brand.
Proof it goes beyond simple pricing: Could McD's get away with matching Starbucks prices? I don't think they could, because they don't have the same brand perception.
Plus, it's more expensive per cup sold to run a Starbucks than a McD's, so McD's can get away with cheaper prices.
Man, I have been very bloviated with my posts lately haha (Off-Topic - WOTD: Word of the day.)