“It’s all about price, the lower the price the more units I shift”.  This is a common statement I hear and it is actually quite an accurate statement that many companies I work with make.  The one variable many manufacturers and service-based companies can easily adjust to create demand is the price.

The problem with tweaking the variable of price (besides lowering margin) is what happens when the competition does the same?   The problem with relying solely on price as the driver for demand for a product or service is that once the sale price matches that of the cost of production, the only variables left to change affects quality.

Online, the drive to a lower price happens much quicker than in the off-line world as it is so easy to compare like-with-like.  Goods for which there is demand, but which is supplied without qualitative differentiation across a market, such as corn, milk or copper, all have a universal price derived by forces external to the producer.  Commoditisation occurs as a goods or services market loses differentiation across its’ supply base.

When considering lowering price perhaps it may be wiser to try and create differentiation. A little thought in to how to move your offering from being a price sensitive commodity like corn and creating a unique story or proposition will transform the fortunes of an online marketing campaign.  Our evidence based research into our customers’ online marketing campaigns backs this up.  Those that lead with a unique story make more money than those that lead with price.

Corn is a commodity. A unicorn is a wonderful and unique story that has intrigue and interest.  If your business had a unicorn product or service, people would talk about it and your price could reflect the difference from the competitors that just sold corn.  Corn or Unicorn, they are both still “corn” but our perceptions of the value of each are very different.

Marketing Challange: Creating A Differentiator

Vietnamese Lien Thi Doãn is only 28 years old, yet she still manages to look younger than her age. She has a 13 year

Lien Thị Doãn Kiva.org Entrepreneur

old son and a 5 year old daughter, kind eyes and she smiles frequently. As the breadwinner for her family (her husband is not well), she works every day – weather permitting – making coal blocks.  She sells each block for around 2 cents USD.

Lien is an entrepreneur and is funded by the charity Kiva.org to help get her venture off the ground.  The charity loan her 1,626,900 VND (£55) to help start her business and she has already repaid the loan.

Kiva.org was setup 42 months ago, allowing us western folk to back entrepreneurs like Lien in developing nations.  The charity uses the web to connect the donor directly with the project they are backing.  Using the web the donor gets updates on the project success and can donate more or transfer the repaid donation to another project.

The charity has a repayment rate of 98%, has funded 221,971 entrepreneurs 82% are women. In its’ short existence it has raised over $90,000,000 using the web.  Because of the web, Kiva have been able to create a game changing charity.  Their donation and feedback model challenges how charities should be marketing.  It’s becoming more evident that charities can no longer keep knocking on a donor’s inbox and asking for more money.  Kiva has shown a game changing approach to marketing their charity through technology.

Amazon’s game changer was to show how infinite shelf space could change shopping habits.  Google has changed the game of advertising by only connecting the searcher with the ad for the product or service they were seeking.

Game changing marketing doesn’t have to always be so dramatic.  Local firm www.propertypal.com is chasing the might of Independent News and Media’s site www.propertynews.com by implementing better technology long before the media group.  The change is small but significant enough to affect the status quo.

Having a game changer makes online marketing easier.  Your game changer is the differentiator, the talking point that will get you retweeted or blogged, it is your buzz generator.  The most successful online marketing strategies we have been involved in have always started with a mini game changer.  So what’s yours?

Once a product or service becomes digital, its cost inevitably marches toward zero.  This is the premise of the latest book from Chris Anderson called ‘Free: The Future of A Radical Price’.  In this book Anderson argues that once the creation costs of any digital asset are covered, the incremental cost of delivering anything digital is so low it’s not worth measuring.

The new internet generation are hard wired not to pay for bits

Anderson examines the human behavior behind why we feel there is value in paying for things made from atoms, for example a newspaper, a music CD, a DVD, training materials, encyclopedia, boxed software etc but yet, the moment it turns from physical atoms to bits and becomes available online, our desire to pay evaporates.  Ask yourself would you pay £0.60 for an online newspaper each day?

The book challenges you to reconsider how you market and price your digital products and services and examines the very successful companies that have embraced giving their digital intellectual property away for free and make their money in other, less conventional ways.  For example the gaming companies that gives away the game, but people can buy tools using real world money to assist them in the game.  Some 10% of people pay and the recurring revenue from this 10% it turns is more profitable than the 3 weeks at the top of the games charts.  The book is packed with similar examples.

To prove his point, Anderson gives away the audio book but asks you to pay if you want the print edition.  The summation is that if you operate in the digital world, you almost inevitably need to find a model that gives the use of your intellectual property away and look at other revenue streams that opens up from having advocates.

Understanding how we perceive value and how we ultimately market and price our products/services is a science.  This Ted Talk video from 2005 is well worth the watch to help understand how to deal with the changing world and how your customers understand value.