The New 4 P’s of Marketing: Price = Worth
Price is merely a reflection of value and value is personal, emotional and often irrational. As I mentioned in my previous blog, value is driven by context and perspective.
Over a decade ago, I paid an exorbitant amount of money to attend the premier U.S. professional football league’s championship game (they’re very litigious, so I won’t use their trade marked term without permission). Why did I pay so much? Because my team was playing in the game! I can assure you, the decision to go to the game was personal, emotional and completely irrational.
Here was the context of the situation: As a kid, I was passionate about professional football. I loved it with all my heart. My family was not into sports and did not understand my fanaticism. I lived and died with the success of my team and my team was terrible. “We” regularly lost in spectacular and embarrassing fashion and it was frustrating being a fan. But, fanatic I was.
Fast forward a few decades. My buddy Mike (another diehard fan of our perennially losing team) and I were sitting in his living room watching our team play in the conference championship game. Our beloved team had finally turned things around. Before the game, we vowed to go to the Big Game if our team won. We didn’t really believe our team would win because they had broken our hearts time and time again.
Fast forward a few hours. “Oh shit… they just won,” I said. “They actually made it to the Super (you know… Game).” We were both stunned. We didn’t really feel elation as much as relief.
Mike said, “You know what that means!”
“We’re going to the Super (You know what)!” We said in unison.
Mike worked the phone and found two tickets. Because it’s the big game, we paid big bucks (relatively speaking) for seats in the upper deck of a stadium on the other side of the country. Add plane tickets, hotel room, rental car, mandatory big game merchandise, food and beer… it was one of the more expensive weekends I’ve ever experienced.
Here’s the thing. Most people were perfectly content watching the game on their television or at a “big game” party. To them the expense of admission and travel wasn’t worth the experience. To us, however, that weekend exorcised the demons of a hundred miserable Sundays from our childhood. No matter the cost, we were going to find a way to make it to the game. From our perspective, the experience was worth every penny.
Frankly, I don’t miss the money. It was worth the sacrifice for the experience I’ll remember for the rest of my life. Value is in the eye of the beholder.
It is easy to get caught up with pricing concepts like elasticity, the law of central tendency, cost, quality, supply and demand, benefits and attributes, comparisons and alternatives, but what something is worth is really driven by the irrational decision-making of the human mind.
The Pet Rock phenomenon of the 1970’s, Cabbage Patch Kids of the 1980’s and tulip mania of the 1630’s had little to do with a price/value equation and everything to do with the context and perspective of consumers at that time. Worth is emotional, not analytical.
Story telling has become popular in marketing because we understand that value is tied up in the emotional connection our audience has with our products, services, or brands. That connection is personal because it is a reflection of who we are as a “tribe” as Seth Godin likes to say.
Our identity is wrapped up in our choices. For example: I am an Apple person; I am a Nike person; and, I am a Ford person. I place a higher value on those brands because I identify with them.
Worth is not a variable in an equation, but rather a reflection of value. So, I like to replace the classic marketing “P” known as Price with Worth because to me price is a mere dollar amount, while worth is the totality of what we are willing to sacrifice for something we value. We will travel farther, wait longer and, yes, even pay more for that thing we value. Worth is bigger and more personal than price. Think about it. When we sacrifice for something that we personally value we typically use the phrase, “It was worth it.”
How do you know when something is priced appropriately? Well, Stephen Covey famously introduced us to the win-win theory, which sounds like a solid approach to pricing. I was willing to sell for this price and you were willing to buy for the same price, so it’s a win-win. Everyone is satisfied.
However, when the price reflects the worth of something we value… the dialogue goes something like this: “I can’t believe that fool sold me this thing I value for that price!” And, on the other side, “I can’t believe that fool bought this thing I’m selling for that price!” I know it sounds negative, but both parties are elated. Now that’s a true reflection of value.
The question is what is your product or service worth to the people who absolutely have to have it?
P.S.
My team hasn’t made it back to the big game since. #wortheverypenny!
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