ANER TODAY cAsqaDE

ALAN OAKES publisher ajoakes@aol.com

The price is right!

I must admit that I enjoy a good glass of wine, but I have never been able to wrap my head around both the pricing and the rating systems for wine. For example. I see a wine with a price of $15 per bottle with a rating of 91. I see another bottle of wine of the same type for $100 that is also rated a 91(different vintner from the same region and rated by the same person). So my dilemma has always been why buy the $100 bottle (not that I would anyway) if the $15 is rated the same and clearly of far superior value. And yet people do.

Similarly, I often see a $15 wine jump over a short period to $30 when a wine rating comes out and customers go out hunting for it. In this example, one can easily argue that this is supply and demand kicking in. No problem with that, and yet, I also see people buying unrated $40 bottles because advertising and/or well-placed PR told them that these wines have great value.

A recent blind survey showed that people preferred a particular wine when they tasted it at higher and higher price points. They liked the wine when it was priced at $20, and even more when it was priced at $50. Therefore, our expectations determine what we think something is worth. Tell someone it is an expensive wine, and they will believe and taste it as an expensive wine.

That same idea affects the perceived value of everything we buy and helps us determine what we are willing to pay, from the designer-label shirt to the brand- ed can of soup. If we are told that something is better, whether it is or not, we think it is worth more and we think it is better for us. For example, many will not buy generic food products-they prefer the branded cereal product at 20Vo more because they say the taste is better. Yet often they are the same product, made in the same factory, but with perhaps fewer nuts.

So the question we all must answer is: how do we affect people's expectations of our products and companies? So many of us are caught up in the commodity game where we can never convince anyone our product is worth more, so we fight daily over price. Yet, I see many clever marketers out there who have convinced customers that their product is worth more. Perhaps they have a fancy logo and memorable brand name, they might have clever and consistent advertising, or they use eye catching point-of-sale packaging, along with added great levels of service and end-user support etc., etc., with the end result they can sell at 30-507o more than their commodity counterparts. More costs, mind you, but their field of competition is much, much less.

It just beats me up at times when I see companies say they want to sell highermargin products, yet they are not prepared to invest in what is necessary to make this happen. They sound like our current crop of presidential candidates, who all now claim to want to make change, as if they could will it to happen.

The reality is that by sticking that new price point on, along with the new label and fancy name, you have to market the product and realize that re-branding just does not happen overnight. Again, too many are content just to stick the word "luxury" on everything until the word has no meaning. Can your cat really tell you that luxury brand of cat food is worth the 3OVo more that those ads promise? Indeed after seeing "luxury" stamped on just about everything, I am not sure I trust the word anymore. If you have a product that is worth more and you are going to price it high, you also need to deliver high value if you are to succeed in the longterm. Give your customers a good experience, get their feedback, then announce it to all that will listen, and keep repeating. The only way to succeed long term is to have an all-encompassing marketing and promotion plan. There is no mystery to why some companies succeed over others; they have a reasoned marketing plan and then go out to execute it.

This industry, while still under-marketed, has made great strides over the last five years. So many more companies get it. I am seeing higher levels of creativity than ever before, along with frequency and consistency. In fact. in some cases better reasoned out than most of those horrible Super Bowl ads I watched last night-Go Roclq!

Stabi lized Weather-Resistant Wood \_-/