You are charging too much

Why is it that marketing theorists tend to blame a brand’s demise on “loss of differentiation” or some such thing when they shoud be saying “it’s too expensive, it’s no longer competitive” ?  (which incidentally means the brand is becoming more not less differentiated).

Why is charging too much seen as a indicator of marketing strength, not weakness or stupidity ?

It annoys me how people keep citing Apple as a company that charges price premiums.  They don’t.  Anyone really familiar with the industry knows of the comparison feature-by-feature breakdowns that show macs are priced competitively they just don’t compete in bargain basement minimal feature area.  Notice how iPad competitors are struggling to even match the iPads pricing.

Back in 2008 Steve Jobs said this during an interview with financial analysts:

Toni Sacconaghi – Sanford Bernstein:

“And then you had also mentioned the price umbrella statement and you said look, certainly to be successful on iPhone, we don’t want to create a price umbrella. I think in response to another question, you also talked about extraordinary feature functionality in terms of your Mac products. Do you have the same philosophy around Mac as you do with iPhone, that you have to be careful not to create an umbrella in each? So I guess the simple question is should we continue to see more affordable price points across the Mac product family and across iPhone going forward?”

Steven P. Jobs:

“Well, I think what we want to do is deliver a lot, an increasing level of value to these customers. There are some customers which we choose not to serve. We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that. But we can continue to deliver greater and greater value to those customers that we choose to serve and there’s a lot of them. And we’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody. So I think you can expect us to stick with that winning strategy and continuing to try to add more and more value to those products in those customer bases we choose to serve. Does that make sense to you?”

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One thought on “You are charging too much

  1. Pingback: Apple’s mythical price premium | Marketing Science

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