(This article is written by me personally without proofreading and English is not my mother language, so you might find a lot grammar mistakes)
Business Strategy: The aura of legitimacy – Increasing Your Product Value At No Cost
Dealing with honesty and customer get what they pay for. (But they’re crazy to buy what you offer)
There are several different way to use this strategy. Although the method a bit different but it deliver the same result.
Example #1: Clothing Store
J&J selling their own design clothes and price range from $100-$200. When come to Sale Season, they can only give 10%-20% discount to all their clothes because their clothes are produced in high quality and by their own professional designer. They will make lost if they give 50%-70% discount.
But there’s a trick to give 50%-70% discount. They will buy other design clothes from other company and put their brand J&J on the clothes to claim as their own design. This is something like pay for private label. Consumer will never know this and won’t care about it because most consumers just want to buy the ‘brand’.
The ‘private label’ clothes are normal quality BUT they cannot sell below $100 because this will affect their own brand value. They also cannot sell for $100 above because the quality is not worth that much (If you’re selling overprice, this mean you’re cheating your customers). In order to make both balance, they decided to price the ‘private label’ clothes for $130 and give 60% discount. This way, they didn’t lower their brand value and also increase more sales.
Think about this, the consumers just can’t resist that the cloth price range from $100-$200 and now give 60% discount. So consumers will think this is a BEST DEAL.
This is a WIN-WIN business. The seller still remain their brand value, increase more sales and making good profits with the ‘private label’ product. The consumers are happy and they get what they’re paying for.
Example #2: Coffee
Big size and small size coffee are almost/ nearly the same costing for seller. The different is on the cup, it looks bigger. The rental, electrical and staffs all are fixed costing. Whether you have a good business or not, you still pay the same rental fee. If you can increase your sales, then you can lower your costing and increase profits.
When you order a small size coffee, the cashier will tell you that you can get the medium size by adding a dollar. Think about this, just one dollar you can get a bigger size. Great deal.
People who is doing restaurant business will know that adding extra won’t effect the costing. Use the bigger size of cup, adding extra coffee in it and it will look bigger a lot than the small size.
Same strategy also been using in Popcorn business. You buy a normal size of box popcorn for $8 and you get bigger size by adding extra $2 dollar, and the bigger box look bigger a lot than the small box. Seller make extra profits and buyer get better deal. This is also WIN-WIN deal.
[tags] the aura of legitimacy, popcorn strategy, business strategy tricks, business marketing [/tags]