Author|Liu Chunxiong Source|Teacher Liu's Forum (ID: liuchunxiong1964)
The soul of marketing is how to sell prices Kotler said marketing is not selling products, it's selling prices. Teacher Jin Huanmin put it more bluntly: Sales is selling products through price; marketing is selling price through products. There are many sayings about marketing, but Teacher Jin's "selling price" theory is interesting, classic, and vivid. People with a product-selling mindset like to use price tactics, such as price cuts, discounts, and promotions. These are all price reductions or disguised price cuts because they are the simplest and most effective. But the side effects are also the most obvious. At the beginning of my marketing career, Teacher Jin Huanmin and I had a common rule: everything is negotiable, but price and payment terms are not. We called it the "two no-negotiations." Here, payment terms are actually ancillary clauses of price. First set the price in stone, then find ways—just not from the price angle. That's the marketing mindset. Teacher Jin Huanmin also said: Pricing determines everything. Pricing is strategy; high price is a grand strategy. This shows how important price is.
Sell the product at its worth So-called selling price means generating a premium. A premium means selling at a higher price than others. If a brand has no premium, it's hard to call it a brand. To sell a product at a premium, you also need consumers to appreciate it and be willing to pay. This requires proving that the premium is worthwhile. So, selling price is about a series of activities that make consumers feel the product is worth the high price, and that the high price is a better deal than a low price. What activities can prove to consumers that the high price is worth it? That's the mystery of marketing. The contrast between marketing and sales is hard for many to articulate. Through Teacher Jin's "selling price" theory, it's easy to explain. Sales often sells products cheap; marketing sells products at their worth.
Price is an efficient tool Why do salespeople like to use price tactics? Because price is an efficient tool. As long as you cut prices, discount, or promote, sales immediately pick up, with quick results and obvious outcomes. So, when sales hit a snag, the sales department immediately thinks of price tactics. In some companies, this has become a habit. Be careful: price tactics easily create dependence. It's like drug addiction; it becomes addictive and hard to quit. Although price tactics are efficient, they easily create dependence, so the next round requires a larger dose, or it becomes ineffective. That's the dependency syndrome. Once price tactics create dependence, they change the break-even point. Companies are so sensitive to profits that once prices drop, they look for ways to cut costs. Cutting costs easily affects quality. In the end, you'll find that price tactics gradually push the company toward the edge of a cliff. I once asked in class: If sales decline, what do you do? The answers students could think of were nothing more than advertising, price cuts, and promotions. Actually, the latter two are disguised price cuts. My response was: Even without professional training, you could come up with these three methods, so they are not professional methods. If you encounter such problems in the future and answer this way, don't say you're my student; I can't afford the embarrassment.
Value is a lasting tool People sensitive to price will repeatedly chase prices. For example, customers attracted by low prices will leave for even lower prices. In other words, price does not bring customer loyalty. I had a saying long ago: "Low price is easy first, hard later; high price is hard first, easy later." Low prices attract customers easily, but retaining them is hard; high prices attract customers with difficulty, but retaining them is easy. Low prices generate price recognition; high prices generate value recognition and quality recognition. So, once marketing that makes products valuable reaches a certain tipping point, it's hard to reverse.
Price disrupts competitors, but also disrupts yourself This is a case I experienced personally. The person answering this question is me. When writing the article, I used the boss's tone. This case shows that price disrupts competitors, but also disrupts yourself. Disrupting competitors is temporary; disrupting yourself is permanent. Now, that once-powerful company is nowhere to be found, while that big company is still growing rapidly. If you trash prices, competitors may only suffer for a while, but you might be not far from death.
Price discipline In the past, big brands had price discipline; small companies didn't. So, small companies were gradually eliminated. Recently, because total industry volume has hit a ceiling, big companies generally face sales difficulties, and big companies are also losing price discipline. Once price loses discipline, it's easy to cause a price collapse, which is more terrifying than a sales collapse. A sales collapse can be saved by many methods. Once prices collapse, consumers flee faster, and there's no way to save it—no solution! Product upgrades in recent years have confirmed that the past habitual "distribution + promotion" tactics no longer work; price no longer has the power to drive sales growth. But how many marketers realize this problem? In the past, marketing for basic necessities, due to the generally low income of consumer groups, could sometimes see results with price tactics. But facing the consumption upgrade driven by the rise of the middle class, price tactics are becoming a negative tool. If not used, fine; once used, it's even worse.
Price "loss of virginity" is serious In the past, small brands lacked discipline; now it's common for big brands to lack discipline, and they've generally "lost their virginity." Now, what allows channel pressure to burst distributors? It's precisely price tactics. Now, "second-tier wholesalers" are making a comeback. Why? Because of tiered sales policies. Tiered sales policies used to support large customers; now they disrupt prices. Because of tiered policies, cross-channel dumping on B2B platforms has become relatively easy. If you continue to play the price game, and prices are trashed, you're not far from death. -END-