

What You Sell and What They Buy - narcissus
http://www.codefromaway.net/2012/03/what-you-sell-and-what-they-buy.html

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davemel37
Two Points....

Lazy Man's Version. 1\. "People Buy the Hole, Not the Drill!"-Marketing Axiom
2\. delink product from price and link price to value. 3\. Always compare
apples to oranges when selling. the worst thing that could happen (from a
marketing and pricing perspective) is your product or service becomes a
commodity in your customers eyes.

The story goes that when Robert Kiyosaki first developed his Cash Flow 101
board game to teach kids about money, he ran some focus groups asking how much
people would pay... the common response was between $20-$40, which is pretty
normal for a board game. He supposively ran into Dan Kennedy who explained to
him that instead of comparing this game to other board games, he should focus
on the value it creates and the financial education it delivers and charge
like $200 for it. He did this and still sold hundreds of thousands of copies.
(it's available on amazon for $99). Drawing the comparison of apples to apples
or in this case board game to board game was holding him back in his mind, but
if the value was communicated properly, the game actually saves you thousands
of dollars of education in a money course, or worse, a lifetime of money
mistakes. ALWAYS COMPARE APPLES TO ORANGES. you never want to draw a side by
side comparison, because then price becomes relevant. If you succesfully
delink product from price, and realize that price is actually by definition a
numeric representation of value, you can actually charge what a product is
really worth. This is also why a "Unique" selling proposition is so important,
you don't want to be viewed as a commodity to your customers, it will only
hurt your bottom line.

Smart marketers live by the axiom, "You Buy the Hole, Not The Drill!"
(Although, this concept of selling benefits, not features is only one layer,
and there are deeper emotional layers if you want to peel the onion. The
better you understand what drives your customers decisions, the more
effectively you can communicate the value you are really providing to them.
Keep in mind though that you need to tie the benefits into features, to
explain how you will deliver that benefit. A good exercise for this is a two
column spreadsheet where you outline all the features of the product in one
column, all the benefits in another column, and start drawing lines matching
them up to each other. Yes, good copywriters and marketers actually do work,
they dont just suddenly get inspired :)

There is a great book on pricing strategies by Dan Kennedy and Jason Marrs
worth reading if you want to learn how to set your prices properly.

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molsongolden
Great thought-provoking comment.

edit: why was this downvoted? I wasn't sure what to say but wanted to let the
commenter know that I appreciated his contribution. Should I have just
upvoted?

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Confusion
Wait a few hours for the score to settle, before asking about a downvote.

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bambax
McDonald's is actually in the information business. It sells information about
its food.

What people buy when they buy a Big Mac are two things:

1\. the actual Big Mac

2\. insurance that a Big Mac always tastes like a Big Mac

This second thing cannot be bought from a local restaurant not part of a
chain. You can't be sure what a random burger will taste like, and you can't
esp. be sure it's not going to be awful.

That's why more people go to McDonald's than to other restaurants that they
don't know: they hate uncertainty and would rather eat something that is
consistently average than take a chance every time.

This is also known as the "Lemon Effect": <http://blog.medusis.com/are-you-a-
lemon> (shameless plug).

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powertower
> they hate uncertainty and would rather eat something that is consistently
> average than take a chance every time.

I think it's more like they have been programmed (marketed to from a young
age) to spend $5-12 on a relatively low quality product as long as they get it
fast and get it from McD's (on every corner). They simply don't know any
better, and don't care to find out more.

I can buy a complete organic meal and cook it myself for half the price, with
2-3x more nutritional benefit, with 1/10 the health risk. But that requires
time, effort, knowledge, self-improvement, etc.

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endersshadow
Oh for the love of all that is good and holy, can we put this marketing-is-
brainwashing thing to rest? People don't go to McDonald's because they saw a
clown singing a jingle on a television. They go because they like the food at
that price. They may be more aware of that option than other options due to
marketing, but people aren't automatons that just do like television tells
them to.

That being said, I challenge your assertion. I can buy a double cheeseburger
(call it 1/4lb of meat) from McDonald's for $1. This takes me about 5 minutes.
Buying organic beef, cheese, and rolls, and then prepping, seasoning, and
grilling that burger will take you, give or take, 20 minutes and probably cost
you on the order of $2-5 per burger (depending where you live), minus the time
needed to get those ingredients. You value time, effort, and knowledge at
zero, which is below their actual value.

My point is that your argument is fallacious. Learn from what McDonald's puts
out and understand why, despite plenty of marketing, Burger King has fallen
off a cliff and Wendy's has come charging ahead. McDonald's has a lot of value
in terms of a case study, but you dismiss it with that old-programmer-standby,
"It's just marketing." I'm sick of seeing that attitude--it quickly dismisses
good and interesting business strategies that we can learn from.

~~~
powertower
No one is dismissing anything. I'm only suggesting that one of the primary
factors is marketing in most sales dealing with consumers in the fast food
industry. Marketing doesn't mean a tv commercial itself, but it does mean the
underlining messages that consumers begin to wrongly believe to be true.

If you go to a fast food chain, and go to an organic shop, the difference in
the look of the customers is drastic. You might be getting your food quicker,
maybe even cheaper, but you end up losing out at the end.

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ianterrell
The founder of Patagonia, Yvon Chouinard, writes about a related topic on the
supply side in his book, "Let My People Go Surfing." The way he phrases it is,
"What is the company's real product?" and he defines product as that which the
company makes its decisions around.

Some of it is a little simplistic, but the points that have stayed with me are
1) the product of a large publicly traded company is its stock price, and 2)
the product of a small scrappy start up is the start up itself.

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lrobb
_Do you really need to write up a whole framework of code to justify the price
you put on a site? Not at all! They're not paying you to write code: they're
paying you to get them a result._

This. I'm reminded of the post by Rob about his startup acquisition... The
interviewers were asking him why he didn't rewrite a site written in classic
ASP to node.js/mongo... Completely missing the point that the code behind the
button made absolutely no difference in the sale or functionality of the
product.

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tzaman
Ah yes, this goes hand in hand with my mantra: a product (be it IT or
physical) is only worth as much as people are willing to pay for it.

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dfragnito
Software IS a Service (SIAS)!!

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funkah
In the past I have also heard that McD's business is not fast food (nor real
estate) but food arbitrage. I suspect this says more about the person doing
the analysis at the time than it does about McD's business. They sell
hamburgers.

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Porter_423
McDonald's business is not about fast food,rather it provides information
about food.Actually business is depend not only by the product but also much
more depend on its Advertisement.That's why McDonald's business is so popular
in America.

