The New York Times recently had an article about retail pricing. The main thrust of the article was about how today’s consumers think and the information available to them to make a decision. Dale Pollak in his Velocity 2.0 blog talks about the same thing. I can relate better to Dale’s blog because I have been involved in the automobile industry for 30 years. The experience is the product we deliver and the only thing our customers care about.
When I was a retailer, people would often ask, “What did you pay for this car?” My initial reaction was , “None of your business!” I soon learned that was the wrong reaction. The customer was trying to justify value. Value is what it’s always about. Nobody ever argues that a Cadillac has more value than a Corolla, but there are a lot more Corollas on the road than Cadillacs. That indicates when it’s time to write the check, more people will buy the Corolla because of it’s value to them at that moment in time.
I think the combination of the internet and the commoditizing of the industry will force “dealers” to move to “one price retailers” like CarMax. People just want to know they are getting the most value for the price. Don’t try to outfox today’s empowered consumer, give them a great experience and price will not be an issue. The early adapters will be the businesses that not only survive, but thrive.
The Times article closes with, ” When something is priced right, Mr. Vineburgh says, he does not try to haggle. Recently he paid the asking price for a composite hockey stick that was marked down to $70, from $150. “The right price, to me, is what I’m willing to pay for something,” he said.