I had an interesting little experience as I stood in line at one of my favorite little delis this afternoon. The owner had decided to raise the price by around $2 per sandwich and the woman at the counter had the unenviable task of telling this to all the customers. Unfortunately, the new price put their sandwich at the same level as another deli just a block and a half away. Problem is, the value propositions weren’t the same. Picture this:
Deli A: Pre-made sandwiches, limited flavor selection (turkey and meatloaf, usually), tasty whole grain bread, $5 apiece
Deli B: Made-to-order sandwiches (incl. toasting), 30+ flavor varieties, 4 bread types (but none as good as Deli 1), larger sandwich, $7 apiece
Where would you choose to go? I head over to Deli A a fair amount and liked their smaller portions and smaller price tag. But now the only competitive advantage I see for them is their bread, which by itself is sadly not enough to bring me back. So I said to employee that she should tell her boss about this conundrum. I hope she does, and I hope he takes it to heart.
The issue here is that the owner decided to raise the price based on what appears to be solely internal pressures. He wanted to make more money on the sandwiches. OK. But he didn’t take into consideration the customers’ input nor did he recognize the alternatives available to us. In the Market Culture Model, he failed on 3 of the tenets.
Customer Insight: The owner of Deli A didn’t fully understand the reasons customers come to their counter. Ready to go, the sandwiches were consistently good and sold for an attractive price.
Competitor Awareness: Deli B offered a better sandwich, but was more expensive and required waiting 10 minutes on a busy day to get. But they recently started letting us call orders in, and as of today are no longer more expensive. Hmmm …
Collaborative Approach: I don’t remember being asked about a potential price hike. Did the owner have a survey? Any market research? Pretty sure the answer here is “no.”
So there we go. Tomorrow I’ll be at Deli B, but I’ll check back on Deli A in a week or so and see what happened. Can you teach an old dog new marketing??
Good post, marketing skill sets can be applied to any business and make a big difference….
This seems like a great example of pricing one’s self out of the market