Formula
S = ( v > P ) C
S = Sales you get which depends on Value (V)
V = Value that the customer gets or feels
P = Price (the price the customer must pay to get that value)
C = Communication, how do you communicate
Formula
( V – P ) C ( V – P ) C
( 400 – 300 ) x 4 ( 360 – 300 ) 8
100 X 4 60 x 8
400 480
You Competitors
You have to make sure that the S value is higher than that of your competitors. So that customers prefer your product or service over competitors.
If you have a really good product or service, the value the customer gets, for example, is 400 and you decide to sell at a price of 300.
This means that the customer has to sacrifice 300 rather than what the customer gets 400. This means the customer gets more.
And of course you have to communicate this value to customers.
For example, competitors sell the same price, namely 300, but it turns out the quality and service is less good than yours. This means that the product has no value.
But because they are smart in communicating their products to customers, have high consistency and use many channels, the effort they spend is only 2 times your effort.
And if your customers see this, of course customers will prefer products from your competitors, even though the product quality is lower. However, because of the communication factor, competitors get more customers.
And when you understand this formula, you have to create the highest value and your communication must also be as high as possible. Then why is the price not asked to be as low as possible?
Because it is possible that the price is indeed the price that you have calculated in such a way based on the cellphone and if you lower the price it will make business continuity worse.
So when you don't want to change the price, you can just change the value and communication. So your value must be high and you must also communicate your product very well
How to increase value even though the product is the same as competitors. We know that there are 2 types of value, namely functional value and emotional value.
For example, we buy clothes without a brand and then buy clothes with the Uniqlo brand. Of course the price will be much higher for Uniqlo even though the quality is the same. And people will still buy it even though the price is expensive.
Because Uniqlo is smarter in branding and communicating to customers, the public will be more interested in their brand.
So we don't need to lower prices to win the competition but try to communicate your product to customers. So that customers have more trust in your brand.