Why is low price not always the best strategy

Why is low price not always the best strategy

Why is low price not always the best strategy? (Professor)

We all love low prices, or at least lower prices.  However, as a company a low price strategy may not be the best decision to follow.  There are many dynamics that come with low price.

For the class:

Why would a company adopt a pricing strategy that is not low price?

#5 The power of the brand (Professor)

There are at least 5 McDonald’s restaurants in the area where I live.  When our daughters were younger, we would go to McDonalds on occasion.  However, our daughter have moved away, and my wife and I rarely go.  However, when we are traveling and need to make a quick stop for food (fast food, not a standard restaurant), we tend to stop at McDonalds.  Why?  Not because we really miss going there. 🙂  It is about the brand. We know what we can get.  We know what to expect from service.  We know the consistency of standard for the food.  Basically, we know the brand.

#6 Do customers know what they want? ( Professor)

There is a quote commonly attributed to Henry Ford, the Ford Motor Company founder, that he probably didn’t say.  However, the sentiment is something marketers need to consider.

“If I had asked people what they wanted, they would have said faster horses.”

The quote makes me think of Apple and all of its innovations.  Did customers ask for iPod or did they just want a better Walkman?  Did customers what a computer in their hand (smartphone) or just a better phone?

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