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What Milk Can Teach Us About Marketing

March 31, 2015 By James Hill

Dear Friend,

Why is it Milk, and I’m not talking about the different fancy shmancy A2, skim, lite, variety – just your plain ole run of the milk, stand 2L bottle…

marketing milk bottlesCan differ in price by 33%.

Look at these two bottles, I bought the 2L bottle on the left at a supermarket for $2.99 and I bought the 2L bottle on the right at a service station for $3.99.

Think about your business for a second. What would it be like if you were charging 33% more than your competitors (and not have people complain about it).

Now most of us know the service station bottle is going to be more expensive. But why is it people happily pay a premium for the bottle on the right?

It’s got nothing to do with value – because these two items are exactly the same. In fact only difference is the used by date.

The answer is in the perceived value of the item.

Now the reason I’ll happily pay the premium for the service station bottle is because when I’m there, I don’t have to through the hassle of going to a supermarket.

Now this is not alway the case – if I’m doing the shopping, there is no value in me going to the services station to get the more expensive milk.

However, when I’m on the way home, filling the car up, in a rush, couldn’t be bothered driving the extra 5 mins to the supermarket (and don’t want the hassle of checkouts) or just walking home from my local cafe.

The local service station’s more expensive bottle of milk becomes a very attractive option.

I mean think about having to go home, jump in the car, go out again – it’s already 20mins lost (without taking into account my annoyance for queues).

What’s the perceived value I put on my time – what else could I do with that 20mins – play with my little girl, watch a fishing DVD, throw a ball with the dog…

Is that worth an extra $1 (when it’s right there in front of me)… you bet.

The perceived value being created is convenience – and this is the position the service station / convenience store has adopt in the market.

So now the million dollar question…

Where are you positioned in your market?

Are you positioned in your market?

Or are you just like everyone else in your industry (and charging like them to – and being forced to compete with them on price).

If you are just like everyone else right now, there is only one way out.

Workout a position in your market, one people are going to pay a premium for.

And then position your business there.

But a word of warning – you can’t be a $2 business charging $3.

James Hill

PS. If you don’t position yourself, you become a commodity and the only thing you can compete on is price. When you work out your value, you work out what people are willing to pay for.

Filed Under: Strategies

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Dear Friend, Why is it Milk, and I’m not talking about the different fancy shmancy A2, skim, lite, variety – just your plain ole run of the milk, stand 2L bottle… Can differ in price by 33%. Look at these two bottles, I bought the 2L bottle on the left at a supermarket for $2.99 […]

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