Posted on May 19, 2011
Are we living in a discount culture? It is no coincidence that the two most successful, and copied, Internet retail models of the last few years are Groupon and Gilt, which are both basically avenues for price-cutting. And the newest trend is “extreme couponing,” now a series on TLC, where people manage to game the system enough so that they can get tremendous amounts of product basically for free.
Yet, what’s striking is, not everyone has fallen victim to this.
On Twitter this morning, Andrew Hanelly, social media guru at TMG, which publishes JCK, asked, “Have you ever paid more for something because of the brand even though you knew there was a cheaper alternative?”
Michael Schechter of Honora answered that most people don't buy generic cereals. And I brought up Apple products, to which Michael responded, “Alternatives and equivalents are not the same thing.”
Now, with all due respect to Michael and the magic of Steve Jobs, who has gotten a fair amount of my dollars, there are Apple equivalents out there. But, to a certain group, only Apple will do. The company has convinced consumers that Apple equals quality, so it’s “safest” to buy from that company. And, for that reason, its products are rarely discounted.
This isn’t something that Apple built overnight—it took years of branding, innovation, and a commitment to getting things right. But it has worked. We even see this in the jewelry industry. We all know that the Pandora doesn’t necessarily make the cheapest charms. But people buy them anyway, because of the power of its name.
The “discount culture” isn’t going away, and chances are the increased use of smartphones will keep price pressure on retailers. Yet the companies who can convince consumers their brand always equals quality, and that they have no equivalent, can still rise above it.
UPDATE: Michael adds further thoughts here.
LEN736 · 0 sec ago