High price is often associated with high quality and a good experience. Price is a great tool for sending a signal to various people across the market such as customers, competitors, and collaborators. Price can also help any company in influencing the perception about its products. Here we take an example of LEXUS.
Lexus is a luxury vehicle division of Toyota. Lexus is a high priced premium car brand which is sold in over 70 countries all over the world. Toyota on the other hand is a mass market brand with no luxury or high priced image and a basic value for money brand. Lexus with its high priced luxury image positions its products for a different segment than Toyota. The company even offers ultra luxury division of cars competing with other European car makers. Lexus cars are made by engineers of Toyota but still both the brands target different segments by positioning the brands at a different levels. How do they do so? This is all due to the differences in the prices which creates a perception of different quality and the companies have to respond according to the perceptions and the expectations of the customers. Lexus created its image as it is today by following specific marketing strategies. The marketing experts are of a view that the early success of the company was due to the high perceived quality and lower prices than other luxury brands. This perception is what makes a difference. Today Lexus commands a higher price than other rival companies now even charging the ultra luxury segment prices.
Another example for positioning:
Jaguar Land Rover company is owned by an Indian company Tata Motors. Tata motors basically sells heavy duty vehicles and small passenger vehicles in India but Tata motors uses high priced Jaguar and Land Rover vehicles for positioning products to a richer segment all over the world. Even apple has used pricing for positioning its product for a different segment. Apple introduced iPhone 5c which is cheaper and looks totally different than other iPhones as it has a plastic body instead of glass and metal, by introducing this phone apple positioned its product for a lower segment.
These companies are using price as a very effective tool for positioning their brands for different customers apart from that these companies are also using price as a great segmentation tool these companies charge different prices from a segment which are price sensitive and different prices from a segment which has deeper pockets. I think of all 4P’s price is the most important tool used for positioning as pricing gives a straight idea to customers of what to expect from a brand or a product. Companies use these expectations for positioning their products and brands in the minds of the people effectively as pricing is the easiest of all the 4P’S.
What other companies can you think of apart from Toyota following such strategy?
Do you also think price is the most important positioning tool?