My point is that the core element, tin of beans/ insurance etc, is one element that it is only one of the components of what constitutes the product. The channel or route to market is not in addition to “the product” it is integral to the product and inseparable from it. Take a look at Neil Borden’s 1964 paper on the marketing mix. It’s probably on google (if not try McCarthy’s) he explains it much more elegantly than me.
If a company can’t differentiate, that is to say make their product offering more attractive, on the basis of the nature of the beans or the extent of the cover, then it is possible to do so by means of the channel, typically characterised by the ease of availability.
Hence is it easier to go to Sainsburys to buy your tin of beans, or to sit in your front room, poke around on your tablet and have Sainsburys deliver it to you? If you consider it is more convenient then would you pay more for it, if so how much? If I, as Sainsburys or LV or whoever, consider that premium to be a few pounds then I can maybe improve my margin if you accept my premium price. If I price it too high then you don’t and I lose out.
The level of pricing of various product offerings is a managerial judgement. Managers are people, maybe they get it right or wrong. Perhaps sometime they have objectives of which we are unaware, and therefore their decisions do not make sense to us. Welcome to life.
|
