Affordability at a Price Point

Abstract

Apart from the quality of the product or service, affordability is the most important variable in the marketing mix. Finding ways to make it easier for people to buy your brand will help entice new buyers, but if the balance between price and value perceptions is off, then the brand will end up losing margin and enter a death spiral. As a brand’s income declines, funds for research and development and marketing are choked off, reliance on price promotion to drive volume grows, and the brand becomes uncompetitive. To avoid this demise, you need to make the brand more affordable—not simply cheaper. A savvy marketer will be able to manipulate people’s perceptions of value in order to maximize the income stream from a brand at a specific price point or find ways to make the brand more affordable without lowering margins.