The Effect of Price on Brand Value

In America, many barber shops offer cuts for $7 to $10. No scalp massage; no nose hair trimming; no straightedge razor shave. A wash with the cut is the height of customer service.

A market exists for a customer service oriented barber shop. Yet, new barber shops are popping up to compete in the cheap hair cut market. Why?

The Myth

“Price Drives the Sale!” This is the myth that sends business after business into crowded, unprofitable low price markets. Price does not drive sales. It never has, it never will. Value – perceived value – drives sales.

Hypothetical Situation

You have a headache. You go to the drugstore. The store has Excedrin, Tylenol and a generic pain reliever. Which will you buy?

Excedrin and Tylenol continue to sell even with generic brand pain relievers priced as much as 75% lower. Go figure.

A Not So Hypothetical Situation
A friend recently asked about eMachines. She was looking to buy a computer and not spend a lot of money. I told her that eMachines are junk. Any computer that cheap has to be junk.

It later occurred to me that I had never used an eMachine. None of my friends had used eMachines. They could be good computers… maybe.

So I searched Google for eMachine reviews. Most of the comments I found were along the lines of “eMachines are too cheap to be any good” – in other words, the judgment of quality was based solely on the price of the computers, not actual experience.

The point is, eMachines is losing sales – and profits – because of their low price strategy. In the consumer mind, low price conveys an image of low quality; high price conveys an image of high quality.

Building a Brand on Price

Often it’s the case that the consumer has nothing other than price to go on to judge the value of an offer. One webhost offers 500MB’s for $1.99 per month; another offers 500MB’s for $79.99 per month. Most consumers don’t know anything beyond what is stated on the site – and thousands of webhosts offer the same damn feature list.

The same applies to many products we buy everyday – DVD players, soap, milk, printer paper, light bulbs, bottled water, gasoline, etc.

As consumers, we don’t have the time to research the products. We often base our judgement of value on the price of the product.

ARCO is cheap gas. Many consumers won’t use ARCO gas simply because it’s the cheapest gas in town. They use Texaco, which has branded itself as a high quality gas simply by pricing its gas higher than the competition.

Prada, Rolex and Lexus are just a few who use prestige pricing to build strong brands.

Value is in the Eye of the Beholder

The beauty of the high price strategy – prestige pricing – is in its reliance on the price to establish value.

Naive business owners love to protest, “But John, we can’t raise our prices because our products aren’t worth that much“.

Welcome to business. That Prada handbag isn’t worth $710 until it sells for that. Texaco gasoline isn’t worth $2.10 per gallon until it sells for that. A Lexus isn’t worth anywhere near $64,000 until it sells for $64,000.

Summary

If you’re selling hosting at $1.99 a month, the consumer has every reason to assume that your hosting is junk hosting.

You could take that same hosting account, slap a $79.99 per month price tag on it and give a better impression.

Studies have shown time and again consumers believe that price and quality are directly proportional.

In the end, your products and services are worth only as much as the consumer is willing to pay and you are willing to charge.

Q. Why doesn’t my online drugstore rank for “viagra”, “levitra” or “cialis”?

A. Because you’re a schmuck business adding absolutely no value to the world wide web and as such you have no quality linkage, and will continue to have no quality linkage. Google determines the value of a website based upon its linkage, and rightly so.

The same goes for thousands of other keywords and thousands of other websites. Quit trying to fake success with rankings. Be legitimately successful and the linkage and rankings will follow.

From Dave Winer:

“The comment thread that followed Nick Carr’s piece about Wikipedia illustrates the mistake of the most zealous Wikipedia advocates, they fail to set expectations accurately, and then, when someone like Carr takes their hype at face value, they attack him for not knowing how Wikipedia really works.“

Again, I like Wikipedia – yardy yar – but I agree with Dave and Nick. The zealots are all-too-quick to circle the wagons when they sense they’re being attacked. As Dave rightly points out, “it’s anti-intellectual”. It’s certainly self-defeating.

I hope Wikipedia get the balance right, I really do. I hope they don’t make the same mistakes DMOZ did.

My, my – that’s rather big news:

“Internet powerhouses Yahoo and eBay are joining forces in an alliance that appears aimed at thwarting the recent expansions of online search engine leader Google and Microsoft”

Anyone remember a time when Ebay used to dominate a lot of Google serps?

Ebay seems a natural fit with the consumer oriented Yahoo! Is this an indication that the growth of the search market is running out of steam, so the way to grab market share going forward is by consolidation?

Can anyone afford Amazon.com?

According to EWeek:

“Google has a new deal with personal computer maker Dell to pre-install Google features into a lot more Dell computers. The first PCs with Google on board will be shipped by the ned of the month, Google Chief Executive Officer Eric Schmidt told analysts recently. He would only say Google was sharing revenue with Dell, but wouldn’t be any more specific. He also said to expect similar future deals between the two companies.”

Microsoft wrote the book on this stuff, and Google certainly appear to have read that book and taken it to heart!

Right on.

A further reason why some top paying keyword lists are of questionable value:

“Have you noticed that keyword price result in ZERO profit if there are no clicks? It’s cost/day (keyword price X clicks/day) that makes you rich, not keyword price itself.”

A top bid keyword, with low traffic, isn’t going to make publishers money. Also consider that many high paying keywords aren’t distributed to the content network, and that Googles’ smart pricing will adjust your percentage further still.

Good tip for Adsense: Keep traffic levels in mind.

Let’s be honest – “SEO Copywriting” is a misnomer. “SEO Copywriting” is the practice of keyword stuffing whilst pretending not to.

Not that there’s anything wrong with that, other than it doesn’t really work, in Google, at least.

Now, that the cat has been put firmly amongst the pigeons, here’s the definitive post from SeoBook on the art of writing “naturally” for search engines:

“How to mix it up to become Google friendly:

• Start the page title with a modifier or couple non keywords instead of placing your primary keyword phrase as the first word of the page title. Example… instead of “search engine marketing company” start your title with “professional search engine marketing…”
• Stemming is your friend. Use plural, singular, and ing versions of your keywords. I have seen pages that used a bunch of the plural version filtered out of Google for the plural version but still ranking for the singular version. If you mix it up you can catch both.
• Mix up the anchor text, subheaders and page content. Use semantically related phrases, and, in some cases, write subheaders that are useful for humans even if some of them do not have any keyword phrases in them.
• Make sure each page is somewhat unique and focused in nature”

The more old school seo keyword stuffing we do, the less Google likes it. Which is the way it should be, and we can expect the other engines to follow suit before long.

I think the best advice comes at the end:

“If it seems complex or complicated then don’t focus too heavily on the modifiers or semantic related phrases or even your core keyword that much. First write your article about your topic without even thinking about the search engines. Then go back and tweak it to include relevant modifiers and semantically related phrases. Make sure that you use multiple versions of your primary keyword phrase if it has multiple versions”

Great advice. I’d add: Think of your audience. Consider how they speak and what terms they use to describe things. Then write naturally. Then add semantic variations.

Softly, softly catchee monkey…

Well spotted, SEOBlackhat:

“Google has done it – at least for now. They have REALLY cleaned up their act when it comes to pharma SERPs like Viagra and Phentermine”

Google have placed portal-style links at the top of the serps for many pharmaceutical related search queries.

Good move.

Thoughtful post by Andrew at Traffick:

“Depending on the type of search query, over the years, certain large websites have been so good at offering the “definitive” or at least leading resource page for a given subject that Google searchers have found themselves clicking through to the same major portals again and again. In short, these are the perennial SERP’s winners, the ones that seem to have a reasonably good answer, solution, or chunk of content for just about anything.”

Andrew is talking about how DMOZ, and other sites, used to feature a lot in the SERPs, now they don’t. These days, it’s Wikipedia. Which site will it be next year? And the year after that?

Which begs the question – why? Are Google, as Andrew suggests, tweaking the playing field, or is Wikipedia domination an unintended consequence of anti-seo algos?

Possibly both, of course.

There is lot of SEO commentary on the net, but the essentials are sometimes overlooked.

Here are my Top Ten SEO Mistakes To Avoid.

1. No Marketing Plan – if you don’t know who your market is, and what they want, high search engine rankings will not help you. You’ll just chew bandwidth and raise your opportunity cost.
2. Selecting Keyword Terms Based Only On Traffic Volume – “I need to be number #1 for “cars”, because the term “cars” recieves a lot of search queries and I sell “cars”! That won’t do you a lot of good if you only sell cars in Fiji. See #1.
3. Selecting Keyword Terms That Have Very Little To Do With Your Service or Product – the days of drag-net SEO using off-topic keyword terms are long gone. Be specific. If you sell cars in Fiji, you want keyword terms like “car dealers Fiji”, and semantic variations thereof.
4. Failure To Use Keywords That Your Target Market Is Actually Using – the copy writing printed in your corporate brochure isn’t how your customers actually talk. It certainly isn’t the way they phrase search queries. Listen to how customers ask for your goods and services. Those are your keyword terms. Find variations of these terms using keyword research tools.
5. Thinking All Search Engines Are The Same – they’re not. What pleases Yahoo! and MSN does not necessarily please Google. If your audience uses MSN, then work out what MSN wants and deliver it. The solutions can be complex and varied, depending on how…cough…determined you are, however, if you want to hit a middle ground, all search engines tend to like keywords in the links (at the time of writing).
6. Relying on Keyword Density – a redundant technique. Instead, stay on-topic and incorporate your keyword terms. How often do you repeat the keyword terms? If you read your copy aloud, and it sounds odd, you’ve overdone it.
7. Poor Titles – When a visitor looks at a SERP, they have 10, or more, choices. Think of titles like newspaper headlines. Repeat the search keyword term and make the title enticing. Think Adwords. In fact, look at how the Adwords advertisers have written their ads for your chosen keyword terms. Chances are, those Adwords on the top have high click-thru rates. They’ve got their titles right.
8. Not Getting Links – links are really important. Really. Really, links are really important. Did I mention that links are important? Link acquisition is essential strategy. Depending on your topic area, you probably don’t need many, but you do need some.
9. Thinking That Hacking Code Will Solve All Problems – For most sites, advanced SEO trickery isn’t necessary. Stick to the search engine guidelines, keep your visitor in mind, write like they speak, ensure your site can be crawled, network in your space, get links. Repeat.
10. Not Thinking Beyond SEO – After a visitor arrives, what then? If you’re not serving their needs after they arrive, then your SEO effort and expense has been wasted. See #1.

Good SEO has a lot in common with good marketing