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Virtual Marketing Newsletter - March 3rd, 2004 - http://www.marketingsource.com/

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In this issue:
Marketing Article: For Premium Pricing, Engage the Emotions
Marketing Article: Raising Your Rates Can *Increase* Your Business

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For Premium Pricing, Engage the Emotions
by Marcia Yudkin © 2004

"People buy on emotion and justify their purchase with logic." A new book contributes depth and currency to this long-accepted truth about marketing and sales. Trading Up: The New American Luxury, by Michael Silverstein and Neil Fiske, discusses particular emotions now motivating people to buy high-priced products, sometimes products that appear out of sync with the buyers' financial resources.

1. Taking Care of Me. Overstressed people may feel they deserve products and services that pamper them, and that help them feel refreshed and rejuvenated. Think, for instance, of day spas, providing a one-day luxury vacation for body and spirit.

2. Connecting with Friends, Mates and Family. In today's increasing anonymous world, people will spend serious amounts of money to attract, maintain and nurture family and friends or a romantic partner. Dating services, cosmetic surgery, gourmet take-home meals and nothing-but-the-best pet treats fall into this category.

3. Questing. Consumers today appreciate adventure, learning, mastery and fun and are willing to pay top dollar to dream about and experience those qualities. Adventure travel is the most obvious example of this, as are amateur chef schools and high-end yoga or meditation retreats.

4. Individual Style. High-priced products often help buyers express their personal taste, differentiate themselves from others and demonstrate their sophistication. Here branding becomes key, a way for buyers to show their alignment with certain values.

Silverstein and Fiske add that today's consumers are skeptical of marketing smoke and mirrors and demand true quality and functionality from premium products and services.

Although nearly all of the examples discussed in the book involve consumer products, some of the above motivators apply in business-to-business settings as well, particularly when your target market is executives or business owners.

Consider referring to the above motivators in headlines, images and bullet points. For instance:

* Don't you deserve a repair service at your beck and call? ("Taking Care of Me")

* Join the hard-driving team that understands you have another crew that matters at home. ("Connecting with Friends, Mates and Family")

* Think big - dare to plan for unfettered growth! ("Questing")

* The ultimate badge of social responsibility. ("Individual Style")

If you can appeal to the above motivators in your sales copy and marketing strategies and back that up with genuine substance, you'll inspire zealous customer loyalty and earn a bigger share of buyers' discretionary income.

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Marcia Yudkin is the author of 6 Steps to Free Publicity and 10 other books. She runs a private member site, MarketingforMore.com, which supports business owners who are growing their businesses. Learn how to avoid the most common pricing mistakes in her free report, "Charge More & Get It," available from http://www.marketingformore.com/survey.htm.

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Raising Your Rates Can *Increase* Your Business
by Diane Hughes © 2004

How many times have I heard literal horror stories from Internet business startups? Too many times to count! I get emails from those who just simply can't seem to make a living online. They've tried everything (according to them) and are still struggling to make ends meet.

At some point, the "conversation" always turns to price. That's where I find a lot of online business people making their mistakes. The common mindset among Internet business startups is that you have to keep your prices rock-bottom low in order to attract customers.

Nothing could be further from the truth! Raising your rates (in some cases) can actually increase your business. How so? Here are several reasons.

1. People Equate Price With Quality

I'm sure you've heard the expression, "You get what you pay for." That statement comes from a long line of lessons learned by people across the globe who have bought something at a discounted price and regretted it later.

Maybe the product was used. Maybe it was made with inferior materials. Perhaps a "discount" service they tried fell through and left them in a fix. It could be any number of reasons, but those who have tried the "bargain" or "discount" route and have been burned are quick to look for higher priced products and services. It makes them feel safe.

I know of several online business owners who raised their rates on the services they provide. What happened? For about one week it seemed they had made the wrong decision. Business all but stopped! However, after that "adjustment" period, floods of leads came rolling in. They never regretted it.

2. Customers View Higher Prices As A Status Symbol

It's true! I'm sure you've met some people who love to brag about how much they paid for everything they own. Their car was custom ordered from the dealer and cost much more than any old car chosen from the showroom floor. Their clothes reflect this season's latest trends and were purchased at full price from the expensive department store. NOT at an end-of-the-season clearance sale. I could go on and on.

The point is, many customers simply will not buy a product or service at a discount price regardless of how good the quality is. They have the "ability" to afford higher prices and are proud of that fact.

3. Many Believe Expensive Products Are Image Boosters

I actually heard this conversation in a department store once.

Woman One: "Look at this blouse! Isn't it wonderful?"
Woman Two: "It's OK, I guess."
Woman One: "But it's an Adrian Bloom blouse! I'm going to buy it and make all my friends jealous."
Woman Two: "Who is Adrian Bloom?"
Woman One: "I have no idea, but this blouse costs twice as much as that Liz Claiborne one so it must be the next big thing!"

Can you believe it? The woman had no idea who the designer was, but based on price, she decided it would enhance her image so she bought it.

The same is true of Internet shoppers looking for products or services. Those who believe being associated in some way with higher-priced businesses are more willing to spend money because they feel it will enhance their images.

The psychology of pricing is a complicated subject, and I'll be the first to admit that raising rates will not work for everybody. Before you raise your rates, consider the following:

1. Can you offer something better or different than your competition?

2. Will the rest of your business support the "branding" of a higher price? (i.e., Do you have a very professional-looking site, excellent service, and other elements that those who pay higher prices expect?)

3. Will the new pricing structure allow you to make as much, or more, money by selling fewer items at a higher price rather than many items at a lower price?

It just might be that the reason your business is struggling is that you're charging too little. Give some serious thought to raising your rates. It just might be the best thing you ever did!

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*** It's Time To Inject New Energy Into Your Marketing *** Are you banging your head against a wall just trying to make some money with your Internet business? Tired of books, manuals, and lectures that give you ideas, but don't help you actually turn ideas into profits? http://marketersdream.com/diane

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