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This week I attended the Maine Marketing Association’s Lunch and Learn presented by Jim Drummond. Jim is the author of Marketing’s 10 Deadly Sins (and How to Avoid Them).

Deadly Sin #3 was: Don’t compete on price. Jim explained that Perceived Value is much more important to people than actual price. Rarely do we purchase based solely on price. Jim defined Perceived Value this way: Perceived Quality, divided by Price, equals Perceived Value.

Perceived Quality, divided by Price, equals Perceived Value

When pressed for an example, he said: Imagine walking into Costco to buy a DVD player. You have the choice between an off-brand, China-made DVD player or a Panasonic. If there is a large price difference, you may choose to go with the off-brand to save money, but if there is only a small difference—say $10 or $20—you will probably go with the brand name because of the higher perceived value.

Therefore, one of the best ways to not have to compete on price is to become a known and trusted brand. A brand that is recognized, is a brand that can be trusted, and your buyers will pay a premium for it.


  1. Jean I | March 19, 2010 at 12:25 pm

    This post has made me rethink my pricing strategy. I have also tried to undercut the competition, but now I’m thinking that this may be the wrong way to go. Thanks for the great post, as always!

    Jean Iversen
    JMI Communications

  2. Emily Brackett | March 21, 2010 at 9:08 pm

    Jean, a good strong brand identity, followed up with good brand building activities are an investment that can really be worthwhile. You don’t have to be a national-level electronics brand, you can be a recognized expert in your field. Recognized = brand identity, expert = brand reputation. Building them will allow you to command higher prices. Good luck!


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