PRICING

Trick or treat?

By Harley Rolfe

Pricing is oneof our most useful yet dangerous of business acts, and Halloween provides the perfectanalogy. If you are only going to do one thing to change your marketing "mask,"pricing is your choice. The plan is to be sure that there are "treats." Theassumption here is that you want to maintain and improve your market stance withoutchanging your actual offering.

You face a conspiracy aimed at making your life difficult. When the only differenceamong products is price, you are playing their game--that of the government and customers.The customer wants the lowest price and he also wants the buying decision to be simple, sohe needs to regard all the choices as the same. Then he can play one rival off the othersand just compare prices. As to the "Feds," U.S. businesses agree to abide by theanti-trust laws. These are mostly aimed at maintaining competition. Most of these lawswere written as a result of excesses by suppliers and are aimed at what many aggressivemarketers want. We must figure a way to prosper without running afoul of the Feds andstill attract sufficient prospects to keep the joint full. It's what we marketers do for aliving. Are we up to the task?

Time out for a moment here: You have a "sleeper." Self-storage units don'tcost much. A 10 percent advantage on a $40/month unit is $4--no big deal. The real problemis that the prospect needs some basis on which to make his decision. Self-storageprices are not, by themselves, significant; they become so only if there is no other basison which to make that decision.

Engineers use the laws of physics to make things work; we marketers use the laws ofhuman nature/behavior. All animal life (that's us) seeks to conserve the expenditure ofeffort/resources to achieve its ends. "Price" extracts resources from the buyer.His normal reaction is to resist or minimize them. He can't help himself: It's asfundamental as dealing with hunger, maintaining body warmth, reproducing, etc. Concernabout price is visceral.

But what is price? There are at least three elements: the price in dollars, the pricein shopping time and the price in analysis effort of various choices. The prospect wantsthe lowest and/or simplest. This is further complicated for us because, in many cases, hedoesn't want a self-storage unit in the first place. The buying process is a hassle whenthe prospect associates it with little pleasure, so attempts by us to deliver our pitchcan create enmity. When the prospect calls asking for the rate on a 10-by-20, he's alreadydecided that the location is OK--he just wants the cheapest price. We must create ourofferings so that there is legitimate need (as seen by the buyer) not to provide thisinformation.

Price plays many roles. It is a powerful attention-getter. It is used exhaustively bymany retailers, such as grocery stores, auto dealers and furniture dealers. Mass marketerssuch as Kmart and Wal-Mart make their living by suggesting that all their prices arelower. Check the Wal-Mart's motto--"Always low prices." The secret is the wholeprice. An important part of the prospect's resource allocation is his personal time. IfWal-Mart can get the prospect to make a trip to its store, the store has won. So, implylow price, but deliver convenience. How about self-storage? Same thing.

But how do you do that with a one-dimensional product? Create a choice that depends onthe tenant's attitude. Here are some approaches:

Price does many things well. It gets attention, it permits the offering of choice, itsets the terms of your tenant contract. But it can also get a facility into a peck oftrouble if not used carefully. Use pricing creatively, but watch out for spooks!

Harley Rolfe is a semi-retired marketing specialist whose career includedexecutive-level marketing positions with General Electric and AT&T. He also ownedlodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degreein economics from Wabash College and a master's degree in business administration from theUniversity of Indiana. He can be reached at his home in Nampa, Idaho, at (208) 463-9039.Further information can also be found in Mr. Harley's book Hard-Nosed Marketing forSelf-Storage.