quality v price: the marketing ‘mix’

Study at any reputable business school, and you’ll come away with enough jargon to last a lifetime. Much of it is laughably inappropriate to modern business practice, but just occasionally there is a nugget of corporate terminology, be it a phrase or a concept, that is worth thinking about.

An example of a phrase we learned at Cranfield is ‘You have to relate to the world as it is, not the world as you’d like it to be.’ What this says to us is that, even though it might be a real ego trip to take ages over a project, to load people and cost onto it to make certain you get everything just right, to offer technology for its own sake (often a ‘solution looking for a problem’), usually what the client really wants is: a) something straightforward, that works well, that people can readily use; b) delivery in a sensible timeframe, maybe with some iterations downstream; and c) all within a realistic budget. In particular they want something that ‘does what it says on the tin’. We can relate to this, since when we need services ourselves, this is usually our objective too!

But alongside the four Ps and the SWOT analysis, one of our favourite concepts is Philip Kotler’s marketing mix:

ABC strives to position itself in the top centre of this matrix — offering the highest achievable quality at a sensible price. The perception our clients have of the quality of the service we offer is of paramount importance to us. At the same time, while we never want to be seen as a cheap supplier, since we tend to use good quality resources, we nevertheless ensure that we are invariably price-competitive, relative to our peers. Of course, it helps that the entire team is able to roll up its sleeves, regardless of specialism, in order to get the job done.

‘Premium product-premium price’ is the strategy adopted by, for example, firms of management or IT consultants who believe that unless their hourly rates are astronomical, people will not perceive them to be ‘top-drawer’. This backfires when they are seen merely to borrow your own watch to tell you the time, as a result of which repeat business is often a bit thin. ‘Cheap-and-Cheerful’ is another way of saying that if the end result is not quite what you’d hoped for, then don’t complain, since it didn’t cost much! ‘Shoddy Goods’ is worse, because you paid more, while ‘Hit-and-Run’ is worst of all since the supplier knows they won’t be coming back, but Boy, are you going to pay while they’re there!

This raises another facet of how some companies charge their clients. Some will seek to load unexpected charges on a unsuspecting client and strive to do the bare minimum for whatever monthly fee has been agreed; basically “everything’s extra”. In some cases they will have quoted low in the first place (an apparent ‘super-bargain’), to get the business. But the serial offenders are the largest players, who rely on the fine print to ensure that when a project overruns, or goes wrong, they are never to blame.

At ABC, we would rather be upfront about the costs likely to be involved in a project, preferring the concept of ‘no surprises’. This often works in our favour, since on at least one occasion we have lost a job, only to be awarded it when it was discovered that the ‘winner’ either couldn’t do the job, or not for the price quoted and was therefore looking to add costs retrospectively. But we think it unlikely that any invoice you received from us would come as this much of a shock! So if you want a proactive supplier that is realistic about price, who will not try and load costs (especially where a third party is involved) and who is cost-conscious but most of all cost-effective, we should be on your shortlist!

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