| For many product categories, having a somewhat | | | | original recipe if it was sold at the same price. |
| higher price is part of establishing a quality image in the | | | | A test was made of charging a five percent premium |
| minds of those who buy and use the product. | | | | for original recipe, along with putting a blue ribbon on |
| Companies which price their products based on costs | | | | the containers. Volume increased for both original |
| will often miss this point, and hurt sales volume by | | | | recipe and for KFC. Consumers reported that the |
| having prices that are too low. How can you use price | | | | original recipe quality rose. And it may well have. |
| and non-price methods to enhance the sales and | | | | Knowing that customers had to pay more for it, the |
| profits of your offerings? | | | | cooks may have paid more attention. This successful |
| In the 1970s, Kentucky Fried Chicken usually offered | | | | program ran for many years before parity pricing |
| two kinds of chicken, one produced according to | | | | between the two products was reintroduced by a |
| Colonel Sanders' original recipe and the other made like | | | | new management team. |
| the typical "crispy" fried chicken found throughout the | | | | Introducing a premium-priced brand can make a similar |
| southern United States. Since the crispy chicken had | | | | positive impact on adding profitable market share. |
| been offered, both products had been priced the | | | | Black & Decker discovered this out when it added the |
| same. The concept behind this approach was that the | | | | more expensive DeWalt line of portable power tools. |
| company's competitors usually sold their crispy | | | | While many people who do home-improvements want |
| products at lower prices, and the less attention on the | | | | the least expensive product that will get the job done, |
| price differential the better. | | | | others take pride in their work and enjoy having the |
| Original recipe was actually less expensive to make | | | | feel and look of top quality tools while they are |
| than the crispy product. Colonel Sanders had designed | | | | working. And those tool lovers will happily pay a hefty |
| his product well. He had designed the product to taste | | | | price premium for that sense of being well-tooled. |
| better and to be easier to prepare. Some people in the | | | | By offering both brands, Black & Decker is more |
| company had been considering cutting the price on | | | | competitive on price with those who care about that |
| original recipe. This would lessen the price disparity with | | | | feature of a product offering while being more |
| competitors. | | | | competitive on image and quality for those who are |
| The market research results showed something quite | | | | more sensitive about those factors. As a result, the |
| different. Customers felt that original recipe chicken | | | | company was able to gain market share and expand |
| was a better offering, and thought that it was worth a | | | | profits even faster. |
| premium price. They reported being confused by why | | | | Where can you use price level to reinforce a quality |
| crispy and original recipe were priced the same. They | | | | perception? |
| also had a few doubts about the quality of the crispy | | | | Copyright 2008 Donald W. |
| product, which created doubts about the quality of | | | | |