Costco's Commitment to Value: The Psychology of their Hot and Ready Food

In this episode of The Brainy Business podcast, host Melina Palmer dives into the importance of choosing between quality and value when it comes to your brand strategy. She talks about how businesses can be successful with either approach, but it's crucial to pick one and stick with it. Melina shares real case studies of brands like Supreme and Costco to illustrate how they've excelled by aligning their pricing strategies with their brand messaging.

She emphasizes that understanding how customers perceive your brand is key to making informed decisions about your positioning in the market. If you're an entrepreneur looking to establish a clear brand identity and nail down consistent brand messaging and pricing strategies, this episode is a must-listen. Melina's insights and examples make a convincing case for the impact of your brand strategy on customer perception and decision-making. For those looking to elevate their branding approach and make strategic decisions, this podcast episode offers valuable takeaways and practical advice.

In this episode:

• Understand the Importance of Choosing Brand Strategy: Uncover the critical role of brand strategy in business success.
• Analyze Quality vs Value in Branding: Explore the dynamic balance between quality and value within brand development.
• Align Pricing with Brand Values: Learn how to harmonize pricing strategies with the core values of your brand.
• Explore the Impact of Brand Identity on Consumer Perception: Discover the profound influence of brand identity on consumer attitudes and behaviors.
• Establish Consistent Brand Messaging: Master the art of crafting and maintaining a cohesive brand message across all platforms.

00:00:00 - Introduction Melina introduces the critical decision every business needs to make: what type of company they are. She explains that this decision is foundational to pricing strategy and can be boiled down to two main paths: quality or value. 00:04:11 - Quality Business Melina defines quality businesses as those that set higher prices due to factors like higher quality materials, expertise, or innovative methods. These businesses focus on higher margins and making fewer sales. Melina emphasizes the importance of consistency in messaging and pricing for quality brands. 00:09:03 - Value Business Melina describes value businesses as offering bargains, great value for money, and selling by volume with smaller margins. These businesses run sales, discounts, and promotions as a key part of their strategy. She highlights the need for alignment between the brand's perception and how customers see them. 00:11:42 - Aligning Business Perception Melina shares an example of a client who faced a disconnect between their perceived quality and value brand image. She emphasizes the importance of aligning the company's identity with customer perception and the impact on brand positioning, products, services, and pricing. 00:14:52 - Holding the Line on Business Type Melina discusses the challenge of staying true to the chosen business type and making consistent decisions. She addresses the pressure to conform to other strategies, the potential damage of diluting a brand's perceived value, and the importance of getting everyone in the organization on board. 00:16:17 - Choosing Between Quality and Value Melina discusses the importance of choosing between quality and value for your brand, emphasizing the need to stick with one approach to achieve success. She urges listeners to consider their vision for their business and commit to a path. 00:19:26 - Case Study: Quality Brand - Supreme Melina shares a case study on the streetwear brand Supreme, highlighting their extreme scarcity model and the success they've achieved through high demand and resale market. She emphasizes the importance of challenging industry norms and being different in business. 00:23:59 - Case Study: Value Brand - Costco Melina presents Costco as a value brand that focuses on providing high-quality items at the best possible price. She discusses Costco's effective scarcity model and the impact of their commitment to saving members money on their overall brand strategy. 00:29:21 - Examples of Quality and Value Brands Melina introduces four case studies of quality and value brands, including Serendipity3, Hermes, Ryanair, and Old Navy. She mentions the depth and detail provided in the book and invites feedback for potential future behavioral economics analysis episodes. 00:31:41 - The Importance of Value Statement Melina discusses the vital aspect of brand identity - the value statement. It encapsulates core beliefs, creates consistency, and influences customer perceptions. 00:32:19 - Impact of Branding on Decision Making Melina explains how a precise brand message and promise are essential for making buying decisions easier for customers. The alignment of brand values and prices is crucial for creating a clear memory and influencing behavior. 00:33:51 - Priming and Brand Image Melina delves into the concept of priming, where word choice and images influence decision-making. She provides examples of how brands like Apple and Disney prime customers' behavior and perceptions through their logos. 00:35:41 - Aligning Brand Identity with Business Type Melina contrasts the mission statements of Costco and Louis Vuitton to illustrate the importance of aligning brand identity with the type of business. She encourages listeners to evaluate their own mission, vision, and values for alignment. 00:40:10 - Conclusion Melina's top insights from the conversation. What stuck with you while listening to the episode? What are you going to try? Come share it with Melina on social media -- you'll find her as @thebrainybiz everywhere and as Melina Palmer on LinkedIn.

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Get the Books Mentioned on (or related to) this Episode:

• The Truth About Pricing, by Melina Palmer
• What Your Employees Need and Can't Tell You, by Melina Palmer
• What Your Customer Wants and Can't Tell You, by Melina Palmer
• Alchemy, by Rory Sutherland
• Marketing to Mindstates, by Will Leach

Top Recommended Next Episode: Truth About Pricing (ep 355)

Already Heard That One? Try These:

• What Your Employees Need and Can't Tell You (ep 225)
• Bundle and Stack Your Offers (ep 84)
• How to Raise Your Prices (ep 354)
• Get the Ultimate Pricing Confidence (ep 66)
• What Your Customer Wants and Can't Tell You (ep 147)
• Jo Evershed and Gareth Harvey Interview (ep 353)

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• Brainy Bites - Melina's LinkedIn Newsletter
• The Truth About Pricing Freebies