As companies look for ways to turn cost centers into profit centers, marketers face the challenge of explaining why something that was once free now has a fee attached to it.
In the securities industry, for example, the unbundling of research from trading means that clients will have to be persuaded that the value they get from research is worth the now apparent price. This is the same challenge facing manufacturers and retailers who start charging for maintenance, support and consulting services.
Other examples of companies that have made the leap include Dell On Call (pay for support), The New York Times (creating pay-for-content Times Select and discontinuing it when the value was not shown) Apple’s .Mac (initially free, now for fee), American Eagle Snack Pack (pay for amenities), and Nintendo Wii’s Opera Web Browser (was free until June 2007).
To build the perception of value, marketers can look to create and leverage ingredient brands (Best Buy and Geek Squad), develop tiered offerings (QuickBooks Monthly, Annual Support Packages), and enhance the delivery experience (Apple’s Apple Care packaging).
These tactics work because they help to support the argument that there is something new and improved about the offering and set the stage for helping customers compute the value of what they once were given as “part of the package”.
Mike Cucka is managing partner at New York-based strategic branding firm Group 1066.
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