In business, the aim of every company or business firm is to make good profit while keeping long lasting customers and attracting new customers each time with products and services that are solution oriented and are in constant demand. However, there are several major determinants of profit margins and successful businesses. Two of these key determinants are price and quality of products/services which these businesses offer. The priorities of the customers who patronise these products and services should be taken into key consideration by every business establishment. Even when the issue of competition with other companies that offer the same products and services, prices and the quality provided gives one company the edge over the other.
The importance of both price and quality to the success of every business entity can never be over emphasised. Although these two key elements are affected by several other individual factors, they are by far the two most prioritised parameters that customers consider when purchasing a product. They are so important that they walk hand in hand. Below are some dynamics of price and quality with reference to customer priorities.
- High quality at a high price: This is probably the most feared of all the dynamics. With high quality almost always comes a high price since the cost of production, quality assurance and other preparatory elements are very high which translates into high prices. For some customers, quality may be paramount and hence, irrespective of the price, they will purchase the item. For others, the price of the product or service is often compared with the quality and hence, even if the product is of very high quality, they will look for other options.
- Low quality at a high price: In this type of dynamic, there is often little or no gain for businesses. It’s often a rip-off or exploitation and only a few consumers fall for it. Customers will never buy products or utilise low-quality services if the price is very high. It is simply a no-no. In rare occasions where customers are in dire need of the product or service with no other alternative, they might just take it as it is. But this kind is very rare.
- High quality at a low price: This happens mostly during discount sales and promotions. In most cases, however, a few very smart customers will buy large quantities and sell for a much higher price. Although a high-quality product that goes for a very low price will attract more customers, it has a devastating effect on businesses since the revenue normally doesn’t match the costs of production. For customers, this is the best-suited dynamic for them.
- Low quality at a low price: Finally, the dynamic that allows a multitude of consumers to play in the market as they wish. Although the quality is low here, a very low price means that customers naturally jump to it. Some may consider the quality and buy less while others may just consider the price fall and buy in bulk. Maybe to sell at a higher price later.
In conclusion, low quality doesn’t necessarily mean low quality whereas a high price doesn’t also guarantee a high quality. Both price and quality walk hand in hand. Therefore it is up to every individual customer to prioritise. Whether price or quality, it is an established fact that every customer wants a high-quality product at a very reasonable yet affordable price.
Credit : JumiaTravel