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The bestsellers were $98 bags. Will Coach find happiness selling $300 and $200 handbags That s still to be determined. But it now has two good horses in the race, instead of one that s carrying too much weight.
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Sometimes, you just have to suck up your high price and adjust your selling technique. Nowhere has the financial crisis hit harder than in the land of expensive watches that are collector s items. The worst decline for Swiss watches is in the United States, where sales fell 40 percent from a year earlier. While sales of expensive watches are way off, business is booming for a Paris-based luxury-sales consulting group called P le Luxe. As reported in the Wall Street Journal, it s interesting to see that its training encourages salespeople to say value rather than price and to sell romance rather than products. And don t bargain with clients. The salespeople are coached to offer a gift if a discount is requested, and they have a closet filled with these gifts. P le Luxe has an approach that can be summed up as going like this: Madam, this timepiece comes from our finest workshop, and it has a value of $10,000. If you buy it, your children are sure to enjoy it for generations to come.
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Now that is what we call a nifty piece of repositioning.
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Undermining a prestige brand with a lower price can be a daunting problem because high price supports the fact that it is a prestige product. As David Schick, a retailing analyst, said, When you are selling anything in luxury, you are selling exclusivity. Rather than posting big sale signs that can mar a store s reputation, high-end chains are telling customers they can buy an item for less even if the price tag says otherwise. These are what I call sneaky sales. Some have an online-only sales promise to knock 50 percent off luxury goods when you click on a certain link in the message. Other techniques inform customers of a sale mere hours before it begins. And then there is the discreet offering of discounts only to top customers. Such offers preserve a brand s veneer while delivering a sense of urgency about a value whispered into the ear of a customer. All these brands realize that once the world sees you go down in price in a very public way, you can never go back up again.
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Consider the technology of ultrasound, which is up against MRI and CT scanning. Initially these were
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VALUE IS THE NAME OF THE GAME
floor-standing machines, but these are being disrupted by portable machines. We work with a company called SonoSite, the pioneer and current leader in small, handheld machines. Its strategy is to establish the perception of leadership and drive home its benefit of big-machine performance in a small machine. That has worked quite well. But now, even in health care, we have a crisis. Money for any new technology will be difficult to obtain. Here s where a repositioning strategy that deals with this crisis has to be considered. The strategy can be summed up in a simple question and answer: Q. How did a small machine become a big idea in medicine A. By saving time and money while improving patient outcome. You can see that SonoSite is using repositioning to adjust perceptions about its value and about saving time and money. In crisis times, that should be a powerful reason for hospital administrators to keep buying small ultrasound machines. The basic leadership story is the same, only now we re adding value to the equation. A similar story can be told about a company called Rackspace. It is also a leader and a specialist in Web site
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hosting. (It stores and manages Web sites for companies all over the world.) But even in high tech, the world is in crisis mode, and companies are looking to find ways to reduce costs. Rackspace is using new technology to add value to its story of superior service as its position. It is offering cloud hosting as a cost-saving offer to some customers. This uses the Web as a distribution system. While it is not for all applications, such as those that require security, it is a money-saving value story. It also reenforces the firm s leadership and specialization story by offering a new, lower-cost form of Web hosting as well as traditional forms of service.
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