Article: How a poor pricing strategy left the Rolling Stones with no satisfaction | Financial Post
The Rolling Stones greatly overestimated their American fans’ willingness to pay a premium to see the aging rockers and were forced to lower their prices when fans reacted angrily.
…The value of a concert experience is reasonably understood. You pay high prices and get one or two bands performing in a stadium for two hours. Instead of lowering prices, the Stones could have increased the real and perceived value delivered by providing a free gift with purchase (high perceived value with low actual cost), more product (i.e. longer show) or offering bundles (sell a limited edition t-shirt with premium seats).
Communicating high, experiential value is also critical to maximizing sales. Premium quality goods have sophisticated brand values communicated through packaging, advertising and merchandising. On the other hand, most musical acts tend to have generic brand values, lacking in authenticity or exclusivity. To sustain premium pricing, brand managers need to ensure all elements of their marketing mix convey an exceptional brand image.
“Succeeding with premium pricing requires that customers clearly understand how your product is superior to substitutes or competitors,” says pricing expert Claire Johnson, senior vice-president and chief financial officer at CIBC Mellon. “The right price point compensates sellers for delivering a better product while leaving buyers satisfied with the value received — and a willingness to repurchase.”
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