Role of Pricing and Product Quality in Marketing

The Role Played by Prices and Product Quality in Marketing

There are millions of brands in the market with widely diverse product quality standards and pricing strategies. Some of them are meant for the lower end consumers and some for the upper end. You can easily mark the difference between a Hyundai Eon and an Audi. These two products serve two different segments of customers with very different purchasing powers. Hyundai Eon is for customers looking for an efficient car with a low price tag. Audi on the other hand reflects luxury and efficiency both and is for people who apart from efficiency want their drive to look beautiful.  In the marketing of these two products, there is an important role of their pricing strategies. Pricing is related with the positioning of a product and reflects its target market.

A premium price tag means premium customers for whom price is not an issue.  However, this is not the case with all the brands. Some brands bring good quality products at average prices. They have positioned themselves in the market as a favorite of the middle class consumers. They have used their pricing strategy to create a distinct image and to target the set of consumers to whom both their products and their prices appeal.  Several brands have been able to match good quality with low prices. It has let them target a very large customer segment and also build brand loyalty without having to struggle a lot with marketing. This article analyses some of most famous brands in terms of their pricing strategies and product quality and how they have used it to create a differentiated brand image.  These brands and their strategies can be valuable sources of lessons in 21st century marketing.


The biggest and most well known home furnishing brand brings great quality home furnishing products at average prices. While IKEA uses several promotional techniques to promote its brand and products, the main strategy is to attract middle class consumers in larger hoards through affordable pricing. Its products are priced affordably but that has not made it compromise the design or quality of its products. The quality is always better than similarly priced products from other brands. In this way, affordability has helped the brand grow its presence globally. Complement affordability with product quality and you have a best seller brand ready to win the masses. Had IKEA been selling its products at premium prices, it would not have been able to penetrate the market as deep or expand globally. So, it used affordability complemented with product quality and durability to bring a brand with a distinct consumer friendly pricing strategy and image.  A cost leadership strategy in combination with good quality has meant quick rise, a  stable and strong image in the market and heavy sales and profits for IKEA.


Another brand that has priced its products affordably so as to appeal to the masses is Microsoft. Microsoft’s product range is unique and so is its brand image. Throughout the planet, there are millions of computers running on Windows OS and that use Microsoft office software. You can imagine the case, had Microsoft not priced its products affordably. Two key elements of its business strategy are affordability and accessibility. Had Microsoft products not been affordable, they would not have been accessible to millions. It is not difficult to imagine that the level of sales would have been a minuscule percentage of the current sales.  Microsoft has a great product with an equally great price tag that makes it the favorite of millions of professionals and business organizations. These products are meant to raise productivity and their quality and pricing are the key reason that Microsoft and Windows are household names.  In this case too, pricing and quality are important tools used to create a distinct brand image related with  affordability, accessibility and on top of all productivity.


Apple’s mention is enough to make us recall the name of Steve Jobs and his obsession with quality. Mac, Iphone, Ipod, IPad, all these products are known for great quality, equally great product design and technology and last but not the least, premium prices. However, Apple is not targeting the average consumer. It is targeting the higher end consumers for whom prices do not matter. In Apple’s case, pricing is associated with a premium brand image and great quality. Apple has become synonymous with uncompromised quality and superior technology. In this case too, pricing and product quality have been used to create a distinct brand image of a superior brand and product. The pricing scheme is meant to retain the technological superiority that underlies every Apple product. The brand’s marketing approach is distinct from other brands – no compromise on quality and a pricing strategy that matches its premium product portfolio. Apple is not all about promotions or advertising. It has got something unique to offer its customers and based on its premium quality, it is in a position to charge premium prices. Again prices and quality are driving the marketing strategy here in case of Apple too. It is one of the most heavily publicized brands and the brand with the highest brand value and brand equity. Apple’s fans and customers are highly brand loyal and this loyalty is driven mainly by product quality. Its never ending obsession with quality has placed the brand at the top among the most valuable brands of the world.


Starbucks is also a great brand with a great marketing strategy. The effectiveness of its marketing strategy is visible in the form of the high level of brand loyalty the world’s largest coffeehouse chain enjoys. Like Apple, Starbucks has combined excellent quality with premium pricing. When it comes to quality, Starbucks believes in no compromise. Its cocoa beans are sourced from diverse corners of the world and roasted a bit deeper than the competing brands do. This is done to bring out the flavor. As a brand that focuses exclusively on product quality, Starbucks has a quite large product range on offer. There are other elements too in its marketing strategy which have helped it create a positive brand image and publicity. It has also added excellent customer service and a relaxing environment to drive customer loyalty. Still, the role of quality and pricing is central to its marketing strategy. It is targeting a segment of premium customers who are not so susceptible to minor price changes and want only the best product. The result has been higher customer loyalty, stronger brand image and global expansion. Till, some years ago the brand did not invest anything in marketing and all the marketing took place through word of mouth and publicity. This is the level of penetration a brand can achieve through matchless product quality. Just like Apple, Starbucks also has an on obsession for quality and it is why its quality challenge is difficult for its competitors to meet.


Another great brand that has proved the important role of pricing in the context of marketing is Zara. It is a fast fashion brand that has expanded very fast based on its quality and product prices. Zara has also grown its market presence fast by bringing high end fashion at lower prices to the middle class consumers. The quality of the products is average and still the design is the factor that makes them attractive. Zara has brought high end fashion and style within the easy reach of the middle class customers. While the style of the garments Zara sells is absolutely irresistible, the quality is also good enough to last a few seasons. In this way, it has made high end fashion affordable. This pricing strategy has worked in the brand’s favor creating positive buzz and made it a formidable competitor for both higher end and lower end fashion brands and that too without spending a penny on marketing and advertising.  Zara has used some unique operations and supply chain strategies to keep the prices low. In the world of fashion, the design of products is also an important element of quality. Zara has used the right mix of quality and prices to grow a distinct brand that outshines the others in the crowd. If you want your customers to love you try not burning their pockets. If you are to burn their pockets, offer products that burn others’ hearts.


Costco is also a brand that has matched great quality with low prices. Its popularity and level of sales are both very high.  Apart from being a formidable competitor of Walmart, Costco is known as the largest warehouse chain of the world. However, its business model differs from that of Walmart. It is a membership based retail chain that targets the more influential customers. The customers can buy a simple membership to grab low prices on most products they shop from Costco. It sells a very large rage of products and apart from selling good quality products it also sells its own private label brand Kirkland. It has taken care of both product quality and prices.  The brand has been able to keep the prices low because it sources in large volumes from its suppliers. The savings are passed on in the form of low prices to the consumers. The overall benefit has been great brand image which has led to higher sales and that too without any investment in marketing. Even without making significant investments in marketing, Costco has been able to manage a strong brand image based on quality of products and prices. It has also built customer loyalty by combining these elements with excellent customer service. Thus, the benefits of quality and cost leadership are obvious in the case of Costco also.

Coca Cola: 

Coca Cola is another celebrity brand that is known for great products and affordable prices. There are billions of fans around the world of the great flavors of Coca Cola brands. The brand sells a large range of soda drinks, health and energy drinks. However, apart from the great flavors of these drinks, the reason behind their popularity is the affordable pricing strategy of Coca Cola. These products are sold in packages of varying sizes. However the pricing strategy is such that the products are affordable for every class. Especially, it has a very large customer base among the middle class customers and the millenials. Coca Cola products are both affordable and accessible, sold in nearly every part of the world. Extraordinary flavors are made available to a very large customer base at absolutely affordable prices. The main ingredient of soda drinks is their flavor. Apart from it Coca Cola, also uses good quality raw materials to produce them. Coca Cola spends a very large sum on marketing of the brand each year. Still, if it was not for the affordable prices of the Coca Cola products, the brand would not have seen as much success and grown as popular. Thus, again you can see that pricing strategy and quality are important factors related with brand’s popularity and customer loyalty.

In this world full of brands, the level of quality and the type of pricing strategy followed can differ vastly from one brand to another. 21st century has brought higher level of competition and that has shifted the focus on two things – quality and prices. The centrality of these elements to the success of marketing has grown. Kotler has highlighted in his interview that the market has kept growing price sensitive. The brands that want to be successful must focus on these two elements to reach a larger segment of customers and sell profitably. The consumers of the 21st century and especially the millenials are highly price sensitive. They want great quality at affordable prices. While some brands have matched their expectations by providing great value at affordable prices, others have retained their premium image to target the high end customers only. Luxury comes at a cost but then high customer loyalty can be a luxury in itself. This is a luxury that select brands enjoy. So, in the battle of brands only the brands that have the right mix of quality and price emerge as victors. You want your brand to win, you must sell the right product at the right prices. Moreover, the right pricing strategy and a focus on product quality can make you a  winner. In most cases, cost leadership and quality based differentiation have resulted in a source of sustainable competitive advantage for the respective brand.  Cost leadership as in the case of Zara and Walmart and quality based differentiation as in the case of Apple and  Starbucks have made these brands winners by providing them sources of sustainable competitive advantage.