Microsoft Competes on Price. Should You?
May 10, 2011 ‐ 0 comments

*this post has been edited Tastes Great or Less Filling? Spanking or Time-Outs? Republican or Democrat? These trifling debates pale in comparison to the single most important issue of our time: are you a Mac person or a PC person? If you’re the former – or a highly sought-after Independent – Microsoft has launched a Do the Math website to see if you can be bought: Highlighting the price difference between PCs and Macs isn’t new. Microsoft has been running ads with this message for some time (when they weren’t running Seinfeld, I’m a PC, or Windows 7 was My Idea spots, that is). Do these ads and the website above make sense? Yes and no. Price is indisputably a competitive advantage for PCs – it’s why, for all of Apple’s inroads, Windows still owns 90% of the market in the US and 95% everywhere else. As cute as the new white iPad 2 is and as easily as it syncs with the new iMac, Apple’s price premium still makes their traditional computers a tough sell to people on a budget and to most corporate purchasing departments. But Microsoft could be doing it better. We try not to be dogmatic about brand-building, but we do believe in the power of some level of consistency. Microsoft’s whipsaw approach to TV advertising leaves us wondering just what the PC/Windows ecosystem is supposed to stand for these days. Wouldn’t it be possible to create a single campaign that communicated both usability and affordability? On the other hand, it’s important to remember that Microsoft is marketing itself only indirectly. In their TV spots and in this website, they’re actually using price to promote manufacturers’ hardware…which just happens to run Windows. With Microsoft’s monopoly of PC operating systems (Linux has an 0.56% share of the worldwide PC operating system market), they are in the rare position of being able to promote sales of their products using price, but not actually position their own products or their brand around it. Does leading with price make sense for your company or product? Maybe.trailer movie Risen 2016

  • Will price be a sustainable competitive advantage for you – no matter what happens in your industry and your market in the next few years?
  • Does your company or product offer no feature, function or value-add that’s worth a premium to customers?

If the answer to both of these question is yes, then positioning as the Walmart of the category might be the most effective strategy for your brand. But if the answer is no, or even if they make you hesitate, we suggest an alternative approach. Sell on price by all means. Make value an early and prominent part of your pitch. Run targeted promotions. Give your sales force and your channel the authority to discount strategically in order to book new business. But don’t make your brand all about price. Find a compelling and unique position for your brand – one that you can own and that piques customer interest enough for you to get into a discussion about cost, but that gives you the flexibility to reframe that discussion in terms of ROI and Total Cost of Ownership if a competitor undercuts you or you develop your industry’s next great product or service. Competing on price can be the right strategy, and it’s worked well for Walmart, Ryanair and other organizations whose strategy is always to offer the lowest price. But companies like Trader Joe’s and Southwest have proved that selling on price while positioning on something more valuable can work as well.

Tell your friends:

Calling B.S.:
A Five-Part Series

BrandCulture’s thoughts on the conventional wisdom.

About BrandCulture Talk

At BrandCulture Talk, we don't stand on ceremony, celebrate conventional wisdom or honor sacred cows. Peruse cheers and jeers for the best, worst, oldest and very latest branding theory and practice...all with the assurance that every post here has passed our "Branding. Not Bull" promise. Won't you please join us and weigh in?

Subscribe to BrandCulture Talk
Twitter Feed
  • The RSS feed for this twitter account is not loadable for the moment.