How Price Affects Design Dynamics

I got that look. If you’ve been in the design, marketing or branding game for a while, you know the look I am referring to. We’re all sitting in a large conference room and I asked what in my mind is the most obvious question anyone with any kind of marketing, design or branding experience would ask. I asked, “What is to be the suggested retail price for this product?” I received looks of confusion, bewilderment or perhaps befuddled may be a better word. Not a single person in a room of executives and senior managers understood why price may be a key factor in establishing the value proposition of the product and its market position; at least not in any way that was evident to me. Maybe it was a secret or something. But it was clear that my question appeared to be a foreign language no-one in the room spoke. Nor was it clear that anyone had a basic understanding as to how price was one of the key fundamental factors in driving the product and package design. After the uncomfortably long silence, one person replied, “We'll figure that out later. That is not important right now.” It was time for my low-key bewildered face to make an appearance. First let me say that I cannot be held responsible for the muscle spasms my face makes when someone talks a little crazy so I tried to explain price, design and market dynamics to a senior team short on time with even shorter attention spans. The brief conversation went a little something like this.

Every detail plays a pivotal role in shaping consumer perceptions and market positioning. One such crucial aspect often overlooked is the interplay between suggested retail price (SRP) and product design. Beyond mere aesthetics, understanding how these elements influence each other is paramount for crafting a brand strategy that will resonate with our target audience. The suggested retail price serves as a cornerstone in defining a product's perceived value. It not only reflects production costs but also conveys a sense of exclusivity, quality, and desirability. Consequently, product design must align with this perceived value to maintain coherence and credibility in the eyes of consumers. For instance, a luxury item commanding a premium price should exude sophistication and craftsmanship through its design language, materials, and finishing.

Let me provide an example. Let us consider the case of Lexus. Lexus is considered by many to be a luxury automotive brand. Most of know that Lexus is the luxury line Toyota as many in the room drove Lexus as their daily driver so it wasn’t too much of a stretch to understand why they purchased that particularly brand. But Lexus is essentially a Toyota but branded and designed to appeal to a different market; an up-scale market. Consequently, among many other things, its price reflects this value proposition. Additionally, Lexus does not and should not look exactly like a Toyota. Otherwise, it would destroy the Lexus brand position it has worked to attain and its value proposition to consumers. The finishes of a Lexus are different. The logo, styling, trim options, suspension and often times the engine will be tuned a bit different. I explained that I would not design an automobile meant for an up-scale premium price market that looks like value priced product. Nor would I want to do the reverse. I would not want to place a value price on a premium upscale market product because I would erode its value and deteriorate any future prospects of the revenue gain from such a market. The most profound fallout would be a drop off in consumer confidence. An organization would lose the trust of consumers exacerbated by poor brand/product position and price confusion.

It doesn’t matter if it is package design, web design, automotive design or architecture of a skyrise, you have to consider price as much as costs when crafting a product’s design. It is a profound and inarguable part of the marketing dynamic. If I’m working on a new package design such as this, it is one of the essential pillars of why I may want to add foil stamping, silk finishes, or embossing or maybe alleviate it altogether depending on our market objective. As the designer, I would also know that I need not design for such finishes if the product positioning is to be value as opposed to premium. I would not design a product that requires thousands in fixed commercial setup costs only to sell if for a $1.99 per package at retail unless the revenue is intended to be volume driven to offset setup costs as opposed to value driven based on broad consumer adoption. As you see, there is a basic cost aspect to design as well as branding. Then there is market perception to consider caused by a product’s price and all I was requiring was a simple ballpark that would help drive the design of the product. Is it premium or is it value? Absence of all other parameters, price can help to establish direction and help to drive design options.

As I have already alluded to, the product or package design plays a pivotal role in shaping consumers' perception of value, thereby influencing their willingness to pay the suggested retail price. A meticulously crafted design can elevate perceived value, justify higher price points, and create a psychological allure that transcends mere functionality. Consider Apple's iconic product designs, which not only embody elegance and simplicity but also command premium prices, setting a benchmark for competitors.

By tailoring design elements to reflect the intended price point, brands can effectively communicate their value proposition and differentiate themselves from competitors. Whether targeting the mass market with affordability or the niche segment with exclusivity, every design choice must resonate with the intended audience's preferences and aspirations.

The suggested retail price and product design share a symbiotic relationship in shaping brand identity, perception, and market positioning. By meticulously aligning these elements, brands can captivate consumers, foster brand loyalty, and drive commercial success. Recognizing the intricate interplay between SRP and design is indispensable for crafting resonant brand experiences that stand the test of time.

So what happened in this meeting of executives to discuss this new product after my explanation about brand, consumer price psychology, marketing dynamics and design? Nothing happened. My points were acknowledged but largely ignored. After the awkward silence was broken with what equated to a “not now” set-aside, the price was never discussed. The design ended up fantastic but with what could but with the most profound degree of scope-creep never before seen. Why? The reason for the bloated project was a lack of clarification on market position. It went from value to premium and back to value as the team fought to identity who the final customer was to be. This was one of my greatest fears. Scope-creepy is the piggy bank with the giant hole in the bottom no one can see (more on that later). The final iteration fell someplace in between in an attempt to appease every customer which is generally a recipe for mediocre market performance. Time will tell how it performs but the appeal-to-everyone approach is largely a fool’s errand. Toyota didn’t make that mistake. Nissan doesn’t make that mistake with Infinity and nor do other successful brands so why aren’t these folks learning for the examples of other established entities? No idea.

Weeks later I was approached by a senior executive from that very same meeting. He said, “That project was painful. I now understand what you were trying to explain to us and I admit that I didn’t get it at first. My background isn’t marketing. Even if we make money on this item, we may ultimately lose money from the constant back and forth and constant product changes we made trying to please everyone in the room.” Time is money. Those dozens of do-overs add up in human resource costs and this guy reluctantly admitted that he finally understood it all. He went on to say, “we didn’t do ourselves any favors by not defining the price as you often say. We certainly didn’t help you by moving the goal post multiple times and being unclear in our objectives because we didn’t know what they were. I’m still not sure if we do.” Hearing him admit that was frightening. Kind of makes you wonder who is running the circus. No wonder the chimps are running wild and the tigers are eyeballing them with hunched shoulders.

Price is one of fundamental benchmarks in establishing output and development costs, product design as well as establishing market performance expectations. It was this exec’s way of saying, that I didn’t have to say, I told you so. He said it for me.