Pricing Concept: The SALVE Framework of Price Image (PREVIEW)
Pricing Concept: The SALVE Framework of Price Image (PREVIEW)
Customer perceptions of the brand's pricing strategy have a significant impact on its value. The SALVE framework is a practical and actionable way to analyze a brand's price image.
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“Our feelings are our most genuine paths to knowledge.” - Audre Lorde.
The most valuable global brands are worth over a hundred billion dollars apiece, and dozens of brands are valued in the tens of millions of dollars. A significant portion of this value is derived from how customers feel about the brand’s visible and known pricing activities, or what we will refer to as the brand’s price image.
In this post, I want to define the concept of price image and explain why managers, particularly those involved with pricing strategy, should pay attention to their brand’s price image and build it intentionally. I also want to introduce you to the SALVE Framework of Price Image and briefly discuss how you might use it.
I will define a brand’s price image as “the customer’s perceptions of the brand’s prices, price levels, pricing strategy, price actions, and pricing-related communications combined into an overall descriptive evaluation.” Here are some examples: HEB has reasonable prices and offers good deals. Netflix has high prices and raises them frequently. You should only buy from Bed Bath & Beyond by using its “20% off any one item” coupon, and so on.
These overall evaluations about the brand’s pricing strategy are valenced, i.e., they are positive or negative. They dictate customer behavior, i.e., whether customers turn to the brand when the occasion arises. The price image also affects customers’ interpretations of specific pricing actions undertaken by the brand and how they react to, for example, price increases. When a brand is intentional in how it uses and communicates pricing cues, its price image contributes positively to its brand value, even a significant chunk.
Price Image Case Study: Walmart vs. Target
Consider Walmart. It has built its brand around the “lowest prices” price image for decades. Its “Always Low Prices. Always.” tagline lasted for nineteen years, from 1994 to 2007, and was followed by “Save Money. Live Better” from 2007 onwards….
This is a preview of the full post that is available to all subscribers, free and paid, of The Pricing Conundrum. To read the full post, please subscribe and support my work.