IS IT REALLY ALL ABOUT PRICE?

• Position: CUSTOMERS

Consumers historically have demanded affordable, high-quality products--and, quite often, they have looked for bargains, or the lowest price possible without sacrificing quality. In today's ultra-competitive retail world, which faces cost-conscious customers who consider more buying options than ever before, those businesses are finding that price usually is the first factor customers consider before purchasing.

A survey of pricing strategies by Retail Systems Research showed consumers' top issue is when they can find a lower price elsewhere--and sometimes, the price even can drive them away from a brand they have favored.

"Price sensitivity is increasing," says Larry Light, CEO of marketing consulting company Arcature, Stamford, Conn., and coauthor of The Paradox Planet--Creating Brand Experiences for The Age of I. "Customers are no longer willing to spend large premiums for many major brands. In a changing world, consumer goods giants must do a better job of understanding the price sensitivities of their brands. Price sensitivity is the ultimate measure of brand health."

Light gives retailers four tips to reduce price sensitivity and make their customers buyers:

Build your brand. "In the past, when faced with a multitude of similar products, people often fell back onto brand loyalty rather than risk a brand they don't know as well at a cheaper price, but that's not as true anymore. A brand's price point that was viewed as a great value five years ago may not be as viable today. Has your brand value plateaued or regressed?"

Focus on the quality, not the...