The Seven Percent Solution

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In the creative economy, the label “Made In America” is frequently an important element of the brand. The artists and artisans with whom I work, and who are making their art and their products in their studios or workshops, are definitely making in America. Most of the fashion brands with which I am involved proudly support local or regional manufacturing. So I was very interested to see what a recent article in The Sourcing Journal had to say about What Consumers Really Think About Made in America.

The news, according to a poll that Ipsos Public Affairs did for Reuters, wasn’t particularly good; neither was it particularly surprising. In a poll of 2,800 Americans, 70 percent felt that it was at least somewhat important for the products that they buy to be made in America. But 38 percent were unwilling to pay one penny more in order to support companies who did manufacture their products domestically. While more than half the people polled were willing to spend something more on products made in America, the number went down as the price went up. Only 3 percent were willing to pay a 50 percent more and another 4 percent were willing to pay a 100 percent premium for those products. So of the more than 2,800 people polled, only 7 percent are willing to pay a significant premium for products that were made in America.

If you are an artist or artisan making and selling your products that shouldn’t surprise you. People may admire your work and comment on the quality, or the materials, or the craftsmanship. But they don’t necessarily buy. Price wins out over the desire to support the local artist or local manufacturer. In that same poll, 94 percent of consumers considered the price to be at least somewhat important in making their decision

The author summed up the contradiction by noting that:

The poll illustrates the truth about consumer behavior—our actions don’t always align with our stated ideals. Especially when they run counter to our wallets.

How should you respond to this article? Your first thought might be to lower your prices. Don’t. Yes, there are a lot of consumers out there who aren’t going to buy your products at the price that you are charging. But those consumers aren’t your customers. Not because you’re too expensive but because they don’t put enough value in what you are offering to justify the price that you are charging. Focus your marketing efforts on the seven percent who truly value the Made In America label and whose purchasing behavior demonstrates support for that value.

Consumer behavior isn’t simple. People don’t just purchase the product with the lowest price or the one with the best quality or the one that is ethically sourced. Each purchase decision is a balance of a variety of different factors; some of them unconscious. Each purchase decision involves a trade off between the value that the product provides and the price that is being asked. If a consumer decides that the value that your product provides to her is worth more than the price that you are asking….cha ching! If not, she goes elsewhere.

The Ipsos study demonstrates that for most consumers, the price is often the most important factor and that considerations of price often supersede stated preferences for higher quality products, or locally produced products, or ethically sourced products for large numbers of consumers. The good news of the Ipsos study is that  seven percent of consumers value the Made in America label enough to pay a premium for products that reflect that value. The Ipsos study implies that for any differentiator, for any element of your product that distinguishes it from your competitors, there is some number of consumers who value that differentiator enough to justify a higher price. Many consumers may not pay a penny more for a product that was made in America, but there are some who will pay significantly more. And that is good news indeed.

While the data in the study speak specifically to the Made in America label, the principle is the same no matter what differentiates your product. Regardless of what you make or how you make it, there will always be people who do not value your product; who do not value the elements that differentiate your product from competitors; enough to justify the price that you are charging for it. Rather than trying to appeal to those consumers by lowering your prices, find the consumers who do value your product and your brand and focus your marketing efforts on them.

For your product and your market, it may not be seven percent. It may be seventeen percent. It may be three percent. But it is there. It may not be mass market but it is definitely a respectable market. There is a market for your products that consists of consumers who value what you are offering and who value it enough to pay a premium price. Your business doesn’t need to chase after the 38 percent who don’t value your products. You should be marketing to the seven percent who do.

So when you try to understand and articulate that you offer, and who you offer it to, remember to focus on that seven percent. They are your true customers.


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