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A hot dog with toppings.

The Footlong Hot Dog

Everyone who has been to a big event — or even to a movie theater — knows that the cost of refreshments bears no relation to the actual cost of the ingredients themselves. A hot dog or a tub of popcorn that you can make in your own kitchen for maybe 50 cents costs $5. And who knows what the syrup in that soda costs, but you’re paying $5 for that too.

What will a theater do to combat the perception that you’re overpaying? One of the things they do is change your point of reference. They don’t sell you a normal-sized box of junior mints — they sell you a supersized one. Your popcorn tub and soda cup are bigger, too. Look around, and you may find the hot dogs are longer, too. Now they’ve provided a reason you’re paying more — you’re getting more. The fact that you’re getting twice as much for 10 times the cost may not occur to you.

In this car environment, maybe you can employ something similar. Nothing will bring down the cost of cars, but is there a value add that might justify at least some of the increase? Maybe you can offer free maintenance for the first 30,000 miles. Maybe you offer $1,000 they can spend on optional extras like floor mats or a car hitch or whatever.

There are multiple benefits here. First, it feels like an extra that justifies at least some of the added costs you’re forced to pass along. Second, it makes side-by-side comparison with competitor prices harder. Third, you can spin the extras you offer into an advertising hook that not only gives you a point of difference but also makes you seem more consumer friendly.

Obviously, there are no one-size-fits-all solutions here. The added value you offer should be tailored to things that provide the greatest delta between perceived value and the cost to you, or that play particularly well with differentiators you’ve already established through your advertising. And yes, in a market where cars are already expensive, it may make what you sell a couple dollars more.

But when life gives you lemons, make lemonade. Then put it in a larger cup.

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Transmissions

Transmissions is a series of regular posts about building brands in the competitive auto industry.

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