Brands shouldn’t be stingy on “little luxuries”

I had an interesting text from my mobile phone provider this week – that I had not used my full data allowance this month – and I could be a little more adventurous when out and about.

The Secret Marketer

In contrast, my wife had her hair cut this weekend and I am not talking a cheap back-street salon, it set her (or rather me) back some four hundred pounds. But – and this is the bit that I don’t get – they charged her an extra £2.50 for a cup of coffee. I would have thought that when they are charging the earth for a cut, they could at least throw in a hot drink. 

A similar thing happened to us at a hotel we stayed in recently. Despite costing close to the national debt of a small country to stay the night, when we went down for breakfast the following morning, not only was breakfast not included, they charged us for each individual item – a fiver for a glass of orange juice, more for a slice of toast, more still for a pot of tea.

I know that during the recession there was a movement to offer the customer a basic price for a service and then let them choose what ‘little luxuries’ they wanted to add on. For commodity, price-sensitive purchases, I can understand this but I am struggling to ascertain why luxury brands would go this way. Even Ryanair – the master of pricing strategy – has dropped some of its more onerous add-on charges, in an attempt to be seen as more customer friendly.

Clearly the marketing directors of each respective brand will have done their research and know the pricing elasticity of their respective customers, so who am I to challenge them? But as the economy emerges from recession, it is growth (as measured by increasing revenues) that gets the analysts excited, and I would have expected more brands to go down the ‘all you can eat’ model whereby the customer pays a higher price that includes extras than one where the customer has to make the effort of deciding to spend more.

I am pretty certain that this is what is behind Ryanair’s decision – there is not much that it gets wrong – although I am sure that if it ran hair salons and luxury hotels, it might come up with a different model.

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