Price is More than Dollars and Cents

Customers are sensitive to the cash price once they are in the store, but they decide on what store based on emotional likes or dislikes. All things equal a customer will choose the product with the lowest cash price. Yet in real life customers make decisions on how they feel about the store, the products or services.

A customer’s emotional desires can overrule the pure economic interest for lowest cash price.  We’ll call these desires the non-monetary value of price.  Non-monetary price are all of the aspects of acquiring a product of service that require the customer to exert time, effort, experience an inconvenience or disruption to their normal activities.  If any aspect of the acquisition process causes a customer to seek an alternative then the non-monetary price exceeded the economic interest of actual cash price.

One example of extreme non-monetary price was on the news the other night.  In this case, the customer’s desire for the product was so strong hundreds they were willing to wait hours on end for a token that would allow them to come back later, waiting a second time, to buy Seahawks tickets. An extreme example of emotional desire worth any inconvenience.  We’ll call that strong brand loyalty.  

In a more day to day situation emotional pleasures include buying from a specific store, a specific style of clothing or a favored brand of any merchandise.  These desires increase the willingness to pay a bit more and go a bit farther out of the way to get the satisfaction of the preferred product.  Starbucks is an example of playing to emotional desires through delivery of a combination of product, service, setting, and rewarding loyal customers to create a very strong customer base.

Test your own responses to the non-monetary price on your daily activities.  Consider how long you are willing to wait in a drive up line to obtain a latte.  Will you stop at a store if you finding a parking space in front yet pass that store if you have to walk more than a block.  Why do you shop at the stores you frequent most often, is it sticker price or something else.

For business minimizing the negative non-monetary price and maximizing the positive emotional desires is a case for understanding your customer’s.   As consumers we are not logical, we make emotional decision about which store before considering the cash price.

Community Sourced Capital in Washington State

Recently Washington State Department of Commerce and Community Sourced Capital, launched a campaign aimed at bringing zero-interest crowd-sourced loans to small businesses in all of Washington’s 39 counties.  So what is community sourced funding and how does this program work for businesses.

FOR BUSINESS BORROWERS

Essentially Community Sourced Capital is a portal to crowdfunding. A portal hosts funding requests so that crowds of people primarily in the community where the business is located can make small investments to support economic development in their neighborhood.  

To start a business will submit a loan application to Community Sourced Capital and pay a fee to become a member of the portal.  The application is checked for financial integrity and community connection, history of sales and existing debts that might compromise the ability to repay the loan. Promotional material indicate loans are at zero interest but there are monthly fees.  Loans must be repaid in three years or less.

FOR COMMUNITY SUPPORTERS

The amount of money loan is divided into units called squares at $50 each. Supporters can may as many $50 squares as they wish to support to business. Squares do not return interest to the supporter. AS the business repays the loan the payment is divided and shares paid into the squareholders   account. Monthly statements and short updates are also provided to squareholders.

TO FUND OR NOT TO FUND 

Like all crowdfunding site the business seeking funds will need to make a serious marketing effort to campaign for local supporters. Steps include creating awareness of the funding request, making sure the request has a social value that the community will want to support.  In the end it will be the community supporters who determine if the business gets a loan.  In most crowdfunding campaigns that were successful typically had great marketing efforts. 

For details and information  https://www.communitysourcedcapital.com/