18 Jul Material Agency in Business
$1.00 Pencil from ethically sourced trees.
$2.00 Pencil from hand planted, ethically sourced, renewable tree lot
$5.00 Pencil from hand planted, ethically sourced, renewable tree lot with fair wage equalization
$10.00 Pencil from hand planted, ethically sourced, renewable tree lot with fair wage equalization and full benefits to help single mothers in developing countries.
…$10.00 Box of 20 Pencils
The term ‘Agency’ in the material world refers to instilling power or authority in an object. Most marketing revolves around this concept, to a degree that even certain brand names hold agency automatically upon hearing them. With proper brand grooming through this concept of agency, it also dictates the target markets for your brand. Where as a name like Ferrari screams exotic sports cars and Smart an economy car, if they try to cross markets, it can result in failure. Ferrari Minivan? Smart Sports Car? Both would be extremely hard to sell.
However, before you can finely hone your brand into a name that hold the same kind of agency as Rolex or No Name, how do you decide how much agency to put into your products?
Let’s get back to the pencils at the start. At what point would you buy the pencil? Are you looking for the cheapest one at fifty cents? Are you willing to pay a couple more bucks to help out a company with higher ethics? How about paying the most for a product related to a good cause? And lastly, what if they were all the exact same pencil, coming from the exact same factory? Of course, you as the consumer have no real way of knowing that last bit, so how we convey our products and the story behind them matters. That is how agency is assigned to an otherwise identical product, increasing its value to the consumer by orders of magnitude.
It’s a balancing act.
At the most expensive range of pencil, you have to expect to sell fewer pencils than your competitors, and also expect that they’ll take better care of them, use them less frequently, and hence have a longer period until their next repeat purchase.
On the other side of the coin, if selling at just fifty cents each, you have to sell a significant amount more to make the same profit. On face it seems like 20 times more sales are needed, but when you factor in the cost of making the goods, the amount is likely closer to 30 times more. However, as you can tell by the scant description of the fifty-cent pencil, the price speaks for itself. Therefore, little advertising is needed in terms of assigning agency to it.
Assigning agency is an inexpensive and easy way to elevate your identical product or service from other offerings in the same field. Knowing how much to assign though is an art that requires analysis of the current market place, your target audience, and what your goal is in terms of brand value. The more agency you want to assign means more advertising dollars and often fewer customers willing to pay the higher price.
I remember a story of a person at a craft fair whose wife wanted a lovely knit blanket at a booth. As there were no prices, they asked the vendor how much the blanket was. Her answer was $800.00. Visibly taken aback, the vendor then went onto explain that the sheep were raised on their farm in an open environment, and lovingly sheered, and the wool was cleaned, dyed and spun by hand before knitting it into the blanket. The patron’s eyes glossed over by the second stanza and blurted out, “I can buy the same thing at Wal-Mart for twenty bucks!,” then left. A bit of agency is always a good thing, but too much can cost you a sale.