We bring the product, you set the price

Ripollès (CNA).- The crisis has hit the hospitality and tourism businesses hard. However, new ideas to attract more consumers appear every day. In Vall de Ribes, in central Catalonia, a marketing strategy called ‘Pay what you want’ has began. The town of Ribes de Freser observed the success of similar initiatives in other cities and they implemented the idea here. However, some shopkeepers expected to increase their profits and ended up complaining about losses.

Nowadays, marketing rules the world. In a crisis often the bravest and the risk-takers win. The key is to recover consumer confidence by lending priority to social norms instead of market rules. Through inspiration and optimism, the employer should try to surprise and excite clients again. 

The manager of the ‘Little Bay’ restaurant in central London, Peter Ilic, knew this very well. In February 2009 he decided to let customers pay only what they wanted for meals in order to beat the crisis with an original and bold strategy. The restaurant owner trusted in the implied value of his Mediterranean cuisine. He only imposed two requirements: the minimum price of a penny and drinks were to be paid for unless you wanted tap water. The restaurant captured lots of headlines with a bold publicity trick. Although at first takings could have been affected by tight-fisted people, the publicity that Peter Ilic obtained does not have a price. At the end, he increased his profits by 20% offering always tempting food and dealing equally well with all visitors regardless of the price they paid.

But Peter Ilic was not the pioneer this bold initiative. The British group Radiohead took the honours here. In 2007 you could download from the Internet their seventh CD called ‘In Rainbows’ and pay what you wanted. In a week, they sold over a million copies at an average of five euros.

Since then, dozens of businesses have copied the strategy all over the world. In Germany for example there are lots of restaurants without price called ‘weinerei’. You can serve yourself again and again and nobody says anything. Then, you impose the price and deposit money inside a glass at the bar.

Catalonia wakes up to the trend

This year in Catalonia we are witnessing an explosion in marketing strategies based on low prices. In January, National Geographic Traveler magazine and Frommer’s guide chose Girona and the Costa Brava as one of the best tourist destinations of 2012. Consequently, the city celebrated the ‘Girona 10’ campaign. Hotels and restaurants at a price of 10 euros and free public transport: it had a resounding success and will be repeated. 1,000 nights were up for sale in hotels at 10 euros and they ended up selling 1,630. A calculation of 8,000 set menus at 10 euros became 15,000.

In March, the city of Granollers tried it on ‘Open Shopping Night’ with shops open to the public until midnight and offering nights in hotels and dinners at 12 euros, all livened up with concerts.

Latest the place to implement a project of this type has been the Vall de Ribes. The ‘Pay what you want’ initiative is aimed to promoting the heritage of the site. 

‘Vall de Ribes does not have a price’

At the end of April, Vall de Ribes, in Catalonia’s Pre-Pyrenees area, held a special weekend. If you paid one night in a hotel, you could enjoy paying what you wanted at restaurants, shops and more hotel nights. In total about fifty businesses were involved in the initiative. Participants wore a bracelet so as to be identified and they could also enjoy traditional dances, archery, a literary festival and other culture and leisure activities.

The campaign also included a trip on the railway of Vall de Núria, the best tourist icon of the valley. Usually a round trip ticket costs around 20 euros and for those two days some people paid just one euro. Clients were perhaps not aware that it is the only way to reach Vall de Núria, one of the major tourist attractions in the Pyrenees with extraordinary landscapes and a sanctuary with a great tradition of pilgrimage.

On Saturday morning a small craft fair was organised. However, stand-holders ended up unhappy because of their losses. A baker from the town explained that although people had paid for their products almost at the right price, the lady who was selling honey decided to close her shop in the afternoon. “Some people have paid 50 cents for jars of honey that were worth 2.75 euros and a woman has taken 20 jars of honey at one euro”, she says. “This should not be done just because we are in crisis and the place is full of people that have got a cheek”, she added.

On the other hand, hotels and restaurants were happier with the prices paid although those who had made ??hotel reservations through the Internet could not benefit from the initiative. All business owners coincided that the low number of visitors was due to the lack of publicity that was made of the campaign and not the Barça-Real Madrid football match that was to be played that evening. “Some inhabitants of the town itself had not even heard about it”, a fruit seller said.

Vall de Ribes Tourism manager, Licia Pantano, agreed that perhaps they did not do enough publicity, but she disagreed with the general idea that the campaign hadn’t worked. “We will analyse the ratio between the price of products and the price that visitors have paid but we understand that apart from quality tourism, we have a medium class tourism that has paid according to their purchasing power”, she explained. “We don’t want to increase profits. We want people to talk about our natural, artistic and gastronomic heritage. We don’t matter if people pay little today if they come back tomorrow and bring more people”, she concluded.

The power of becoming known

The participative pricing mechanism ‘Pay what you want’ (PWYW) increases the credibility of the vendor and its products and gives more power and confidence to the consumer. But obviously the majority of customers take advantage of the strategy. Is it worth it to run this risk?

Marketing professor of ESADE, Carles Torrecilla, thinks so. He says that the best way to get publicity is to generate newsworthy events. “In the case of Vall de Ribes case the benefit of the strategy comes later, when the number of visitors increases because they know the site as a result of the initiative”, he explains. “So then people of Ribes de Freser should not be dissatisfied until they see if visitors return when prices are already normal”, he adds.  According to Torrecilla, in the world of marketing we can not expect anything from one single action. The continuity of the strategy will be the key to get a firm foothold mental map.