Social Media and The Marketing Mix - Price Element

The pricing element is one of the most interesting elements of the marketing mix when viewed through the lens of social media. New technology and social media are forcing us to reexamine what "price" is. In many cases it is no longer a dollar value. Thousands of services on the web are perceived as "free," and competition seems to only depend on who has the best product. This is not the case and never will be.

Opportunity Costs and Time - The New Currency

The new price is opportunity cost. It's what people give up in order to consume your product. Opportunity cost on the web is represented by time and digital real estate. If I follow and read your tweets it means that I am missing someone else's. If I read your post, I will miss some other post.

If you tweet a lot, you are expensive to follow. If you post 10 times a day, it's expensive for me to have you in my Google Reader.

This leads to the question: In terms of time and opportunity costs, how "expensive" are you?

This new approach to thinking about price also has implications for service providers. If I have a social networking site, I need it to be as easy as possible to create an account, and interact. OpenID, XML, RDFa, and FB Connect are examples of things that reduce the "price" of a service.

Pricing As Positioning

When we bring positioning into the picture, it makes things more complex. Post and tweeting less does reduce the opportunity cost of following or subscribing to you, but only posting once every six months is overdoing it. You've positioned yourself at a low enough price that almost no value is perceived. Would you be concerned about buying a new car for $2500? Yes.

Posting frequently can have the opposite effect. Posting frequently increases price, but can also imply quality. Frequent posting is often seen as confident and authoritative. People assume the person must have something of value to say to post so frequently. The frequency can add value above and beyond the true value of the content. However, this can backfire. Posting frequently and sucking is the quickest way to an unfollow or unsubscribe.

Balance and Target Markets

The key is to balance actual price and positioning. This balance should be driven by your target market. First, you have to honestly assess what value you add. Post accordingly. Also lower the barrier to entry as much possible around account creation, and interaction for any social media services. Then think about your target market. What are their opportunity costs? If you are targeting dope smoking teenagers that live at their mom's house and don't have jobs then post with reckless abandon. They have all the time in the world. If you are engaging tech savvy finance gurus, these people have less time on their hands and higher opportunity costs.

These economic forces around opportunity costs have not fully materialized because there is still a lot of glow around social media. It's still new and fun. As the glow wears off and pure economics kicks in, these price/value theories will become reality.