u can compare this whole situation to the the Taxi service.
here in the uk we have TWO main different types of taxi's.
1) The Black Cabs (expensive quality service)
2) Self Employed Taxi Drivers (cheaper taxi service)
they both offer the same type of service, as they both pick up customers and drop them off to their destination. its a service. similar to producers.... u have those 'cheap' producers and those 'expensive' producers... but they both offer the same service right?? well thats the
issue.
black cabs are more expensive than those normal taxi services..... so why are'nt black cabs out of business????? surely the small taxis are undercutting them?
well the answer is VALUE/ QUALITY SERVICE.
the black cab drivers are more thuroughly trained, they have better vehicles, its more secure/trust those drivers, and genreally its better to travel in black cabs for those 'customers who are willing to pay that little extra' for those extra added qualities to the service.
so u see here.... the service is the same, they pick and drop of passengers. but the black cabs arnt out of business, as they offer more than just a regular taxi.
so similar to the taxi service, if u as a producer want those extra $$$$ u need to add something to ur service/beats to which customers wud be willing to pay for that little extra added value.
once u have added that extra value to ur service, customers will expect to pay that little extra. it wont be a shock to them.
similar to a coffee shop, u can walk into a small time coffee shop... but u expect there to be nice coffee at a cheaper price compared to the big chains. however if u go starbucks u EXPECT to pay more, as u expect that 'added' value/brand.
make the cutomer believe u have that added value and u will be ok.
its similar to other buinesses aswel
wal mart > tesco
easy jet > british airways
hi tek > nike
as u can see they all offer the same type of service.... however one is seen as the 'cheaper/economical' one... and the other a luxury/better quality.
so maybe another issue is the TARGET MARKET AUDIENCE! as the expensive companies arnt really targetted at broke people.... they have their eyes on those wealthy/impulse buying custUmers. so similarly as a producer u need to figure out ...
- WHAT TYPE OF SERVICE YOUR OFFERING?
and
- WHO YOUR TARGET MARKET IS?