In my conference presentations and consulting work, I have often made reference to the fact that when it comes to pricing, we lawyers could do worse than take inspiration from the often far more sophisticated pricing strategies of other industries and professions. I have for example taken and adapted to our profession, some of the best pricing ideas and practices from hotel chains (yield management), airlines (customer segmentation and price discrimination), and fast food franchises (bundling) to name a few.

Clairol and L’Oréal battle it out..

I came across another excellent example recently in Malcolm Gladwell’s latest bestseller ‘What the Dog Saw’ (Penquin). It centres on the clash of the women’s hair colour titans – Clairol and L’Oréal. Clairol was the dominant incumbent in the US market for many years with its product called Nice ‘n Easy. In the mid-1970s French company, L’Oréal decided to launch an attack on that dominance, an attack that was spearheaded by its product, Preference.

Apart from any other consideration, L’Oréal decided that it was not going to compete on price. Independent tests had shown that L’Oréal’s Preference was in fact a superior product because it delivered a more natural, translucent colour. They took the bull by the horns and in all their marketing, proudly proclaimed the fact that they were more expensive than any other competing product.

They also decided that they needed to attack Clairol’s marketing slogan which was; “Does she or doesn’t she?” Leaving aside the deliberate double entendre, the primary inference was that Clairol's hair colour product was so natural looking that it was impossible to tell whether it was the woman's natural hair colour or the result of ‘product’.

'Because I'm worth it!'

The wording of the first television commercial is a piece of marketing history;

“I use the most expensive here colour in the world. Preference by L’Oréal. It's not that I care about money. It's that I care about my hair. It's not just the colour. I expect great colour. What is worth more to me is the way my hair feels. Smooth and silky but with body. It feels good against my neck. Actually, I don't mind spending more for L’Oréal. Because I’m worth it!”

The power of the commercial was originally thought to lie in its subtle justification of the fact that Preference cost ten cents more than Nice ‘n Easy. But it quickly became obvious that the last line was the one that counted. On the strength of “Because I’m worth it!”, Preference began stealing market share from Clairol. In the 1980s, from a standing start, Preference surpassed Nice ‘n Easy as the leading here colour brand in the country, and in 1997 L’Oréal made the phrase the slogan for the whole company. An astonishing 71% of American women can now identify that phrase is the L’Oréal signature, which, for a slogan - as opposed to a brand name - is almost without precedent.

In the mid 2000s, this was replaced by "Because you're worth it". In late 2009, the slogan was changed again to "Because we're worth it" following motivation analysis and work into consumer psychology by Dr. Maxim Titorenko. The shift to "we" was made to create stronger consumer involvement in L'Oréal philosophy and lifestyle and provide more consumer satisfaction with L'Oréal products.

So what are the messages for law firms?

• Apart from the two international companies, there were a myriad of small companies in the market. The more crowded the market, the harder you must work to differentiate yourself from your competitors.

• If you have a premium product or service, make everyone well aware of that, price it accordingly and don't apologise for it.

• It doesn't matter what industry, trade or profession you are in, there will always be a wide spectrum of price and quality that consumers will be able to choose from. It is critical for you to decide where your firm is going to sit on the price/quality/service continuum and then remain faithful to that decision.

• If you so choose, you can be the most expensive provider and be very successful. You don't have to compete on price.