One of the hardest obstacles to overcome as an entrepreneur is going up against a major competitor whose product is similar and cheaper than yours. Not only will you have to break through the noise of established competitors to reach customers, but you will also have to figure out how to position your product in the marketplace in a way that will get people to pay extra bucks for an early stage solution.

In this situation, you could take the long road and spend weeks brainstorming, creating a PR strategy, and facilitating fancy marketing campaigns to try and get a leg up. A better option, however, is a shortcut that utilizes the excitement we get from presents. Essentially, using cheap gifts to convince people to pay more.

Presenting Victory

If executed properly, you’ll have prospective customers ignoring premium prices for your product without any hesitation. But don’t take my word for it; here are three companies that have used the power of gifts to dominate their competition in sales even with higher priced products.

Southwest

When Southwest was starting out in the 1970s, competitors looked to destroy the airline by undercutting them on ticket prices. Southwest responded with one of the most genius marketing strategies the airline industry has ever seen. Customers who purchased an airline ticked from Southwest started receiving a free bottle of whiskey to take home or drink on the flight with every ticket purchase. For frequent flyers, that’s a whole lot of whiskey!

After a few weeks, word started getting around about the amazing “gift” Southwest was giving to its customers. People began overlooking the fact that the airline was not the cheapest option, because the uniqueness in the gift they offered heavily outweighed the extra money they had to pay. In fact, the gift got so popular that housewives started calling Southwest saying they had too many bottles of alcohol in their homes.

For Southwest, the bottle of whiskey was cheap enough where it allowed them to still have great margins, giving them the revenue they needed to keep the airline going. After a while, competitors realized that they would be unable to beat Southwest simply by using lower prices, and were forced to raise prices to keep up.

Today, Southwest continues its dominance in the airline industry, achieving profitability for over 41 years straight.

Tiffany and Co.

Have you ever seen a Tiffany and Co. commercial with a baby blue box and a red bow tie on top? While this may be just one of many jewelry commercials you see, the baby blue gift box you see on tv is one of the greatest reasons why Tiffany and Co. is arguably the most famous jewelry company in the world.

When you buy a piece of jewelry at Tiffany and Co., you’re not getting the most diamonds for your buck. What you are getting, however, is a gift that ignites a signature emotion to someone else when they see the wrapping. Tiffany’s blue box represents the ideal response any person giving a gift to someone else would want. The company’s genius marketing plan has created a mystic like emotion people feel when they see that their gift is coming in a light blue box. To customers, the box represents happiness, wealth, prestige, and perfection. To get a loved one to experience those emotions, a premium price is a small token to pay.

Sprig

A new company that has used the power of gifts perfectly is a food delivery company called Sprig. When I ordered my first meal from the San Francisco startup, the main thing I noticed was the quality of the bag. As opposed to the paper bags you typically see, Sprig’s bag could easily be mistaken for a reusable grocery bag. At first, I was puzzled. Why would a food delivery company, whose margins are core to success, spend extra money on bags?

After a few weeks, the answer became obvious. Customers used these Sprig “gift bags” as replacements for their grocery bags, becoming walking billboards for the company. I’d see Sprig customers with their bags at Trader Joes, Whole Foods, and even at their kid’s soccer games. In more than one occasion, I started a conversation with someone about his or her experience with Sprig, and I even made a few friends from doing this. Time will tell, but my guess is the Sprig gift bag will eventually be put in the same category of genius as both the Southwest Whiskey gift and the infamous Tiffany and Co. blue box.

When you properly use the power of the gift to beat out competitors, you’ll start to build a brand that will allow you to raise the prices of your product. Your customers will turn into your marketing partners, and start to be the ones showing off your gifts to their friends and family. The outsiders begin to become curious, and soon you’ve put a system in place where people are seeking you out instead of the other way around. And when that happens, you’ll have a foundation in place that will your competitors won’t be able to compete with.