Pricing is always an integral part of every company’s marketing campaign. The prices you set for your products influence how your customers – or potential customers – react to them. Pricing is more than just setting a number above the actual cost of goods. It is about sending the right message or tone about the product too. In this article, we are going to discuss how you can use pricing as part of your marketing strategy.
Know Your Product and the Value of Your Brand
The product and the brand that it represents all play an important role in pricing. You should always consider them both when setting the price for your product. The higher your brand value, the more premium you should add to the price.
Here’s a good example. Company A is selling handcrafted luxury watches online. Each of the watches is designed for individual buyers and then produced to the highest standards possible. In this case, premium pricing is the best strategy to go for.
The higher price represents the product’s (and the brand’s) value nicely. Should Company A decide to lower the price of their products, there will be some customers who doubt the actual quality of the product instead of appreciate the lower price.
What the Market Will Pay
Another important factor to consider is the market itself. How much are your customers willing to pay for your product? This is not an easy factor to identify and figure out, but it is a factor that will help you set the best pricing strategy nonetheless. Knowing the actual market value of your product is key.
You can find out about how much the market will pay for your products by doing several things. For starters, you can review the market and find out more about competitors’ products and their prices. You can then observe how the market reacts to these prices.
Alternatively, you can ask the market directly. A focus group discussion or an open research can be quite effective in getting insight from the customers and deciphering the consumer black box. You’ll be amazed by how much you can learn from these activities.
Control Your Prices
Last but certainly not least, it is important to have the ability to control the prices of your products on the market. This may be simple when you are selling products and services online, or when you have complete control over the distribution network. For retail products, however, it is a necessary yet complicated thing to do.
There are MAP compliance systems you can use to help. The Minimum Advertised Price or MAP is a good way to keep the prices of your products in check. Systems such as Trade Vitality will even do most of the hard work for you, including producing accurate insights directly from the market.
Take these three steps and you’ll be that much closer to setting the most effective prices for your products. There is no doubt that pricing is a handy marketing instrument to have, simply because there are so many things you can achieve with the right pricing strategy.
