Your pricing strategy plays a significant role in driving your brand growth. You need to treat pricing as a continuous process to project your brand positioning and stay competitive. Match your pricing strategy to your overall business strategy and financial objectives. Think of how you set up your business to make money and the role price plays in delivering those results.
Look back to the Strategic ThinkBox, by starting with your brand positioning as to how customers value your main benefits relative to your brand’s perceived product quality, added services, and the tightness of the customer connection.
While many marketers think of price as a defensive response to counter inflation or a competitive reaction at the retail shelf, the smartest brand leaders use price as a weapon to drive brand value.
Managing the price/value relationship
Increasing the perceived price:
Your pricing strategy starts with understanding your brand’s price/value relationship and looking for ways to increase the perception of value. In the chart above, We use perceived value and perceived price with the diagonal line representing where the two find their equilibrium. Every base product price starts at the going commodity price (pink circle). We can move up the curve to a higher price (darker red circles).
- Perceived quality of the products: Explanation of the product benefits match up to the customer’s needs. Adding emotional benefits go beyond commodity.
- Reputation for expertise: Re-enforced by experience, past usage or reviews/referrals for a similar situation.
- Perceived quality of the services: Go beyond product to go faster, easier, smarter by replacing activities the customer can’t do or does not want to do.
- Make your customer look better: Add perceived value to their brand, or making them look smarter.
- Happy customers: Happy experiences builds trust that allows customer to open up emotionally. With each happy experience, you can add cached value.
Happy experiences builds trust that allows customer to open up emotionally
When you find a unique position, which you know motivates consumers, and can differentiate you from competitors. Use the motivation of your positioning and the delivery of amazing experiences to tighten the bond with your consumers.
An indifferent brand has low perceived value and will end up with a much lower price point. A beloved brand can use its emotional connection to drive perceived value and ensure the price premium is perceived as good value. For instance, consumers are undoubtedly willing to pay $5 for a Starbucks latte, $750 for an iPad or $100,000+ for a Mercedes. The same consumers will price shop on brands where they have no feelings. A beloved brand has an inelastic price, which means the quantity demanded does not change very much when the price changes.
