I am NOT Maverick Marketing Sydney

Making prices hard to compare means a customer cannot easily determine which competitor offers the best value.

It is a pricing strategy used by marketers that manage branded products that are not positioned as no-frills or low cost brands.

BRAND POSITIONING.

The first and most widespread technique used is brand positioning. If the brand is positioned as a high quality or premium brand as opposed to a no-frills or low cost option, and is perceived to be superior by the customer, the marketer has a greater opportunity to charge a premium versus its competitors.

This is because customers ultimately believe they get what they pay for. The reasoning goes that good brands make better products. Brands are more trustworthy. More effort goes into product design and manufacture, and important corners are not cut to make way for a lower price.

The customer perceives that a branded product is a safer purchase since less is likely to go wrong with it. There is a reputation at stake. The customer feels more confident about making the buying decision. (Whether branded products are, in fact, better is often open to debate but what matters in marketing is not reality, but your customer’s perception.)

Depending on the type of product and its brand positioning, marketers tinkering with branded products need to take great care. While a branded tin of vegetables may be offered as a weekly supermarket special to encourage trial, it is an entirely different scenario when a prestige brand, such as Prada or Rolls Royce, embarks on a slash and burn.

The positioning of luxury brands particularly can be irreparably damaged by price reduction. The reason is that customers buy these brands because they are exclusive, most people cannot afford them. Dropping prices makes them affordable for more people, thus compromising the exclusivity factor.
Continue Reading

Bookmark It

Marketers of no-frills and budget brands want to make prices easy to compare, as do marketers that want to use price as a method to grab quick market share.

Pricing transparency and price-led promotion enables them to maintain their brand positioning as the category low cost provider or achieve short-term objectives related to volume or market share.

Price Comparison Services.

The first technique budget brands use is price comparison services on the Internet. A price comparison service (a shopping bot) allows customers to compare prices for specific products.

The shopping bot websites do not usually sell the product. The retailer has a commercial relationship with the price comparison service. If the retailer is selected by a customer, the retailer may incur a pay-per-click charge for the listing and referral, or may be invoiced for a small percentage of whatever is sold.

Some larger price comparison sites require vetting of retailers before a commercial relationship is established. This is done to ensure the legitimacy of the store prior to any customer transaction.

Examples of price comparison websites include:

www.getprice.com.au

www.shopbot.com.au

www.lasoo.com.au (which displays retailer catalogues)
Continue Reading

Bookmark It

Marketers essentially price in three ways.

They either price:

• below their competitors
• above their competitors or
• at the same price point as their competitors.

Note: Pricing is so closely interlinked to the marketing strategy chosen and the brand positioning that if you haven’t read these posts already, you should ensure you do so before establishing pricing strategy.

Pricing Below Competitors.

To price below competitors, a number of factors need to work in the marketer’s favour.

• They need lower costs than competitors.
• A marketer may choose cheaper or broader locations, distribution channels or facilities, lower product quality or provide fewer added services to keep costs down.
• They need to source product more cheaply (if in retail).
• A marketer may head offshore (often to Asia) to source its product, and adopt a specialist retail model.
• They may accept a lower profit margin.
• And they accept the risk. This is that there is no guarantee you’ll make up for a lower margin by selling higher volume. In fact, often the opposite is true. Products cost money to produce. Volume sales may not offset the additional costs of product manufacture.

Continue Reading

Bookmark It

Everywhere you turn, retailers are holding sales. Apart from reinforcing in the consumer’s mind that we have an economic predicament on our hands (and that retailers might be feeling a tad desperate), it also has another effect.

Massive discounting is a sure-fire path to financial trouble. Once your gross profit margins have evaporated, you have no business left.

In the chase for short-term sales, the long term effect can be disastrous.

Despite the temptation of sales, customers that are intent on tightening the purse strings are still not buying if the item is not something they really need. Price is not the deciding factor for them. And those with the disposable money to spend now sit back to wait for items to be discounted.
Continue Reading

Bookmark It