Value, value, value. If you’ve been following along for a while now, you’ll know how much we harp on about value. If you’re new around here, welcome, it won’t be the last time you hear about it.
This week the issue of pricing seems to be a hot topic amongst our clients, business friends and through online discussions. Fact of the matter is, it’s not an easy thing to figure out, it’s generally a bunch of trial and error before you find that sweet spot. Though we’re going to help you break it down, because if you can nail the next 3, chances are you’ll nail your pricing strategy.
Firstly, let’s put it simply – maybe it’s not them, it’s you.
Huh? We hear you thinking. Well, the funny thing is, it’s up to us as brands to communicate the value (check out one of our other articles ‘Understanding Value‘) Not only that, it’s up to us to know our product and know the people who need and/or want it. So, let’s kick it off shall we.
This, is a thing. A pretty big thing too we might add. When it comes to buying things, psychologically there are certain connotations attached to that brand. What do you feel or think when you compare?
- Apple vs. Samsung
- Toyota vs. BMW
- VB vs. Balter
Each are big players in their fields, both sell the same things, yet both are worlds apart. This is purely because of the associations that come with them and how we as consumers choose to align ourselves to them based on the messages they put to market. They’ve all been strategically thought out and placed in a way to make you feel and think about them. Whether you align with that is what will inevitably make you buy them, and in most cases it’s not about the price.
In saying that, the price goes hand in hand with those associations. They essentially shape what people will want to pay. Put it this way, if Apple put out a new iPhone for $200, I bet your first thought wouldn’t be ‘it’s affordable’ it’d be ‘why is it so cheap?’. Low price points don’t always attract a buyer, a low price point can also deter a good buyer, because if they have quality in mind and a set budget and you go under that, chances are they’ll eliminate you in their own buying process before you even had a chance to become part of the final selection.
Knowing your target audience
We’re talking reeeeeallly getting to know them. As a brand, you need to know who you’re targeting and where they sit in overall demographics – income, gender, locality, age, education, ethnicity etc.
Now let’s get this straight, you can have multiple audiences, they’re called segments and generally it means that you use the same message but cater the content to suit the audience it’s going to. To give you an example, let’s talk face cream:
- Twenty something’s – keep your skin young and fresh.
- 30s-40s – potential mums? No more tired eyes!
- 40-50s – Rejuvenate your skin and eliminate face lines.
The cream does the same thing, the message and execution is delivered differently to speak directly to the specific target.
Understanding their buying behaviours
How do they buy? What do they consider important?
As mentioned above demographics are important and socioeconomic (income) status always comes into play as to how much someone is willing to spend for your product. For instance, if you want to target a family with 3 kids in a lower range income bracket, chances are they won’t have as much money on the side to spend on ‘nice to have’ things. They’re buying essentials. Therefore, the lower price point is a high factor here. But, if you’re targeting DINKS (double income no kids), chances are they’ve got disposable income (hello international travel anyone… well not right now anyway). This is where you could work with a higher price point, because cost isn’t as much of a factor and chances are they’re more likely to buy materialistic things.
We like to use the example of placing a BMW billboard in a low socioeconomic area as an example. Not only could people within that area not afford to buy one, but it’s a damn insult flashing something in front of them that may be unachievable. It would be bad ad placement and would give off negative associations to BMW as a brand.
This is why multiple brands can sell the same products and work in unison. The real value (aside from having a good product, that’s kinda important too) is the focus on the messages and narrative you put to market. The value comes from what you can provide in many aspects from core values to manufacturing to processes and the customer journey. People are always willing to pay more for something that is worth it.
All it could take is a reposition or different messaging strategy that changes the way people think about your brand. Do the work, test it out and keep trying until you get it just right.
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