A Methodical Pricing Process Drives Profitable Growth.
A well-thought-out pricing strategy and comprehensive plan will help companies become more focused in the way they define their pricing requirements, more purposeful in developing and assessing pricing scenarios, and will ensure proper evaluation, promoting constant improvement and profitable growth.
Price is often the lowest priority in the marketing mix, but it is one of the most significant sources of brand value creation. Price plays a critical role in supporting the other elements of the marketing mix by signaling a brand's worth, fostering consumer consideration, and supporting the consumer perception of the brand. If a brand is priced too low, it may be considered a commodity, where any other like product is an easy substitute; if priced too high, it may be unapproachable. A brand’s perceived value, what it delivers or does better than the competitors' products, and how much the consumer is willing to pay for those deliverables will help determine the right price.
A robust pricing process, as part of the annual planning process, ensures the inclusion and evaluation of all elements, such as margin requirements, consumer brand perception and what they are willing to pay, and competitor responses and increases the probability of achieving the optimal price that maximizes sales and profitability.
An effective pricing strategy process begins with a review of many external factors and internal requirements, followed by four main stages.
A well-defined and carefully considered pricing strategy helps companies utilize, and support, their consumer's perception of a brand's value relative to the competitive marketplace and develop a sustainable, long-term approach to driving growth. It provides a framework to aid in making pricing decisions, and its real value is in prompting companies to think differently about the role that pricing plays in the overall brand mix. Effective pricing strategies adopt a consumer perspective, encouraging companies to develop a deeper understanding of the consumer's perceptions of value to drive growth.