This is a guest post from Rebecca Jarvis of InTouch Public Relations.
When was the last time you revisited your pricing strategy?
As I gear up for an afternoon of writing I take a sip of my lemongrass tea and indulge in a strawberries and cream rock candy. I savour the sweet treat in my mouth and I turn my thoughts to the country style jar the candies are packaged in. Noticing it’s still half full, I realise I’ve had this jar of sweets in my office for more than 12 months.
So why have I been so careful with my consumption?
I take a closer look at the label; ‘Crabtree and Evelyn’.
I am by no means a loyal customer of this brand. My knowledge extends as far as noticing a mention in an early episode of Friends. I also recall selecting some items as a gift a few years ago, however after seeing the price tag promptly placed them back on the shelf.
Is this why I’ve been savouring these sweets?
Can price and perception of a brand have that much influence on our consumption?
If I took these exact candies and placed them in home brand packaging I wouldn’t even purchase them in the first place, let alone ration my intake.
I realise that I placed a higher value on these candies (despite the fact that they have a suggested used by date of June 2013) because I place a higher value on products that are more expensive.
This theory is in no way new…
Price is one of the five P’s of the marketing mix.
Although Crabtree and Evelyn’s brand is highly valued, it is unlikely they are selling nearly as many jars of candy as the nearby supermarket that stocks a home brand range.
Therein lies the strategy,
Crabtree and Evelyn is a luxury brand and the price is based on the image of the brand rather than the actual product.
But how do you determine the right pricing structure?
The first and most obvious step in determining your price is to work out the how much revenue you need to make to ensure you are covering your costs. It’s important to review this regularly.
Now, how much would customers be willing to pay for your product or service? Look at where your competitors are placed in the market. What are they charging? How is your product different and superior?
To determine this you could take a survey of your target market and find out what they would be willing to pay. Use surveymonkey.net to devise a simple five minute questionnaire and entice people with a prize, or get some people together for a focus group meeting.
What products have you purchased recently where the decision has been primarily based on the brand? Leave a comment below, I’d love to hear from you!
Rebecca Jarvis is a communications consultant specialising in stakeholder engagement. Whether it be through a traditional advertising campaign, or social media engagement, Rebecca helps businesses nurture and strengthen their relationships with customers to improve brand loyalty.
Email firstname.lastname@example.org for a free consultation.