Tweak Your Biz » Marketing » Avoiding Bad Practices. Part 3: Pricing And Positioning

Avoiding Bad Practices. Part 3: Pricing And Positioning



This is part three of a four part series on avoiding bad practices in your quest for marketing results.

This part centres on Pricing and Positioning.

  • How does pricing affect products and services?
  • How would a change in pricing be perceived by a consumer?
  • What pricing and positioning should you choose for your company?

In today’s climate, positioning and pricing are becoming more and more difficult to define. As a general rule of thumb, high prices are set for higher positioned products or services and low prices are set for lower positioned products or services. With a market looking for high quality and position, but for low prices, some companies are blurring the line.

Let’s take a look at what defines the price of a product or service:

  • Time involved to source, make or work on
  • Skill / expertise required
  • Difficultly or ease of sourcing materials or talent
  • Availability
  • Customisation needed
  • Desireability
  • Quality of service or good/s
  • Reputation of person or company

Now let’s look at what defines positioning of a product or service:

  • Reputation of person or company
  • Overall quality provided
  • Customer service and level of service
  • Amount of options
  • Professionalism
  • Associations and partnerships
  • Public perception (How they/other rate them)

You may have noticed that there is a crossover of elements in both lists. This is a positive link; as one rises, so does the other.

Public perception

The public may not be aware of everything involved, but they are aware that a superior offering will cost more.  They also know that if they are seeking something that requires customisation, extra attention to detail or a higher quality then the reputation and branding of a company will play a vital role in their choices.

What effect will a change in price have?

If you are considering a change in pricing, then think very carefully. Even a slight change one way or the other will change the perception of your offering.

Changing to a higher price

If your prices are going up, you need to justify why.

  • Are you sourcing higher quality materials?
  • Have you improved your service?
  • Are you providing an additional skill or bringing more knowledge?
  • Have the materials you are sourcing increased in value / become rarer / custom treated / environmentally friendly?

Make your customers aware of what changes have been made and they are more likely to accept the adjustments in price.

Changing to a lower price

Again, despite the fact that you may feel a decrease in pricing will be well-received, you do need to justify why you have lowered your pricing. Customers may be skeptical.

  • Are you providing less – smaller quantities / less time / less expertise?
  • Are your items or services  inferior in some way – cheaper materials / more readily available materials / lower quality or attention to detail
  • Are you using less packaging or a cheaper way of transportation?
  • Are you simply responding to a change in customer demand and testing new markets / customers / levels of service?

In both cases be clear on the reasons why and ensure that you are meeting (ideally exceeding) your bottom line. Be aware that people will expect the two to marry up – price and postioning.

Steps to consider when choosing

When considering a change in price and/or positioning, follow these steps:

  • Throughly research your options
  • What are your expectations and goals? Will these changes meet them? What are your sales projections?
  • Look at each stage of the process – from design to delivery. Where can adjustments be made?
  • Rollout your changes in line with a plan
  • Be prepared for any questions and changes in customer behaviour (good or bad)
  • Monitor your changes and evaluate

Finally, I would like to thank Sean O’Sullivan for the topic of this blog. A worthy one for discussion. If anyone else has an idea for part four, please let me know via comments.

Have you changed your prices in recent times or at any point for your business? What prompted these changes and what effect did they have on profit, sales or customer perception?



The Author:

Christina is a complete geek, hence a perfect web + online marketing consultant. After ten years working with Premier Recruitment Group, LA Fitness, Monarch Airlines, Thomson Travel and a host of other companies, she now owns CG Online Marketing (www.cgonlinemarketing.com) in Ireland and is an associate of the Ahain Group. She's qualified in most things online such as web server management, digital design, Google Analytics and SEO. Specialties: Social Media Marketing, SEO / PPC,Google analytics (qualified in GA IQ) Web trends + insights, Data segmentation and targeting, Customer Behavior analysis, Digital design, Writing, Ethical marketing Green marketing / Sustainable tourism and Hotel + travel online marketing http://www.cgonlinemarketing.com

Add Your Comment

  • http://twitter.com/fredchannel Fred

    Nice one Tine. If there’s one general mistake I see with people starting in business is that part of they strategy is always go for the cheaper price, the “affordable” sign. There’s a lot more competition when being cheaper or the cheapest, plus the margins are so low that we need to cover more sales to cover our costs and salaries. When aiming to be the cheapest, it’s good to remember what John Jantsch (ducttapemarketing.com) said one: “There’s always someone that’s willing to go out of business before you”.In our case, no price change recently but back then, at the beginning of 2009 we realised that regardless the complexity of any project we were following our methodology and putting in way too much time when it came to smaller budgets. The question was: do we lower the quality level so we justify a cheaper price on smaller projects? the answer was no, so we decided to raise the bar and automatically started working on projects from a specific budget. We’re happy with the results.

  • http://www.btbtraining.com/blog Niall Devitt

    Great post! As Fred says so many smaller companies get this wrong. I remember working with one company who had set their pricing very low at the start to capture market. This worked well for a while but they then lacked the money to properly support the business and after a while lost many of their customer. At a later stage they fixed their pricing but remain tainted by a perceived bad reputation to this day. Emma’s post from earlier in the year is also worth a read http://tweakyourbiz.com/marketing/2010/08/16/if-the-price-is-right/

  • http://www.ivanwalsh.com Ivan Walsh

    Hi Christina,

    One trend I’ve seen when selling Information Products, is that the lower the price, the more complaints.

    There’s a few reasons for this but one is that, if you develop a premium product, you also attract customers who value your material, especially if they can’t find it elsewhere.

    Ivan

  • http://www.cgonlinemarketing.com/ Christina Giliberti

    Hi Ivan,

    I always opt for the middle products/prices and compare in most cases, but there are some items that only high quality will do – when its a long-term purchase, when I want strong/quick results and when I need the best. The best isn’t cheap!
    A premium product will attract a nicher market, and yes they will value what you have more.

    Thanks!

  • http://www.cgonlinemarketing.com/ Christina Giliberti

    Hi Niall,
    A price and strategy shift that cost them long term. People don’t like feeling hustled. Thats why preparation and research are important to develop a way to shift without gaining a bad reputation long term. Some companies like BA never fully recovered from a bad reputation. Ryanair is now being seen a ‘cheap’ airline as opposed to ‘affordable’. Its a thin line, but you have to assess what you have to offer and price accordingly.

  • http://www.cgonlinemarketing.com/ Christina Giliberti

    Hi Fred,

    Yes, cheap is more competitive and it does give you a wider audience to market to. You’re right sell low = sell more, sell high = sell less. Much of the hard work (researching, sourcing customers, sales etc) needs to be done regardless of price.

    You should be happy – you’re a well-respected company, that is profitable! Thats who every company should want to work with

  • http://www.tweakyourbiz.com Niall Devitt

    Thanks Aisling, hope you will like the changes – stay tuned! :)

  • http://www.facebook.com/wchingya Ching Ya

    I agree with Helen, the new site looks great! Excited to see how everything turns out. Congrats on the new launch Niall and everyone who made it happen!

  • Facundo

    Looking good!

  • http://www.bloggertone.com Niall Devitt

    Thanks Helen :)

  • http://www.bloggertone.com Niall Devitt

    Cheers mate :)

  • http://www.bloggertone.com Niall Devitt

    Thanks Ching Ya, we’re all looking forward to test driving it now!

  • http://twitter.com/JimmyDaugherty James Daugherty

    I’m new here but the changes look good. Exciting times!

  • http://Www.waterwayfinancialgroup.com/ ChrisH

    As someone in the fourth month of a home based business I have seen many of these challenges. On a positive note, home based businesses cost much less than a brick and mortar.

  • http://growthforce.com/ GrowthForce

    For #5 – there are many small steps businesses can take to review their budgets regularly. For instance, companies can run a six-week cash flow forecast, and each cycle compare the data against the annual budget to see if the company is staying on track.

  • soumuku

    Recently I was really, really low on cash and debts were eating me from all sides! That was UNTIL I decided to make money on the internet! I went to surveymoneymaker dot net, and started filling in surveys for cash, and surely I’ve been far more able to pay my bills!! I’m so glad, I did this.. With all the financial stress these years, I really hope all of you will give it a chance. – zgl1