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How to Price a Product for Retail · Enhance.training

• 0:03
  SPEAKER_01: Hello, and welcome to this Enhanced.training podcast on how to price a product for retail.
• 0:10
  SPEAKER_01: Enhanced.
• 0:15
  SPEAKER_01: So take a look at the courses on offer and think about transforming your performance and your business.
• 0:21
  SPEAKER_01: My name is Anna, and I'm taking you through this subject because I love pricing.
• 0:27
  SPEAKER_01: And more than that, I love seeing the results that come in when pricing is set right.
• 0:32
  SPEAKER_01: I've over 15 years experience from working with some of the top FMCGs working in finance alongside sales and marketing.
• 0:42
  SPEAKER_01: During that time, I learnt a great deal and I saw what really works, and more importantly, perhaps what didn't.
• 0:51
  SPEAKER_01: Now I get to share these secrets so others can benefit from the skills I've learned that I don't have to spend 15 years learning what works and what doesn't.
• 1:01
  SPEAKER_00: Okay, let's get into the podcast.
• 1:08
  SPEAKER_00: So let's talk about how to price a product for retail.
• 1:12
  SPEAKER_01: First of all, you need to put yourself in the retailers' shoes.
• 1:15
  SPEAKER_01: You need to imagine you're the retailer.
• 1:17
  SPEAKER_01: You need to have a think, what do retailers want?
• 1:21
  SPEAKER_01: Retailing is a tough environment.
• 1:23
  SPEAKER_01: Even before COVID-19 hit us, retailers have had to work hard to juggle declining footfall, increase competition from online and other such costs.
• 1:34
  SPEAKER_01: But they hold the key to your customers, to the people you want to sell to.
• 1:38
  SPEAKER_01: To get your products to more people, you need retailers, and to grow your business, you need to sell your products in more stores.
• 1:47
  SPEAKER_01: Getting your retail pricing right is essential.
• 1:51
  SPEAKER_01: Product pricing that's too low means you will not make enough profit to survive, but product pricing that's too high means you might not even get a listing.
• 2:01
  SPEAKER_01: Before you dive into the numbers for your pricing strategy, you need to discover what retailers want.
• 2:07
  SPEAKER_01: What do they really need?
• 2:09
  SPEAKER_01: Your retail pricing strategy should be focused on what the retailer needs, and this podcast is going to go through five such areas right now.
• 2:19
  SPEAKER_01: So what do retailers want?
• 2:21
  SPEAKER_01: Well first of all, they want to make money.
• 2:25
  SPEAKER_01: It sounds obvious, doesn't it?
• 2:26
  SPEAKER_01: But retailers need to make money.
• 2:29
  SPEAKER_01: Every penny is important to them.
• 2:32
  SPEAKER_01: They are known for it.
• 2:33
  SPEAKER_01: If they are bricks and mortar retailers, this will be even more the case, especially as internet shopping now accounts for around thirty percent of all non-food purchases.
• 2:43
  SPEAKER_01: And according to KPMG twenty nineteen was the worst year for retail since their records began back in 1995.
• 2:53
  SPEAKER_01: Retailers big and small are fighting for survival.
• 2:58
  SPEAKER_01: So we need to recognise that retailers need to cover their overheads.
• 3:02
  SPEAKER_01: These overheads, which include business rates, wages in line with national living wage, certainly not on their decline.
• 3:11
  SPEAKER_01: So when we're planning on how to price a product for retail, we need to accept the retailers will need to make a clear margin.
• 3:18
  SPEAKER_01: You need to take this into account.
• 3:21
  SPEAKER_01: You will need to suggest a retail price for the consumer and then a price you will sell to the retailer.
• 3:28
  SPEAKER_01: The price to the retailer will need to be low enough for the retailer to make their margin, but high enough for you to make your margin too.
• 3:37
  SPEAKER_01: And don't forget to include VAT and duty in your calculations if they apply to your product.
• 3:43
  SPEAKER_01: But it's not just the margin they make on one item.
• 3:46
  SPEAKER_01: They need to know that your product will sell.
• 3:49
  SPEAKER_01: If you want your product to replace a product that's already stocked, you need to show that yours is better.
• 3:54
  SPEAKER_01: You need to show that your product can either have a higher rate of sale or higher margin, or ideally even both.
• 4:01
  SPEAKER_01: What else do retailers want?
• 4:04
  SPEAKER_01: Well they want people in their stores, of course.
• 4:07
  SPEAKER_01: Retail is highly competitive, and increased footfall or more people in store will always be an aim of any retailer.
• 4:14
  SPEAKER_01: This applies to both online and especially bricks and mortar sites.
• 4:19
  SPEAKER_01: There is an increasing focus and increasing trend on customer experience to encourage people back into retail outlets.
• 4:28
  SPEAKER_01: Experience is helping to get people into stores, and any part you can play in this will be welcomed by the retailer.
• 4:35
  SPEAKER_01: Your product and your retail pricing must match what the shoppers are looking for.
• 4:39
  SPEAKER_01: Whether it's giving better value, giving access to the latest trends or technology, or something else that the shopper is looking for, let your retailer know what you can bring.
• 4:50
  SPEAKER_01: Let them know how your product will increase footfall and get new customers into their shops.
• 4:55
  SPEAKER_01: The more relevant your product is, the more the retailer will want it, and the more they'll be willing to pay for it.
• 5:01
  SPEAKER_01: Now retailers are known for trying to push down prices, but if you can't afford to lower your prices or simply don't want to, try offering other value instead.
• 5:14
  SPEAKER_01: You might be able to contribute to advertising, social media, or in-store activation.
• 5:20
  SPEAKER_01: And activations in store can include sampling, demonstrations, competitions, and the like.
• 5:26
  SPEAKER_01: Anything that will encourage more people to come to that retailer and buy more of your product is going to be a winning scenario for both of you.
• 5:35
  SPEAKER_01: But what else do retailers want?
• 5:38
  SPEAKER_01: They don't just want people in their store, they want loyal and new customers too.
• 5:42
  SPEAKER_01: Because once the retailer has got people into their stores, they want those customers to keep on coming back.
• 5:48
  SPEAKER_01: They want them to tell their friends about them, to encourage more sales.
• 5:53
  SPEAKER_01: The retailer will have worked hard to establish their brand, what they stand for and the type of customer they attract.
• 6:00
  SPEAKER_01: You need to show that you understand your target consumer and why and how they're a match for the retailer you're selling to.
• 6:07
  SPEAKER_01: If you have a premium high priced product, it would clearly not be a great fit for a discount store, and vice versa.
• 6:15
  SPEAKER_01: So do your research into the retailer's customer base.
• 6:18
  SPEAKER_01: Who do they target?
• 6:20
  SPEAKER_01: What are these consumers' likes, dislikes?
• 6:22
  SPEAKER_01: What's their disposable income?
• 6:24
  SPEAKER_01: What are their habits?
• 6:25
  SPEAKER_01: What do they do?
• 6:27
  SPEAKER_01: Why do they shop where they do?
• 6:29
  SPEAKER_01: The closer the match to your ideal customer, the more likely you are to get a listing as you'll be more aligned to that retailer.
• 6:36
  SPEAKER_01: Your retail pricing should reflect what their current customers are willing to pay in that store, and your product should reflect the quality and the values that they are used to.
• 6:46
  SPEAKER_01: This will show the retailer that you can help them to satisfy their customers and keep them coming back.
• 6:52
  SPEAKER_01: Think about how your business and your product can help the retailer.
• 6:56
  SPEAKER_01: What does your product do to help them gain loyalty of their customers?
• 7:00
  SPEAKER_01: Does your product maybe offer better value or have stronger green credentials?
• 7:06
  SPEAKER_01: Your pricing strategy and any support you give to the retailer needs to help them attract and keep customers.
• 7:13
  SPEAKER_01: It's in both your interests to do so.
• 7:18
  SPEAKER_01: Now what do retail buyers want?
• 7:20
  SPEAKER_01: Well they want to meet and exceed their own targets.
• 7:24
  SPEAKER_01: Now there are different types of retailers, from small independents to multinational grocers and whatever thing in between.
• 7:33
  SPEAKER_01: So you need to be clear which type of retailer suits your product and which one you'll be targeting.
• 7:38
  SPEAKER_01: Now unless you're selling to a really small independent store, you'll most likely be selling to the buying team rather than the owner.
• 7:45
  SPEAKER_01: So you need to find out as much as possible about what that buyer really needs.
• 7:50
  SPEAKER_01: Think about it, buyers are people too.
• 7:52
  SPEAKER_01: They've got their own aims, their targets, their jobs to be done.
• 7:56
  SPEAKER_01: So the more aligned your offer is to the buyer's goals, the easier the selling will be.
• 8:01
  SPEAKER_01: Try to find out what that buyer is measured on.
• 8:04
  SPEAKER_01: It could be revenue or profit, margin, rate of sale, average basket size, the list's almost endless.
• 8:11
  SPEAKER_01: But the buyer will appreciate you taking the time to find out what they want and not simply just what you want.
• 8:18
  SPEAKER_01: When working out how to price your product for retail, show how your product and your support package help the buyer get to their goals.
• 8:25
  SPEAKER_01: Show them how your product can do it better than the current range.
• 8:29
  SPEAKER_01: Anything you can do to help them will help you.
• 8:33
  SPEAKER_01: And finally, what do retailers want?
• 8:36
  SPEAKER_01: They want integrity.
• 8:39
  SPEAKER_01: This is really important.
• 8:41
  SPEAKER_01: When asked what they want from suppliers, repeatedly retailers ask for improved communication and integrity.
• 8:48
  SPEAKER_01: So when you say you're going to do something, just do it.
• 8:51
  SPEAKER_01: If the deal you offer promises extra support in store, make sure it happens.
• 8:55
  SPEAKER_01: And if in exceptional circumstances you can't do something you said you would, then just let them know as soon as possible.
• 9:02
  SPEAKER_01: It's all common sense, but make sure you do it.
• 9:05
  SPEAKER_01: And it may sound obvious, but do not lie just to get the deal.
• 9:10
  SPEAKER_01: However tempting it may be, it will leave a bad taste if you get found out, and any trust you've built up will disappear at once.
• 9:18
  SPEAKER_01: Let me give you a real life example.
• 9:21
  SPEAKER_01: So I know a buyer who experienced this.
• 9:24
  SPEAKER_01: A supplier came to them with a seasonal product offering.
• 9:27
  SPEAKER_01: The offer was good, but the buyer wasn't sure as it was really early in the season, so they didn't think they needed to make the order that day.
• 9:34
  SPEAKER_01: But the supplier then said that the buyer needed to secure the volumes that very day as all the competitors had already done so, and so supply couldn't be guaranteed unless they did that order right there and then.
• 9:49
  SPEAKER_01: So fearing they would miss out, the buyer well, they agreed to secure the large seasonal volumes.
• 9:55
  SPEAKER_01: But the next day, that buyer was quite surprised when the salesman's manager called them to thank them for being the first big customer to order way in advance of anyone else.
• 10:07
  SPEAKER_01: Yeah, imagine how they felt.
• 10:09
  SPEAKER_01: Shocked, upset, betrayed, yep, and they never bought from that supplier again.
• 10:15
  SPEAKER_01: The trust had been broken.
• 10:19
  SPEAKER_01: Your pricing product, your pricing strategy should also be responsible.
• 10:24
  SPEAKER_01: Retail pricing to maximize value is one thing, but profiteering is quite another.
• 10:29
  SPEAKER_01: It's never ethically right to increase your prices to make an unreasonable profit on the sale of essential goods and especially during times of emergency or crisis.
• 10:39
  SPEAKER_01: There are rules and standards to ensure fair retail pricing and competition.
• 10:44
  SPEAKER_01: Make sure you know what these standards are so you can operate within the competition law.
• 10:50
  SPEAKER_01: Okay, so how to price a product for retail?
• 10:54
  SPEAKER_01: You need to find out what your customers want.
• 10:57
  SPEAKER_01: Retail businesses are about making their cash work hard, attracting and keeping customers and getting the most out of their suppliers.
• 11:05
  SPEAKER_01: So find out as much as you can about your target retailer and adapt your retail pricing accordingly.
• 11:11
  SPEAKER_01: Shape your offer to take the retailers' needs into account, not simply your own.
• 11:16
  SPEAKER_01: Do your research, make it easy for the buyer to say yes.
• 11:20
  SPEAKER_01: So when you ask yourself how to price a product for retail, remember it's all about the customer.
• 11:26
  SPEAKER_01: Plan ahead, know what will help them, know what they want, and especially importantly what you can afford to give.
• 11:35
  SPEAKER_01: Go and give it a go and good luck.
• 11:40
  SPEAKER_01: We hope you enjoyed our podcast on how to price a product for retail.
• 11:45
  SPEAKER_01: To learn more about product pricing and getting your product listed in retailers, visit enhanced.training and check out the following.
• 11:54
  SPEAKER_01: You can sign up to our Pricing Learning Hub to get more free articles, podcasts, and videos, and take a look at our product pricing for profit course, specifically designed for sales, marketing and finance managers and business owners.
• 12:11
  SPEAKER_01: The course aimed at all who sell into retailers or distributors and want to gain confidence in pricing your products, sell larger volumes, and increase your profitability.
• 12:22
  SPEAKER_01: Thank you for listening to this enhanced.