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How to Combine Pricing Strategies to Maximise Price · Enhance.training

• 0:00
  SPEAKER_00: Hello, this is the fourth and final part of our product pricing series.
• 0:05
  SPEAKER_00: We're going to look at how clever marketing and comparisons can make all the difference in pricing success.
• 0:11
  SPEAKER_00: Now I had every intention of stopping this pricing series at three podcasts and moving on to the next topic.
• 0:17
  SPEAKER_00: However, I was inspired to continue by Marketing Week's article, Brands Pricing Shouldn't Be Bound by Their Categories.
• 0:24
  SPEAKER_00: This article reminded me that when we combine our pricing strategies with marketing strategies, they can be really powerful.
• 0:31
  SPEAKER_00: So in this podcast, I'm going to show you the power in combining value pricing and competitive pricing to maximise our price.
• 0:40
  SPEAKER_00: My name is Anna Taylor, and if you're new to this podcast, Enhanced.training provides online business courses to help professionals, managers and business owners improve their performance.
• 0:53
  SPEAKER_00: For over 15 years I've worked in finance alongside sales and marketing teams for companies such as Unilever, Montelez, SAB Miller and Asahi.
• 1:02
  SPEAKER_00: I've seen firsthand the importance of getting pricing right, and I want to help you to do the same.
• 1:08
  SPEAKER_00: Now they say that pricing is either your most powerful weapon or your worst enemy, and I certainly want to help make sure it's the former for you.
• 1:14
  SPEAKER_00: If you like this podcast, please share it with friends and colleagues and visit us at it at enhanced.training for more great tips on transforming your performance.
• 1:26
  SPEAKER_00: So how do we maximise the price of our products?
• 1:30
  SPEAKER_00: Let's start with the basics.
• 1:32
  SPEAKER_00: If you've listened to the earlier podcasts in this series, you'll know that I love value pricing because it tends to be the method that provides us with the most profit.
• 1:41
  SPEAKER_00: The more value you give the consumer, the more they'll be willing to pay.
• 1:45
  SPEAKER_00: So while this is my favourite method, I do know that pricing tends to work best when two or more strategies are used together.
• 1:52
  SPEAKER_00: And at the end of the last podcast, I said that using cost plus with competitive pricing alongside value pricing would be the winning combination.
• 2:02
  SPEAKER_00: Now let's think about it.
• 2:03
  SPEAKER_00: Let's imagine a pyramid, and on the base of the pyramid is cost plus pricing.
• 2:08
  SPEAKER_00: Because this is your foundation, it covers your base, your costs, and once in place you can then move on and focus on other strategies.
• 2:17
  SPEAKER_00: Now on top of that layer is competitive pricing, as this is your way to keep up to date with market conditions and be relevant.
• 2:26
  SPEAKER_00: And finally, at the pinnacle of the pyramid is value pricing.
• 2:30
  SPEAKER_00: This is the cherry on the top.
• 2:32
  SPEAKER_00: It keeps you accountable to your consumer to make sure that your product gives value.
• 2:38
  SPEAKER_00: If we take it as standard that you'll always be prudent and thorough with your costs, I'm now going to focus on the other two methods and how we can use these to our advantage.
• 2:48
  SPEAKER_00: How can we use these to maximise our communication to the consumer?
• 2:52
  SPEAKER_00: How can our price benefit from it?
• 2:54
  SPEAKER_00: How do we maximise price?
• 2:58
  SPEAKER_00: Well, maximising price is all relative.
• 3:02
  SPEAKER_00: As part of your value pricing journey, you'll need to discover what a consumer values.
• 3:07
  SPEAKER_00: The value your product gives is based on how the consumer perceives it.
• 3:12
  SPEAKER_00: Do they see the value the same way as you do?
• 3:15
  SPEAKER_00: Well, value can be so subjective, so you must do all you can to make sure the consumer sees it your way.
• 3:22
  SPEAKER_00: Now this is where competitive pricing can come in, because consumers perceive price and value relative to similar products.
• 3:29
  SPEAKER_00: I mean we all look at what else we can buy for the same price or that meets the same need.
• 3:34
  SPEAKER_00: We compare and contrast, it's all relative.
• 3:38
  SPEAKER_00: Now the Marketing Week article that I referred to earlier highlights an example of how the shopper perceives value as they do their weekly shop in a supermarket, or probably more like online these days.
• 3:48
  SPEAKER_00: But let's imagine a consumer walking down the soft drinks and squash aisle.
• 3:53
  SPEAKER_00: So in this aisle, most of the products are£5 or less.
• 3:57
  SPEAKER_00: The consumer sees the new product, they pick it up, look at the price, and they see for£700 millilitres it's£24.
• 4:07
  SPEAKER_00: They're likely to balk at the price, no matter how pretty the bottle or natural the ingredients.
• 4:11
  SPEAKER_00: How can something five to ten times more expensive than any other product next to it be worth it?
• 4:19
  SPEAKER_00: But let's imagine a different scenario.
• 4:22
  SPEAKER_00: Let's imagine this same consumer is in the Spirits Isle.
• 4:26
  SPEAKER_00: Here, the£20,£30,£40 price points are the norm.
• 4:31
  SPEAKER_00: They see a new non-alcoholic alternative, look at the price.
• 4:36
  SPEAKER_00: Well,£24 may seem potentially reasonable, still perhaps pricey, but perhaps not out of the world expensive because it's all relative.
• 4:45
  SPEAKER_00: And this is precisely what the likes of SeedLip have done, and they've done it excellently.
• 4:51
  SPEAKER_00: So maximising price is about thinking outside your competitive set.
• 4:55
  SPEAKER_00: If you want to change your pricing model, you have to change your comparison set.
• 4:59
  SPEAKER_00: Seedlip are not unique in managing pricing expectations differently.
• 5:04
  SPEAKER_00: It's open to almost anyone who wants to challenge the perceived norms.
• 5:08
  SPEAKER_00: Do you remember the competitive pricing podcast?
• 5:11
  SPEAKER_00: I told you about lining up all your competitors in terms of price and quality and then working out where you fit in.
• 5:17
  SPEAKER_00: Well this is similar, but with this exercise you don't simply gather data about any old competitors, it's about finding the right ones.
• 5:25
  SPEAKER_00: Let me give you a real life example of when I've done this.
• 5:29
  SPEAKER_00: So when I was working on the Peroni brand, we did this very exercise.
• 5:33
  SPEAKER_00: But we didn't just compare the brand to other world beers, nor simply to all beers, but we actually compared it to Spirits 2.
• 5:41
  SPEAKER_00: Because we looked at what a consumer could choose to drink when they walked into a bar and we took them all as potential competitors.
• 5:48
  SPEAKER_00: We sorted the brands not just by price, but on a premium scale or perceived value scale.
• 5:54
  SPEAKER_00: Peroni was then slotted in at the higher end of the scale in the same groupings as the likes of Grey Goose Vodka or Tankare Ten Gin.
• 6:02
  SPEAKER_00: So when the sales team presented this study to buyers and bar owners, they could then compare Peroni to the whole drinks cat degree.
• 6:10
  SPEAKER_00: They didn't only have to compare Peroni to other beer brands where, well, it was already the most expensive, so it changed the perception of value and allowed for the beer to be priced accordingly.
• 6:23
  SPEAKER_00: But you do need to follow through with conviction.
• 6:26
  SPEAKER_00: Because you can't just say you're like a different competitor set, you've got to act like it too.
• 6:30
  SPEAKER_00: If you want a consumer to believe that your product has the same value as an alternative competitor, you must behave like them too.
• 6:38
  SPEAKER_00: If we go back to the SeedLip example, they act in line with their alcohol-based competitors rather than their soft drinks one.
• 6:45
  SPEAKER_00: They attend the same trade shows, they have tops mixologists using their products in cocktails, you can see it in their advertising, packaging, communications, and pricing.
• 6:54
  SPEAKER_00: So if you talk the talk, you must walk the walk.
• 6:57
  SPEAKER_00: Your price should always match every other element of your strategy.
• 7:02
  SPEAKER_00: But if you believe that using a completely different competitive set to highlight value to your consumer is a step too far for you, there are alternative strategies for you.
• 7:13
  SPEAKER_00: Maximising price is still an option for you.
• 7:16
  SPEAKER_00: You could go down the route of producing a premium version of your own brand instead.
• 7:20
  SPEAKER_00: Good better best pricing is a proven pricing model.
• 7:24
  SPEAKER_00: Why?
• 7:25
  SPEAKER_00: Because it's all relative.
• 7:27
  SPEAKER_00: Next time you're in a supermarket or doing your online shop, look at brands that have done this.
• 7:32
  SPEAKER_00: I'm sure you'll find hundreds of examples from supermarket-owned brands to cereal and tea.
• 7:37
  SPEAKER_00: If you produce a premium range with higher prices, your existing range looks like it gives more value in comparison.
• 7:44
  SPEAKER_00: How can you do something similar to change the perception of your products so you can price it for the value it truly delivers?
• 7:53
  SPEAKER_00: There are of course many ways to combine pricing strategies to your advantages, many ways to maximise price.
• 8:00
  SPEAKER_00: Combining value and competitive pricing can help communicate the value you're providing while staying competitive and profitable.
• 8:07
  SPEAKER_00: Take inspiration from what you see around you.
• 8:09
  SPEAKER_00: Don't be afraid to push boundaries.
• 8:11
  SPEAKER_00: After all, pricing of value is relative, so choose your competitive set wisely.
• 8:18
  SPEAKER_00: If you need a few pointers on how to choose a strategy or some pricing advice, visit us at enhanced.training and select articles or better still, sign up to the Pricing Learning Hub for access to pricing calculators, fact sheets, how-to guides and more.
• 8:35
  SPEAKER_00: We even have a free pricing strategy select tool that helps give the pricing direction you need.
• 8:40
  SPEAKER_00: If you like this podcast, please share it with friends and colleagues.
• 8:45
  SPEAKER_00: I hope you've enjoyed listening, and I look forward to speaking to you again soon.