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How to Price a Product for Retail · Enhance.training

• 0:00
  SPEAKER_00: So what do retailers want?
• 0:02
  SPEAKER_00: Well, retailing is a really tough environment.
• 0:05
  SPEAKER_00: Even before COVID-19 hit us, retailers had to juggle declining footfall, increased competition from online, and increasing costs.
• 0:13
  SPEAKER_00: However, they hold the key to your consumers, the people you want to sell to.
• 0:18
  SPEAKER_00: So to get your products to more people, you need retailers.
• 0:22
  SPEAKER_00: Getting your retail pricing right is therefore essential.
• 0:25
  SPEAKER_00: Product pricing that's too low means you'll not make enough profit, but pricing that's too high means you may not even get a listing.
• 0:34
  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.
• 0:44
  SPEAKER_00: For over 15 years I've worked in finance alongside sales and marketing teams for companies such as Unilever, Mondelez, SAB Miller and Asahi, and I've seen firsthand the importance of getting pricing right and I want to help you do the same.
• 0:59
  SPEAKER_00: If you like this podcast, please share it with friends and colleagues and visit us at enhanced.training for more great tips on transforming your performance.
• 1:08
  SPEAKER_00: So before you dive into the numbers for your pricing strategy, you need to discover what your retailers want.
• 1:15
  SPEAKER_00: What do they really need?
• 1:17
  SPEAKER_00: Your pricing strategy should be focused on what the retailer needs.
• 1:21
  SPEAKER_00: And this podcast we're going to explore five key areas that you mustn't ignore.
• 1:26
  SPEAKER_00: So what do retailers want?
• 1:29
  SPEAKER_00: Well, first of all, they want to make more money.
• 1:32
  SPEAKER_00: It sounds obvious, doesn't it?
• 1:34
  SPEAKER_00: But retailers need to make money.
• 1:36
  SPEAKER_00: Every penny is important to them.
• 1:38
  SPEAKER_00: If they're bricks and mortar retailers, then this is even more the case, especially after the last year of restrictions.
• 1:44
  SPEAKER_00: According to KPMG, 2019 was the worst year for retail since records began in 1995, and 2020 will have been even worse, I'm sure.
• 1:54
  SPEAKER_00: Retailers, big and small, are fighting for survival.
• 1:58
  SPEAKER_00: Retailers need to cover their overheads.
• 2:00
  SPEAKER_00: These overheads, which include business rates and wages in line with national living wage, are not on the decline.
• 2:07
  SPEAKER_00: Therefore, when planning how to price a product for retail, you need to accept that they'll need to make a clear margin.
• 2:13
  SPEAKER_00: So in setting your product pricing strategy, you need to account for this.
• 2:17
  SPEAKER_00: You'll need to suggest a retail price for the consumer and then the price that you will sell to the retailer.
• 2:24
  SPEAKER_00: This price needs to be low enough for the retailer to make their margin but high enough for you to make your margin too.
• 2:30
  SPEAKER_00: And don't forget to include VAT or duty in your calculations if they apply to your product.
• 2:36
  SPEAKER_00: But it's not just the margin that they'll work on one item, they need to know that your product will sell.
• 2:42
  SPEAKER_00: So if you want your product to replace something that's already stocked, then you need to show how your product can either have a higher rate of sale or higher margin, or ideally both.
• 2:53
  SPEAKER_00: What else do retailers want?
• 2:55
  SPEAKER_00: Well, they want people in their stores.
• 2:57
  SPEAKER_00: Retail is highly competitive, and increased footfall or more people in store will always be an aim of any retailer.
• 3:05
  SPEAKER_00: This applies to both online and especially bricks and mortar sites.
• 3:09
  SPEAKER_00: There's an increasing focus on customer experience to encourage people into these retail outlets.
• 3:14
  SPEAKER_00: Experience is helping getting people into stores, and any part you can play in this will be welcomed by the retailer.
• 3:21
  SPEAKER_00: Your product and your pricing must match what the shoppers are looking for.
• 3:25
  SPEAKER_00: Whether it's giving better value, giving access to the latest trends or technology, or something else that the shopper's looking for, let your retailer know what it is you can bring.
• 3:34
  SPEAKER_00: Let them know how your product will increase footfall and get new customers into their shops.
• 3:39
  SPEAKER_00: The more relevant your product is, the more your retailer will want it and the more they'll be willing to pay for it.
• 3:46
  SPEAKER_00: Now I know retailers are known for trying to push down prices, but if you can't afford to lower your price, well, or simply don't want to, why not offer value instead?
• 3:55
  SPEAKER_00: That value could be in the form of driving customers into store.
• 3:59
  SPEAKER_00: You might be able to contribute to advertising, social media or in-store activation, and anything that will encourage more people to come into that retailer and buy more of your product is a winning scenario for both of you.
• 4:13
  SPEAKER_00: And thirdly, what do they want?
• 4:15
  SPEAKER_00: Well they want loyal customers.
• 4:17
  SPEAKER_00: Because once the retailer has the people in their stores, they want to keep those customers, keep them coming back to tell their friends and to encourage more sales.
• 4:25
  SPEAKER_00: The retailer will have worked really hard to establish their brand and what they stand for and the type of customer they attract.
• 4:32
  SPEAKER_00: And you need to show that you understand your target customer and why and how they're a match to the retailers.
• 4:39
  SPEAKER_00: If you have a premium high-priced product, it would not be a great fit for a discount store and vice versa.
• 4:45
  SPEAKER_00: So think about how your business and your product can help the retailer.
• 4:49
  SPEAKER_00: What does your product do to help them gain loyalty of their customers?
• 4:54
  SPEAKER_00: Does your product help to offer better value?
• 4:57
  SPEAKER_00: Does it have stronger green credentials?
• 5:00
  SPEAKER_00: Your pricing strategy and any support you give to the retailer needs to help them attract and keep customers.
• 5:06
  SPEAKER_00: It's in both your interests to do so.
• 5:10
  SPEAKER_00: And fourthly, what do they want?
• 5:12
  SPEAKER_00: Well, they want to meet and exceed their targets.
• 5:16
  SPEAKER_00: So remember, buyers are people too, with aims, targets and jobs to be done.
• 5:22
  SPEAKER_00: The more aligned your offer is to the buyer's goals, the easier the selling will be.
• 5:27
  SPEAKER_00: Try to find out what the buyer's measured on.
• 5:29
  SPEAKER_00: Is it revenue, profit, margin, rate of sale, could be average basket size?
• 5:35
  SPEAKER_00: The buyer will appreciate you taking the time to find out what they want and not simply what you want.
• 5:41
  SPEAKER_00: So 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.
• 5:49
  SPEAKER_00: Show them how your product can do it better than the current range.
• 5:54
  SPEAKER_00: And finally, what else do retailers want?
• 5:57
  SPEAKER_00: Well they want integrity.
• 5:59
  SPEAKER_00: When asked what they want from suppliers, repeatedly retailers asked for improved communication and integrity.
• 6:05
  SPEAKER_00: If you say you're going to do something, do it.
• 6:08
  SPEAKER_00: If the deal you offer promises extra support in store, make sure it happens.
• 6:12
  SPEAKER_00: And if in exceptional circumstances you can't do something you said you would, then just let the buyer know as soon as possible.
• 6:19
  SPEAKER_00: Managing expectations and the relationship is the most important thing you can do.
• 6:24
  SPEAKER_00: It sounds obvious, but do not lie just to get a deal.
• 6:29
  SPEAKER_00: It will leave a really bad taste if you get found out and any trust that you've made built up will disappear at once.
• 6:36
  SPEAKER_00: I can give you a real life example of this because I know a buyer who experienced this very thing.
• 6:42
  SPEAKER_00: So a supplier came to them with a seasonal product offering.
• 6:46
  SPEAKER_00: The offer was good, but the buyer wasn't sure as it was still so early to be buying for that season.
• 6:52
  SPEAKER_00: But the supplier then said that the buyer needed to secure volumes that very day as all their competitors had already done so, and supply couldn't be guaranteed if they didn't order.
• 7:02
  SPEAKER_00: So, fearing they would miss out, the buyer quickly agreed to secure the large seasonal volumes.
• 7:08
  SPEAKER_00: Now, imagine how that buyer felt when the salesman's manager called the very next day to thank the buyer for being the first customer to order way in advance of anyone else.
• 7:20
  SPEAKER_00: Well, the fact is they never bought from that supplier again because the trust had been broken.
• 7:27
  SPEAKER_00: It's so important not to lie.
• 7:30
  SPEAKER_00: And finally, your product pricing strategy should be responsible.
• 7:35
  SPEAKER_00: So retail pricing to maximise value is one thing, but profiteering is quite another.
• 7:39
  SPEAKER_00: It's never ethically right to increase your prices to make an unreasonable or exaggerated profit, especially on the sale of essential goods, and especially during times of emergency.
• 7:50
  SPEAKER_00: Make sure you know what the standards are for this so you can operate within competition law.
• 7:56
  SPEAKER_00: So, in summary, find out what your customers want.
• 8:01
  SPEAKER_00: Retail businesses are about making their cash work hard, attracting and keeping customers, and getting the most out of suppliers.
• 8:09
  SPEAKER_00: Find out as much as you can about your target retailer and adapt your retail price accordingly.
• 8:15
  SPEAKER_00: Shape your offer to take the retailers' needs into account, not simply your own.
• 8:20
  SPEAKER_00: Do your research, make it easy for the buyer to say yes.
• 8:23
  SPEAKER_00: Plan ahead, know what will help them, know what they want and what you can afford to give.
• 8:29
  SPEAKER_00: If you like this podcast, please share it with friends and colleagues and visit us at enhanced.training to find more articles, podcasts, and videos on many aspects of pricing, business management, and personal performance.
• 8:42
  SPEAKER_00: I hope you've enjoyed listening and I look forward to speaking to you again soon.