The best pricing strategies for successful brand management
This article covers 4 commonly used pricing strategies in the consumer electronics business, through the eyes of a data-driven decision-maker. Pricing implies defining an end-user price for retail sales.
Pricing strategies are a well-researched topic, thoroughly analyzed in scientific papers but easily neglected in the everyday decision-making process.
Brand management is based on combining 4P’s of the marketing mix (product, price, placement, promotion). Decision-makers should be aware of different techniques and tools used in the pricing process. They should combine them with their own understanding of the market and the company’s risk-taking ability.
Whether they are directly responsible for the pricing process or not, brand managers, sales managers, or eCommerce managers can have an influence on it.
The management of the company usually considers a lot of factors before they price a product, like:
- the segment of the product,
- the willingness of a consumer to pay for the product,
- the conditions of the market,
- actions of the competitors,
- the cost of manufacturing for products or development and deployment for services,
- the profit margins.
But, in practice, it is common to simply follow the competition and act reactively when a lower price for some product is noticed.
This can have several consequences:
- UNCERTAINTY – This approach can have a negative impact on a company’s profit since it becomes difficult to forecast revenue and profit.
- INCONSISTENCY – Brands or retailers using this technique do not communicate a clear message to their customers – what can they expect.
There are multiple pricing strategies, with one common goal: to maximize the company’s profit.
In this article we would like to point out 4 pricing strategies that are often used in the consumer electronics business, to address the specifics of each and to give guidance on how can KLIKER market be of use in the pricing process.
Full list of pricing techniques available in our Data usage in brand management article.
Economy pricing is a pricing strategy technique where promotion and marketing costs are kept minimal at all times, so the end-user prices can be low.
Also know as budget pricing, it is suitable for brands and merchants whose target buyers are budget-driven, with price as a primary factor of the purchase decision. Some usage examples:
- Brands that decide to use economy pricing and skip advertising can place their products on more markets. That way they use the economy of scale leverage to achieve needed margins without having to raise the end-user price.
- When an A-brand launches an economy brand on the market, it certainly gives a good push to the new budget pricing brand, since consumers connect the quality of the new brand with the older brother, but at a much lower price.
- Private label products are becoming a real competition to traditional branded consumer electronic products. Budget-driven customers are keen on buying devices in retail stores because they mostly have a high level of trust in their retailer. Also, retailers usually have customer-friendly return policies which are very important for the customers – it brings the feeling of safety and easy problem resolving.
KLIKER market use case
- Choose the selected category in My market interface
- Select All retail and All brands for total data pool
- Select a technical specification mix for the product you are currently analyzing.
Now you can conduct Search and analyze the price distribution across retailers that have these products listed.
Beware – sometimes it is not necessary to have the lowest price, even in the budget pricing model. It can be enough to have a price lower than a top-selling competitor’s model.
How to find the top sellers?
- Check the display position count for every product you got from this search and eliminate the ones with only a few listings.
- For the products you identify as direct competition, open the Price history graph and analyze the trends across retailers for the last 3 months.
For your convenience during the analysis and archiving purposes, we recommend exporting the Search results into a .xls file.
Promotional pricing is the most used pricing technique in modern retail and eCommerce. With exception of EDLP (Everyday Low Price) retailers, most merchants are using some form of promotional pricing: a discount, free gifts, coupons, vouchers, bundle offers… When we talk about promotional pricing, we consider products in a mature phase of their lifecycle, not just the EOL phase.
KLIKER market use case
KLIKER market is showing regular price and promotional price for every product. KLIKER market also collects publicly available and nonrestricted coupons and discount codes and applies them to regular prices.
When deciding on your next promotion, KLIKER market can help you with:
- Analyzing the competitiveness of your promotional prices on the market
- Analyzing promotion cycles of your main competitors (be it a competitor brand or a competitor retailer) – you can notice time patterns and decide if you want to run a promotion in the same time or avoid a clash
- Crashed promotion feature – KLIKER market collects your promotional data as well as competitor’s, so our Crashed promo feature automatically reports when a lower price appears on the market – find it in Alerts section
Markup pricing is based on increasing the manufacturing or purchasing price for a certain markup (%). Markup can be constant on all products or specified for each product line or category.
KLIKER market use case
- Purchasing managers might use KLIKER market as a control tool of purchasing prices. After applying the markup on your purchasing price, analyze the competitiveness of your offer on the market (check competitor’s pricing for selected SKU). If the result is substantially higher than the market average, you might choose to go back to your supplier and negotiate better terms.
Dynamic pricing is also known as surge pricing, demand pricing, or time-based pricing. It is a flexible pricing strategy where prices fluctuate based on market and customer demand, purchase frequency, stock level, and sell-out dynamics. It is often used on advanced eCommerce sites, with the aim of keeping a constantly high competitiveness level.
KLIKER market use case
- By connecting your CMS or ERP and KLIKER market via API, your pricing software can be fed with accurate market data from all relevant competitors on the market. Insert this data in your dynamic pricing formula and keep your prices optimal.
A good pricing strategy can be your competitive advantage in the market. If you adjust it in time, according to your customer’s behavior, you can ensure stability and growth.
By actively using and analyzing market data in the pricing process you can achieve higher profits and maximize the return on your company’s capital.
We created KLIKER market as a tool to help you in this process. Request a demo and try it for free.