Tip of the Spear Ventures

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competitive advantage

How Brands Use Pricing Strategy to Improve Customer Experience and Increase Brand Value

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The Point: Is the pricing strategy you establish for your organization’s products/services the “right” price? By the “right” price, what’s really at stake is what will enhance the customer experience and increase your brand value. From the pricing studies that we’ve conducted, we’ve seen a number of organizations that are challenged while at a 3-pronged fork in the road when it comes to establishing pricing strategies. In this article, we’ll explore an overview to pricing strategy and the inherent benefits associated with customer experience and brand value… Enjoy!

Pricing Strategy 101

Pricing Strategy can be a powerful tool to increase brand value and attract new customers. Brands use value-based pricing to create a range of products and services at different price points. The goal is to make each product or service stand out from the rest of the market. To do so, brands must create a meaningful difference between their products and those of competitors, and give consumers an apparent reason to pay more. Brands that employ a premium pricing strategy often target a particular segment of consumers.

Pricing Strategy as Competitive Advantage

While low prices are often appealing to consumers, they are also perceived as cheap and can erode brand value. Price changes must be carefully considered, as they are almost impossible to reverse. If a competitor is already offering a product or service at a low price, they may have the upper hand. Using discount pricing can help a business to attract more foot traffic and to clear out old inventory, but it could also lead to negative effects on the perception of quality.

Pricing Strategy and Organizational Goals

Developing the right pricing strategy is essential for any business. There are many factors to consider, so it is a good idea to calculate COGS, profit goals, and customer needs to create the optimal pricing strategy for your product or service. Once you’ve done that, you’ll be ready to start your pricing journey.

Pricing Strategy – First Steps

The first step in creating a profitable pricing strategy is to define your target audience. A target audience’s price sensitivity will help you determine the appropriate pricing strategy. For example, if you have a product with high price-sensitivity, price-skimming may be a good strategy. If you have a limited market, a low price strategy may work well for you.

Pricing Strategy is an ongoing process. Ideally, you should use CRM software to segment your customer base and test different pricing strategies. Developing a successful pricing strategy requires time and effort. However, the right pricing strategy should be well-supported with your go-to-market strategy and marketing plan. In order to determine the best pricing strategy, it’s important to gather feedback from your sales team. You should also evaluate your competitors and gauge their pricing strategy.

There are many different ways to price your products and services. For instance, you can price a product or service above your competitors, while you might be able to match them using a value-based model. For a more profitable strategy, you might want to price your products or services below your competitors. This strategy, however, requires more research and insight into your competitors. It’s also important to evaluate your own costs and resources in order to determine which pricing strategy works best for your business.

Another pricing strategy is loss-leader pricing, where you offer a low-priced item with the hope that consumers will buy more. This strategy works well if you want to attract new customers. If the price of your product or service is a significant part of your business, you might choose to charge higher prices for ink to attract more potential customers.

SUMMARY

In this article, we’ve explored pricing strategy from an overview perspective along with inherent benefits associated with customer experience and brand value. Crucial in establishing the pricing strategy are identification of competitive advantage and organizational goals. We’ve also explored a few additional “first steps” that should be considered in doing so.

Sam Palazzolo

KEYWORDS: Pricing Strategy, Competitive Advantage, Customer Experience, Marketing, Competitive Strategy, and Organizational Goals

The Leadership Challenge: Competitive Advantage – 5 Tips!

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The Point: I met with a leader during the week who was competitive to say the least (Make that extremely competitive!) In their drive to succeed, they often overlooked their individual purpose, the potential of their organization’s stakeholders, and the “bigger” picture of where their organization fit into the market that they seemed to dominate. Perhaps a good thing? Probably accompanied by many potential bad things though. In this post, we’ll take a look at harnessing the power of competitive advantage as a leader along with five tips to align directionally for success… Enjoy!

Are You Leading at the Tip of the Spear?

Go… Fight… Win!

It’s been said that business is war. In order to accomplish victory in such “battles” it’s important to keep in mind not only what will be gained in such moments, but also what very well might be lost. John was a small mid-cap sized organizational C-Suite leader. Appearing to be in control of the majority of his faculties, he set out a strategic vision during one of our leadership development executive coaching sessions.

“If we execute this plan, our competition will look to strike here” he commented drawing out what appeared to be a marketing battle map on a scratch pad. “If they strike here we’ll have them exactly where we want them… Weak!” While these were grandiose plans (and why aim small and miss small when you can aim big and miss big!), he lacked the perspective of other organizational leaders and stakeholders. The fight had been fought without single action step being taken, and John was claiming victory.

Competitive Advantage

The leadership challenge faced in this example is one that has many facets. So let’s see if we can’t break them down by offering five (5) tips for competitive advantage:

Tip #5 – Innovation

There’s no doubt that you’ve read a lot lately about innovation and its role in organizational domination. “Innovate or perish” seems to be a captivating mantra. However, what does innovation truly look like, and more importantly who is supposed to be doing all this innovation? The bottom line is that in order for competitive advantage to take place someone/somewhere within the walls of the organization had better be planning/developing what’s next.

Tip #4 – Engagement

Similar in leadership popularity to innovation is the concept of engagement. Leadership as well as stakeholders engagement level not only sets the tone for competitive advantage, but accompanying pace as well.

Tip #3 – Inefficiencies

How are you/your organization measuring your efficiencies? If you have a key performance indicator (KPI) dashboard that insures that you are approaching targets on-time (and modify course accordingly when off), then you have a leg-up on your competition that might believe they are measuring like-kind indicators but are lacking the “key” components.

Tip #2 – Learning Leaders/Organizations

The key to Tip #3 – Inefficiencies lies in your ability to learn as a leader as well as an organization. While success breeds more success, there is an often misunderstood component regarding what lessons can be learned from moments of failure. Learning from both provides competitive advantages.

Tip #1 – Tools

Do you/your stakeholders have the right data, and perhaps most important are they equipped to take action on what they learn? If so, you have properly equipped yourself/your stakeholders with the tools for competitive advantage. Without these tools (out of date, broken, and/or nonexistent) and you’ll be at a competitive disadvantage.

SUMMARY

In this post we’ve looked at the leadership challenge of competitive advantage and five tips regarding how you can seize such moments so as to continue to progress down successful paths as a leader. Leadership development and executive coaching provides a framework to explore such opportunities, but implementation/execution/sustainment initiatives play a crucial role in the battle for future success.

 

Sam Palazzolo