How much is your customer willing to pay for your product or service?
As a new business, pricing your product according to what consumers will pay isn’t easy. Listen to your potential customers so you know what they value. People often think that price is the one determining factor in all sales and that consumers will always purchase a product or service that is less expensive. Setting the correct price for your product or service allows your company to achieve its sales targets and business goals.
Review the prices of competing businesses in your marketplace. If the essence of your marketplace is low prices, make sure your pricing matches these claims. But perhaps your market position emphasizes quality or innovation more than competing businesses. Higher prices can be justified if the quality is superior to your competitors.
Does your business have an existing product or service?
Find the relationship between demand and price by experimenting with pricing policies. What happens when you raise or lower the price? If the market for the product or service does not change, the price is said to be inelastic. Consider raising the price of your product or service to increase your profits while keeping the sales volume stable.
Pricing Objectives
A new business focuses on marketing with a lower profit to maximize the exposure to potential customers in hopes of turning a profit later. However, a mature company may benefit from a set pricing objective. Some common pricing objectives are:
- Maximizing long-term profit
- Maximizing short-term profit
- Increasing sales volume
- Increasing dollar sales
- Increasing market share
- Maintaining quality leadership
- Matching competitors’ prices
- Maintaining the status quo
These objectives may change depending on many factors, including introducing competing products, changing the regulatory environment, and the product’s life cycle stage.
If sales are slowing, consider the following pricing strategy: Seasonal pricing, bundling (combining several products into a package), cash and early payment discounts, introductory pricing, new customer and referral discounts, early promotional discounts, and volume discounts are all options for price adjustments.
Product’s life cycle
The message you want to communicate to your customers changes with each stage of a product’s life cycle.
Image credit Business2community
- Introductory Stage: During this stage, the goal is to build brand awareness among consumers. If you intend to use resellers in your distribution channel, you attempt to convince them to carry the product. Samples and trial incentives work well during this stage.
- Growth Stage: customers are aware of your product. Increase your advertising to build brand preference.
- Maturity Stage: Emphasize how your product differs from the competition’s and build brand loyalty. Use incentives to get competitors’ customers to switch to your brand.
- Decline Stage: At this stage, consider discontinuing products that aren’t selling. Expenditures are lower during this phase and should focus on reinforcing the brand image of products you’ll continue to sell.
Promotion includes all communication with consumers that encourages them to purchase your product or service. This marketing mix comprises sales, print materials, advertising, public relations, and publicity.
Sales
Traditional businesses rely on a sales staff to persuade customers to purchase a product or service. Sales associates must be well-informed about the product or service and trained to interact with customers. The Internet allows businesses to reduce costs by moving some or all of their sales efforts online. Consumers compare prices and other product features online before finalizing their purchase.
A sales staff is still an essential part of many businesses and industries. The sales process can be in a physical location, such as a car dealership, or a relationship between an account manager and a client using a combination of in-person and virtual interactions. Expensive products or those with a long sales cycle tend to rely on a sales team. The cost of a sales team can be a good investment if they bring inconsistent or profitable sales in a way that an e-commerce site may not.
Customer Relation Management software
Advances in technical tools continue to make the sales process more accessible and automated. Customer Relationship Management (CRM) software help keep track of customers and potential leads. The CRM can offer data-driven suggestions on when and how to contact potential customers. Specific actions can trigger automatic emails or update a points-based system to help you determine which customers are ready to purchase your products.
Often CRM software is designed for large enterprises and can be expensive for small businesses, but there are options for smaller companies. Zoho (zoho.com) offers some of the same functionality as other popular CRM software.
Print Materials
A website provides information traditionally found in print media, saving a company time and money. Distributing or mailing brochures, catalogs, postcards, or other print materials to existing or prospective customers is still essential. With print media, choose your words carefully and pay special attention to fonts, layout, and all other design elements. If these are not your specialties, you may consider hiring a graphic designer and writer. Barber Tech Media specializes in design and content writing. We are happy to assist you with any questions you may have.
Additionally, there are now many ingenious ways to connect print mailing (snail mail) campaigns back to the digital world. Using a unique website address for the emailed postcards, coupons, and brochures is essential. The website analytics report will improve the tracking of responses to the campaign.
Marketers can rent mailing lists based on demographic or psychographic criteria and send printed items to those addresses. When a recipient of the mailer types in the website provided on the postcard to register for a special offer, the business gets a new customer or lead and perhaps a new subscriber to their email list.
Advertising
Advertising is a message that relates to the focus of your promotion plan.
Ads can build awareness, change attitudes, and trigger action. Your advertising message is your promise to consumers. Support your commitment with factual statements about a product’s features.
- What type of emotion do you want to call to mind?
- What rationale can you convince consumers to use your product or service?
Once you know the message you want to communicate, you need the answers to two questions:
- Where do your customers hang out?
- What would attract their attention?
Public Relations and Publicity
Public relations (PR) and publicity are powerful strategies that most small businesses skip over. It is easy to think there’s nothing newsworthy to share about your business, but that might not be true. It’s not uncommon for a new store or restaurant to be the subject of lengthy interviews or articles in local publications. New products are also of interest to local or industry-based outlets. And even if your business and products aren’t new, it doesn’t mean that PR isn’t an option. Online and print newspapers and other publications are always looking for content. They might respond favorably to a press release about a new hire, a charity event, a human-interest story involving your product, or any other topic that their audience might find interesting.
Designate one personable employee and product-savvy to be in charge of media relations and communications with the press. You want a good, reliable, and mutually trusting relationship between the media and your business. Provide prompt, accurate information, and all advertisements about your company and products are accurate and consistent.
Your Public Relations (PR) plan depends on the answers to two questions:
- What do you want to communicate?
- What hook can you use to make it newsworthy and exciting?
Public relations can build excitement about your product, service, or website.
Traditional publicity tools include press releases, feature stories, interviews, opinion pieces, publicity photos, speeches, community involvement, and social responsibility activities. Consider blogging weekly about one of your company’s events and posting it on social media to communicate directly with your customers. Use Search Engine Optimization (SEO) reports that keep track of Internet activity by monitoring posts on different platforms.
Our team members at Barber Tech Media can add content, marketing strategies, and analytics to improve your company’s Internet presence. Please feel free to contact us at 530-683-5157. We are happy to assist you with improving your company’s marketing strategies.
Header photo credit Milad Fakurian