A peasant may not remain one. Offering a range of models at different price levels lets consumers develop brand loyalty — before they can afford your best. Example: By ignoring the low ends of their markets, GM and Ford allowed Toyota & Honda to grow strong enough to then challenge them with high-end cars. Source:Continue reading “Rationale for Entry-Level Offerings”
Beware of “loss leaders” that could become just-plain-losses. Example: A cellular service attracted droves of customers for its “evenings free” promotion. But… most of them only placed evening calls. Source: The Tao of Pricing.
Water seeks its own level. So, too, do prices. Products sold cheaply in one country will find their way to countries where they are priced higher. Source: The Tao of Pricing.
There are many paths that increase short-term revenues but hurt profits in the long run. The wise owner will watch out for them. Particularly devious: Large discounts given by sales managers to reach a revenue total that earns them a bonus. Source: The Tao of Pricing.
The more your customers invests in your products: Time (for learning/training), or Money (for peripherals) …the less likely they are to switch to a lower-priced product. Use this knowledge wisely(!) Source: The Tao of Pricing.
Are you increasing sales with your price cut? Or… Just increasing your customers’ inventory? Advancing their expensive purchases by a month or two? Price cuts that don’t increase total sales can be as worthless as the promises of a known liar. Source: The Tao of Pricing.
Rare is the buyer who buys “down” in quality. A Ford discount won’t attract a Mercedes buyer. Research has found that discounts primarily pull buyers from products of the same — or lower — quality. Source: The Tao of Pricing.
The wise marketer considers whether coupon distribution should be restricted to competitors’ customers. Research shows only 14% of coupon redemptions come from new buyers. Worse — only 50% come from your most loyal customers. Source: The Tao of Pricing.
It takes a rich company (or a one-man service provider) to compete through lower prices. And there’s the danger of another company matching your price. A wise owner seeks a low-cost, efficient operation, but… most products and services will do better if price is not their only advantage. Source: The Tao of Pricing.
If your product is inexpensive, convenience in finding it will be more important than discounting it a few cents. Therefore — don’t discount, but spend the money to get wider distribution. Source: The Tao of Pricing. #pricing #pricing strategy #pricingpsychology #entrepreneurship