Pricing Strategy Attract customers and generate profits

Rachar S.

Besides marketing strategies another important aspect of brand profitability is pricing, which is more than just cost-conscious and profit. The price settings also affect the decision of the consumer, the image, as well as the position of the brand.

This article, SMS2PRO will introduce you to the Pricing Strategy, a strategy to set product prices to attract target groups and increase the chances of making a profit.

What is a Pricing Strategy? How important is it to the brand?

Pricing Strategy is product pricing strategy. It is one of the important factors that affect the purchasing decision of the target audience. It is also an indicator of brand image as well.

When there is pricing comparison between Product and competitors and there is a slight difference, this could change the target audience completely and have a huge impact on the consumer's perspective.

Typically, product prices are set based on four fundamental factors:

Cost
Target group
Product position (Position)
Competitors

But at the same time, Pricing Strategy can be analyzed to create a strong marketing strategy that can affect sales quite a lot. SMS2PRO has compiled up to 7 strategies.

7 Pricing Strategy

Let's see what the 7 Pricing Strategy that SMS2PRO has compiled. Each strategy is suitable for which product? and what situation.

Value-based pricing strategy

Value-based Pricing is a basic pricing strategy. It sets a price that the target audience is willing to pay by referring to market price and other competitors in order to compare prices reasonably.

Although this strategy is not particularly flashy. But if the price of the product can be set appropriately not too cheap until the brand looks inferior but also not too expensive. Setting the right price is the purchasing power of the target group and this will help increase confidence and royalty from the target audience.

Penetration pricing strategy

Penetration Pricing is a pricing strategy that wants to penetrate the market quickly by setting it cheaper than other competing brands to attract the target audience to decide to buy and try it out. Then when the brand became known, they began to adjust the price to make a profit.

Suitable for FMCG (Fast Moving Consumer Goods) products that can be purchased as a replacement for the original without having to consider the impact much, such as soap, toothbrush, inhaler, snacks, etc.

The Penetration Pricing strategy is very suitable for 3 types of products:

Products that have just started to compete in the market (Penetration Product)
Products with low switching costs
Substitute Goods

However, this strategy also has a big drawback.

Because if the competitor's prices are cut down, but the sales are not good, you won't have much room to retreat. Increasing the price will probably have no buyers or buyers will be reduced. This may cause profit loss or risks deteriorating the brand's image.

If you are a new brand that has just launched the first product. It is advisable not to use this strategy at all. Although the low price makes it easy to buy and sell. But it affects the image of the brand to some extent. In the long run, it will be difficult to adjust the position of the brand.

Premium Pricing Strategy

Premium Pricing is a strategy for pricing products that are higher than the market. To create a brand image that is Premium and Luxury and can also generate profits to the brand quickly.

A brand that is able to set Premium Pricing must ensure that its position is at the top and that product quality must be better than the general level and must provide value to enhance social status or create an exclusive image.

We will give examples of products with value that can be set at Premium Pricing such as

The brand's products have a long history.
Products designed by famous designers.
Products of superior quality state-of-the-art functionality superior to general products
Products that can create the ultimate experience both in terms of functionality (Functional) and feeling (Emotional).
Products made from high-class handicrafts
Complex products in various processes to get something valuable

Take, for example, a Rolex watch. “Why do people like to wear Rolex when it is so expensive?”

The answer lies in the question: Rolex is a brand that everyone knows it's worth and the luxury of this brand of watches as well Therefore, only wealthy people could afford to wear them. Therefore, Rolex can greatly enhance the social status of the wearer.

In addition, Rolex materials are not only premium, but also extremely durable. coupled with excellent after-sales service by skilled repair technicians. To keep the wearer's watch in good condition according to the brand philosophy of “Perpetual Excellence” or “Perpetual Excellence”.

Now everyone should be able to see and see how luxury is composed of what makes the wearer an important person, both from the brand and from society.

Therefore, Premium Pricing is not something that can be easily set.. Be sure to explore the element that will result in the price of your product being premium as well, otherwise your product will be just expensive, not Luxury

Pricing strategy based on psychology (Psychological Pricing)

Psychological Pricing or pricing strategy based on psychology is another Pricing Strategy that we find often as well.

It is to set a price to attract buyers based on the mentality of numbers and its divided into 2 types:

Odd Pricing
Even Pricing

Odd Pricing is to set the price of a product that ends with 9 or 99 to make the product look cheaper. But in fact, the price is almost no difference.

For example, shop 1 is 200 baht, shop 2 is 199 baht, but we feel that shop 2 is cheaper even if the price difference is only 1 baht.

That is because The human brain always starts counting from the front. Makes us start counting the number 1 leading first, so I feel that the price of the 199 shirt is cheaper.

Even Pricing is to set the price of a product ending in 0 or 00 to make the product look like it has more value, quality and looks like a full price product ,not a discounted product. This is the effect of Odd Pricing, which usually sets the price with the general product that are easy to reach or discounted products

Decoy Pricing Strategy

Decoy Pricing or pseudo pricing is a pricing strategy that we often find in cafes, coffee shops or restaurants.

It is a strategy that makes customers willing to pay more but at the same time feels worthwhile. By creating an unreasonable price option that can easily eliminate options for the customers so they have no option to deny to pay the set price.

Example of a coffee menu in a cafe.

Coffee Size S Price 49 baht
Coffee Size M Price 69 baht
Coffee Size L Price 79 baht

It's clear that Size M coffee acts as a decoy. This makes customers who do not want to drink a small cup of coffee to think. If you have to buy a size M cup, add a little more money to get a Size L coffee and finally decide to buy a Size L coffee.

Set selling price strategy (Bundle Pricing)

Bundle Pricing is to set the selling price in a set. It is a Pricing Strategy similar to Decoy Pricing strategy to make the target audience feel worthwhile and willing to pay more for the purchase of goods. This strategy is often found in restaurants or FMCG products.

Example of a menu in a restaurant

1 dish price 79 baht
Soft drink price 39 baht
Rice set + soft drink price 99 baht

or, for example, FMCG products such as

Shampoo price 159 baht.
Hair conditioner, price 79 baht.
Shampoo + conditioner set, price 199 baht

With a slight increase in price But get one more product that is used together. Therefore, it is tempting to attract customers to add more money to buy a set in order to get more value.

Seasonal Pricing Strategy

Seasonal Pricing is an adjustment of product prices over time in order to respond to the needs of customers at that time for example Umbrella prices increase during the rainy season itself.

Seasonal Pricing can be adapted to prepare event-based merchandising or important days such as selling water guns during Songkran selling jasmine flowers during Mother's Day, etc.

In addition, we may see the use of this periodic pricing from Double Digit campaigns on E-Commerce, for example, on the 4th of the 4th month, when there will be a large number of products on sale. It's a great opportunity to reduce the price of backlog items. or distributing products that do not sell well as well

Summarize

By this time, everyone should have understood the concept of Pricing Strategy and probably enough to visualize how important product pricing is. But one more important thing that cannot be overlooked is the marketing channel.

For those who have their own products and looking for additional marketing channels, SMS2PRO recommends SMS Marketing, a marketing strategy to reach customers via SMS, increasing the opportunity to generate sales at a starting price of 0.18 baht per SMS only.

You can ask for more details at