Many people do not see pricing as a function of marketing. However, understanding what the customer will pay and what the market will bear at any particular time is crucial as we are only price sensitive at certain times.
A perfect example showed itself last week on a visit to Tesco Express in an airport terminal after a long trip. Headed for milk, bread, something to take home to cook quickly etc. Prices were eye watering by comparison to any local Tesco Express and certainly Tesco Extra. This company certainly understand our minds, the importance of convenience and our motivations at any purchasing point in the year.
It is my contention that many small and medium sized enterprises sell products too cheap, particularly when being price bashed by other trade customers. We have been brainwashed into a discount mentality!
Working in conjunction with the finance department, it is worth looking at the market, seeking out and comparing competitor prices and products, understanding price sensitivity, the value of your brand presence and work on the value to the customer of having your product or service. The 2 departments can therefore craft a better pricing structure.
For more information on effective research that helps to maintain the appropriate margins, contact russ@rfm.co.uk
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