PRICING STRATEGY
One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features,channel decisions, and promotion.
While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product:
Market Development Strategy
A market development strategy involves selling present products or services in new markets. Managers take actions like targeting promotions, opening sales offices and creating alliances to operationalize a market development strategy. Developing a Product Marketing Strategy is one of the most challenging and exciting aspects of product marketing and launching a new product. The marketing professional should begin by writing a working outline of his market plan to help organize the study, gather information, and organize the presentation.
Product Position
Differentiate your product and your service.
Find the opportunity. Its out there.
Remember that famous glass of water? The one that optimists see as half full and pessimists see as half empty? A scientist, however, sees a question — Was the glass designed with too much capacity?
What we see is, actually, a matter of perception. What your customer sees is, also, a matter of perception — his perception. Understand your customer’s needs.
Describe your products.
Describe your customer’s pain …
Some sales systems will script sales closing techniques based on customer needs or wants. My opinion is to agree with other sales systems which insist that customers only buy on an emotional level.
Have you bought everything you wanted? Have you bought everything you needed? Of course not. But, how did you feel when your car stranded you on the highway? Were you a bit more receptive to the idea of buying a new car?
Read this carefully because this is the key to all market strategies. When your sales force closes sales, they will do so only by understanding your customer’s emotions.
Your customers will buy from China, India, South America, anybody. Very few industrial customers have loyalty to any country or brand name today. If you don’t agree, just look at number of people drinking bottled water that is imported from other countries. The last time I looked, the United States did produce good clean water. Go Figure. You must understand your customer’s psychological needs. Take a piece of paper out and write this down, “You must understand your customer’s psychological needs to best succeed in product marketing and sales.”
If Possible, Do Market Testing
Show product and promotional concepts to customers.
Double check.
Make Strategy Decisions
Decide on new revenue growth and profits.
Decide on new product development.
Decide on price.
Decide on sales force, distribution, service.
Decide on customer psychological factors, not features and benefits.
Decide on product promotion.
A popular way to remember the function of marketing is the “four p’s of marketing”, which are product (you must have a “new product development process”), place (distribution or where you will sell your product), promotion and price. A good definition of marketing will provide a more detailed definition of the standard marketing function, and the four p’s of marketing.
I added psychological sales factors as a fifth p of marketing; because, your marketing strategy must list the relevant sales psychology factors, and state how these factors will be addressed. Sales psychology is arguably the most important part of a marketing strategy. Yet, customer psychology is seldom mentioned in marketing strategies.
Write an Action Plan
Pert chart on product development.
Calendar of planned media.
Budget
Implement Your Plan
Hold routine meetings to review progress on sales leads. Provide a lead tracking system. Nothing is status-quo. Revisit your plan and update.
References.
International Marketing, An Asia-Pacific Perspective (4).
