When people think of marketing, more often than not they are thinking of Promotions, which is only one element of the four P’s in the marketing mix. Pricing and Product design are equally important elements that need to be strategized and planned out carefully to succeed in marketing.
Pricing and designing your products or services “right” can take you a long way in increasing sales and profits. In conjunction with packaging (a fundamental part of designing products), you have the power of converting a rather straightforward product into multiple valuable offerings that are more appealing and enticing for new and existing customers.
Ease of entry
Whatever product or service you are offering, make it easy for customers to make their first purchase. They may acknowledge their need and want your product, but if your price forms a barrier you might find it difficult to complete that first sale.
This is for example why mobile operators offer low-cost entry packages. They know you won’t stick to those plans, but they make your decision to make that first purchase a whole lot easier. Upgrading and expanding your package become a natural course of action later on.
Break it down
By taking your product (or service) and strip it down into affordable options, you not only remove a potential barrier by reducing the first-time purchase price, but also expand the range and variety of what you are offering.
Say you are in the software business and developed a great accounting solution that comes with all the bells and whistles customers could possibly wish for. By removing some of the options and features, you suddenly have multiple products that facilitate customer acquisitions and most importantly, generate future repeat business from upgrades.
More often than not, customers really want and need to buy your products but can’t afford to. This is especially applicable not only in the case of cars, but lots of other items such as laptops, TVs, etc.
Someone might really want to buy that new laptop for JD600, but can’t spare the cash at the moment (or anytime in the future for that matter). You will probably not be able to count on a bank to help you out, but you can offer some in-house financing at a premium.
For example, you can offer that laptop at two payment of JD325 each, four at JD200, or even more if you have the cash-flow to support you in that. Several companies have done this in the past (in exchange for post-dated checks) and successfully moved quite a bit of their inventory.
Two for the price of one
When times are tough and sales drop, companies frequently revert to discounts and significant price reductions to attract customers. What those companies basically end up doing is diluting the value of their products. If an item is worth JD100, then it’s worth that much.
However, if you find yourself in the need for some extra cash or want to give customers an incentive to buy more, offer two items for the price of one. You are still basically offering a 50-percent discount, but you are now generating more cash as you are selling at least two units at that 50-percent discount (versus only one).
Similar to the previous argument, you can increase your sales and cash-flow by cross-selling your products or services.
Take our case for example. We offer strategic marketing plans and social media marketing retainers amongst others. When compelled to launch a promotion, we might get better results by selling each at a 25-percent price reduction, provided they are purchased jointly and together. We get a bit less for both, but we sold two services now instead of one. This is a particular good strategy for example during slow times and we have time and energy that are not fully utilized anyway.
Don’t force it
Some brands – especially online services – insist on an annual commitment for new customers. This is a tough sale. Keep in mind, they may like what your website promises but they haven’t tried you yet.
As such, it will be rather difficult to entice them in entering a long-term commitment. Instead, offer a fee trial period, and then monthly subscriptions that can be canceled at any time with no obligations.
Now, to encourage them to commit for prolonged periods, offer discounted long-term subscriptions, such as twelve months for the price of ten. Once they’ve tried you out and had a chance to experience your service first-hand, they are likely to make the commitment not only to save some money, but also out of conviction.
Rebates are a great way to encourage repeat business. By offering points that count toward future purchases, you accomplish just that; future purchases.
You will have noticed that many retail outlets offer loyalty programs, which are nothing more than rebates to ensure you chose their outlet for your next purchase so you can take advantage of that credit balance you have there waiting for you.
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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