Price Positioning is essential for setting up your brand image and marketing strategy and differentiating your brand from the competitors. It allows you to set up your brand and its products or services as a lower, mid-range or premium segment in the market.
There are various types of customers in the market; thus, you have to prepare your pricing strategies according to your target market customers. In this guide, we have mentioned all pricing strategies that can help you set your required position in the market.
What is Price Positioning?
Price Positioning is defined as setting up the price of your products or services concerning the competitors present in the market. It allows you to set up market-accepted pricing, which provides an important place for your products and services.
Under the price-quality positioning, your products are to be set up under the premium, mid-range, or economy pricing segment products in the minds of your customers. The price positioning is held to set up the perceived value of your products or services that matches the consistent actual value.
The price positioning strategy includes various factors, including the target market, competition, and features of your product or service. Therefore, a luxury brand sets its prices generally high to position its brand with premium products, while some brands choose to keep their prices low to target the price-sensitive market.
Price positioning is one of the best marketing strategies to target a specific customer base, differentiate your brand from competitors, and generate more profit. However, your brand needs to set up your brand objective before implementing the price positioning.
6 Effective Price Positioning Strategy
Generally, 5 effective price positioning strategies can help your brand position its relevant image in the market. Let’s have a look at the strategies.
1. Premium Pricing
Premium pricing refers to determining the higher prices of your products and services than your competitors to showcase the premiums and exclusivity of your brand. This pricing and positioning strategy is typically beneficial for products and services with unique features and benefits.
For instance, various luxury car or jewelry brands utilize the premium pricing method to position them as high-end brands. To set up your brand in the premium market segment, your products and services must have several unique and valuable features. It would surely bring you a total new market share.
2. Penetration Pricing
Penetration pricing strategy refers to setting up lower prices for your products or services compared to your competitors to attract price-sensitive customers and gain some market share. This strategy generally penetrates the crowded market with new products and services.
The main motive of this price positioning strategy is to gain a consumer base by offering lower prices and slightly increasing the prices with time to maintain the company’s profit. To successfully implement this strategy, you have to shape your brand to sustain profitability even at the lowest price point.
3. Value-Based Pricing
Value-based pricing refers to setting up the prices of your products based on the value they add to the customer’s life. Thus, the main motive of value-based pricing is to charge the worth prices that reflect your product’s features and benefits.
To properly implement this strategy, you should deeply understand your customers and their needs and wants. You have to fulfill those needs properly and the customers’ wants and then charge accordingly. To effectively utilize this strategy, you need to make the customer perceive the good value of the products and services.
4. Dynamic Pricing
Dynamic pricing refers to setting up and changing the pricing of your products or services based upon the time it is to attain maximum benefits utilizing customers’ sense of urgency and need.
For example, you would have seen various airlines changing the price of air tickets based on how many days are left for the flight’s take-off. To properly utilize this strategy, you must use a lot of data and algorithms. Dynamic pricing is generally helpful for seasonal businesses to gain the maximum possible benefits based on demand.
5. Competition-Based Pricing
Competition-based pricing refers to analyzing your competitors’ prices to set your prices accordingly to compete in the market with reliable prices. Sometimes, competition-based pricing generates higher profit for you, while sometimes, it only goes through survival time.
Pricing can not be the only factor in your business; instead, you have to focus on the value you’re giving. You will only have better products and services that your customers will like. Amazon’s products are the best example of competitor-based pricing. It will help you better compete in the market.
6. Price Skimming
Price skimming refers to selling a trendy and on-demand product at its acme while your competitor doesn’t have the product to sell. It allows you to set a monopoly in the market and, thus, sell it at slightly higher margins. However, it would be best if you did not sell at outrageous prices.
At the initial stage, it allows you to earn a lot of profit and quickly hit the break-even of the segment. Gradually, when the product becomes normal in the market, and everyone starts selling it, you can start selling at lower or mid-range prices.
Price Positioning Examples
Example #1: Apple
Apple is one of the most prominent brands known for widely using price positioning. They have positioned themselves as a premium brand in the market, which reflects the high perceived value of the products. They have built their reputation as a premium brand over some time.
Example #2: Patagonia
Patagonia is an outdoor company known for its clothing and gear. They also widely used price positioning, and they have also positioned themselves as an eco-friendly brand. According to a Nielsen report, 58% of consumers can pay more for environmentally friendly brands.
Thus, the company showcases its high perceived value as a sustainable and ethical business and charges higher than other brands. It helps them target all environmentally friendly customers.
Example #3: BMW
BMW is one of the most used price positioning brands in the market due to setting up its brand as a premium or luxury car brand. The customer perceived its value as a premium product and gave its brand a high-quality feel.
Example #4: Gucci
Gucci is also one of the great price positioning examples in the fashion market. From the start, the company has showcased its value as a premium and exclusive brand. It has given them a top-notch position in the market.
Example #5: Chanel
Chanel is also a great pricing and positioning strategy example as a premium fashion brand. Like the other premium brands, it has also showcased its value as an exclusive brand.
To Wrap Up
This guide consists of all the essential factors regarding the price positioning that can help your brand make the right pricing and gain market share. We hope you like the guide and that it has helped you know the relevant information regarding the price positioning.