What is the price position and how can you improve it?
Price positioning is an essential task for a successful webshop. In this article, we'll look at why consistent pricing across your brand is so important and what strategies you can use to change your price position.
Price positioning is fundamentally determined by whether consumers perceive the price of a product or service as expensive, average or cheap. So, in this concept, price is based on the buyer's perceived position, as the e-trader focuses on the value of the product as determined by the market and the buyers in the given situation.
This perception is strongly correlated with the quality of the brand's products and services but is also influenced by the activity of competitors and fluctuations in supply and demand.
Retailers can, with the right strategy, transform the price position, and thus the customers' perception of the brand, of a particular product or service.
Keep in mind that by changing the price position you may also attract a different target market, hence affecting sales volume, increasing or decreasing it. However, understanding your brand's price positioning will help you optimize your decision-making and thus drive business growth.
INVASIVE AND CAPTIVE PRICE STRATEGY
To transform your price position, it is essential to choose an effective pricing strategy that suits your needs. The following two pricing strategies can be effective in influencing users' perceptions of your products:
Penetration pricing strategy: low prices to attract a new customer segment or to enter a new market. This method is used to position selected products as low-priced and more competitive than competitors' products. The medium to long-term objective is to gradually increase the price once the product has gained the trust of new customers.
Captive pricing strategy: the opposite of an invasive pricing strategy; introducing a new product or new service at a higher price than competitors. This method favors premium price positioning, thereby reinforcing a positive perception of brand quality in the minds of users.
COMPETITOR-CENTRIC PRICE STRATEGY
In addition to the two methods mentioned above, which you can apply at specific times or for specific products, you can also regularly apply prices similar to those of your competitors - this is known as a competitor-centric price strategy. The big advantage of this is that the similarity of prices means that price is not the deciding factor when buying. However, you really need to know your competitors' prices and consistently maintain the position to avoid brand image erosion. In addition to price, other valuable additional information can increase customer confidence, such as customer reviews.
SMART PRICING, HIGHER PROFITS
Whatever pricing strategy you choose, PriceKit's pricing decision support system makes it easy to price consistently. While maximizing your profits, you can also collect customer feedback on your products.
Why choose PriceKit?
- It tracks your competitors' prices and stock levels.
- It helps you develop a pricing strategy, advising you how to react flexibly to market changes to maximize profits.
- Save time by automating time-consuming routine tasks.
- Ideal as a reliable price monitor for small, medium, and large companies.
