Market Share and Pricing Strategy Improve Business

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What’s Your Market Share?

Pricing Strategy is What Every Business Lives or Dies By
Mistakes in pricing strategy can damage your company’s brand more than one might think.

With the economic tides constantly turning, pricing strategy and market share development continue to be a very important decision for marketers.

Premium Prices vs. Discount Prices
Whether big or small, choosing the right pricing strategy to develop higher profitability is critical when developing a client base.
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A higher pricing strategy can provide higher value for a client while enhancing profitability for the marketer. This will promote a longterm relationship between buyer and seller. Discounting products does not necessarily lead to improved sales and certainly doesn’t boost profitability, because it requires two sales to make what you could make with one sale with better pricing.

It’s natural for people to associate value with price not just the name brand. You know the old saying, “You get what you pay for.”

You do get what you pay for sometimes, take a look at this example. An RCA MP3 player compared to an iPod, or a quick drive-thru gas station car wash compared to a full service, inside-and-out car wash – there are differences. One is better quality and therefore costs more, because of the research and components involved with the product.

Higher Pricing or As We Say “Optimal Pricing” Allows:

  • Funding investments in research and development, quality, and continued innovation
  • Increased revenue to reinvest into marketing and advertising which boosts awareness and appreciation for the brand or product
  • Creates an internal culture that focuses on improving

Even in these financially tough times, consumers continue to pay huge premiums even for items offered for free. For example, consumers purchasing purchase bottled water pay on average of $1.25 per bottle.

The next time you get your water bill, give them a call and ask how many gallons of water you could fill at home for $1.25. Hint: it’s more than 600 gallons!

Obviously bottled water is convenient, but it shows consumers will pay a premium for exactly what they want.

Create a Fighting Brand in Response to Pricing Wars
Before pulling the plug and dropping your prices, think about what alternatives you may have first. Most consumer objections regarding price are essentially about value received.

This fairs the same with your company when assessing marginal cost vs. marginal benefit. A buyer’s objection reflects their concern that the price they are paying and what they are getting are “Not dancing to the same song”.

What the consumer wants and what the consumer needs are very different. In this case, communication from the seller needs to better explain how the product provides what the consumer wants.

Pop Quiz:
How or what could you think of that would make customers pay double what they usually pay for a product?

Maybe raising prices isn’t as relevant here but rather adding value while keeping prices the same while others are jumping ship with their prices. Think more about what you can add to your brand! You MUST think outside the box and establish your unique niche to be more valuable than others in a competitive market.

Stand your Ground and Invest in your Brand
The value that delivers goes far beyond price. If your pricing matches that of your competition, then that screams you are equal to your competition and have nothing better to offer.

If you neither differentiate or exemplify your niche, then mediocrity is inevitable.

You Won’t Make the Cut When Price Cutting
A big mistake can occur when it may seem small out of the gate. If a company has a product with a 40% markup margin and the price is reduced 20%, really all that happens is the margin is split in half. This means you have to sell twice as many widgets to make the same amount of money, but of course pricing and profitability have to be balanced and fair.

To maintain the market share or expand a company’s market share, keep the profit margin at least at 40%.

When business owners create a price cutting environment, it begins to attract a lower level consumer and employee. The mentality of associates focuses on cutting corners, and regardless of the consumer they all want personalized attention and solutions.

Pricing fundamentals include marketing, research, merchandising, innovation and customer service. Market share growth is just as important and all of these fundamentals play a key role in market share growth.

About us: DREAMFly Marketing, a marketing company in Naples and Southwest Florida, creates branding strategy for clients across the United States. Our marketing company in Naples focuses on marketing strategy, advertising, public relations and social media online marketing, online marketing and promotional products.

About Camden Smith

Camden Smith has written 77 posts for Marketing Magnetics.

Camden Smith owns DREAMFly Marketing with 16 years in strategic marketing and television journalism. Her cutting-edge, aggressive marketing skills have earned her numerous awards. Smith lives in Naples, Florida with her daughter London.

  • Msmith9176

    Great article. This is what our business practices and it’s nice to see that we are making the right decisions about pricing and value of our services.