Pricing Strategies To Position Your Business For Success
If you’re in business, sales, or marketing, you’ve likely heard about the power of pricing strategies and positioning. Your price structure plays a vital role in your ability to convert a prospect into a loyal customer. Positioning your business correctly in the market is just as important. It’ll allow you to better tailor your offerings to meet the expectations of your target customers. It’ll also make it easier for you to create a powerful marketing message that sets you apart.
In this article, we’ll look at three main steps you can take to position your business for ongoing success, and various pricing strategies you can employ. We’ll also drill down into some of the most popular positioning strategies that successful companies use and discuss how you can connect with your target audience so that you aren’t competing on just price.
Step 1: Know Your Audience
So, you’ve created a product or service, and you’re anxious to maximize your income and grow your business. Or, perhaps you’ve been working in sales and marketing for years, but have struggled to boost sales or even get a foothold in your industry. Regardless of where you are in the process, your goal should be to develop a successful pricing strategy that positions your brand above the competition.
Sounds difficult? Not at all!
Know Your Pricing Strategies
The key is to know your market and to determine, early on, how you could use pricing strategies to position yourself. For example, brands like Walmart use pricing as a positioning tool to encourage potential customers to shop at their outlets to save money. This pricing strategy is referred to as penetration pricing.
On the other hand, some brands have positioned themselves as a premium or luxury provider of products. You’ll see that these brands often use and the element of scarcity in their marketing and their price points reflect that. Think Luis Vuitton or Mercedes Benz. This pricing strategy is referred to as price skimming.
Middle-Of-The-Road Pricing Strategies
And finally, we have what’s considered to be middle-of-the-road pricing strategies that often involve different pricing levels in the form of upgrades. These serve to position an offer in a way that appeals to the large majority of customers stuck in the middle of two different price points.
There are many different ways you can utilize the pricing as a powerful positioning tool to establish your brand and maximize your income. It starts with taking action and making the decision on what your point of entry will be in the market. This will then help you choose a pricing model that fits how the market will perceive your product or service. As you do this, you’ll want to keep in mind that whatever price point you choose, you will alienate certain customers whether it’s a lower price point, or higher one, or somewhere in the middle. It’s impossible to appeal to the masses, and that’s okay!
The reality is a product can’t be all things to all people!
Business owners and companies who attempt to please everyone often find themselves stalled in growth. When your company’s focus is too broad, and you haven’t identified your core audience, or pricing strategies- you’ll always be chasing the sale—saying and doing anything to get that customer. On the flip side, the more you know and understand your target audience, the easier it’ll attract customers and build a loyal community of buyers.
You’ll know what is most important to them and can align your marketing message to highlight those benefits.
Here’s an example:
In 2013, Nathan Barry quit his job as a software developer to start his own business. He created a SaaS platform to help bloggers, podcasters, and authors.
Nathan struggled. His profits were minimal, and people continued telling him he’d made a mistake. That he should pivot to adjust to different needs, it was clear that he had to decide whether to let go of his original idea or work even harder. Today, ConvertKit.com, has over 50 employees and annual earnings of over $24 million.
What did he do to get there?
He positioned his product to focus on one specific targeted group. A group who saw immense value in his service, and then he priced it accordingly.
Concentrating on a particular audience will not only help you find your target customers, but it’ll reduce the number of people you’re attempting to service at once. With smaller groups, you’re able to specifically cater to their wants and needs, who then, in turn, refer more customers just like them.
Step 2: Use the B.L.S. Formula
Now that you know and understand your audience, you’ll discover that they have many needs and wants. This understanding can sometimes make creating a product or service that’s tailored for a specific audience difficult. But, it would help if you did the leg work involved in keeping your sights set on one core group.
The tighter your target audience is, the easier it’ll be for you to create a compelling marketing message that speaks to them. You’ll know what they are most interested in, what is most important to them, and how to best cater to that.
So, how do you get started?
Regardless of your market, your potential customers will likely fall into one of three categories.
Benefits, Logic, and Scarcity.
The B.L.S: formula will help you categorize your potential customers into one of these three groups with the strategy on how to market to each of these types of shoppers.
Benefits: Potential customers who fall into this category are typically driven by emotion and a better life vision. Or finding the solution to a problem. They tend to justify their purchases after the fact, with logic.
Logic: Potential customers that fall into this category focus on hard data, statistics, facts, and other forms of proof. They’re particularly fond of case studies and before & after marketing campaigns. They use evidence of previous success to justify their purchase decision.
Scarcity: Potential customers that fall into this category are motivated by the fear of missing out. They respond well to the urgency in marketing messages and want to be a part of something special.
How to Market Them
Once you’ve decided which bucket your potential customer falls into, the next step is to figure out exactly how to market them. To do this, you’ll want to see things from their point of view. If you find this to be challenging, here are three questions you can ask yourself that will help.
- Which benefits of your product/service would stand out to them?
- What is most important to them?
- How high are their expectations for your product or service?
When we create a product or service, it’s not always easy to see things from another person’s perspective in a way that captures all the different ways that it will benefit other people. This lack is usual. After all, we’re close to our projects. We’ve put a lot of time and energy into building them, and so what we might believe is the key benefit isn’t what resonates best with our audience.
So, the easiest way to create a marketing message that will appeal to the majority of your market is to try to see things from their point of view. Consider the benefits, features, logic, and scarcity and how you can tap into these elements to improve your outreach, leading to higher quality leads and conversions.
Here are a few things to keep in mind:
- Features: What are all the different parts or aspects of the product or service? Am I adequately portraying these features in my messaging?
- Benefits: What do these parts or aspects do? Will it save time or money? Prevent their pain? Would it help to solve a specific problem?
- Logic: What facts, case studies, statistics, and social proof stand behind my product or service?
- Scarcity: Is there an urgency associated with the product or service? Is there a limited quantity available? Is the product on sale?
Once you identify the answers to these questions, you’ll be able to take that information and use it to build out your marketing process.
Step 3: Set Yourself Apart – Not JUST through Pricing Strategies
You’ve come to know your audience and figured out how you’re going to approach them. Now is the time to make sure that you stand out above the rest. Your product or service is likely not the only one on the market. So, you’ll need to do some work in highlighting the differences and why someone should purchase your product over another.
Even companies with an incredibly strong brand and product still need to dig deep to position their offerings in a way that motivates their potential customers to take action. They do this with a U.S.P.
So, what is a U.S.P exactly? U.S.P. stands for Unique Selling Proposition.
Without a U.S.P, your product will always struggle to compete in your market. It won’t stand out, even with use of good pricing strategies. So it won’t leave a lasting impression on your prospects’ minds. Your product already has a U.S.P; your goal is to identify what that is and highlight it in your sales pitch and marketing message. It also becomes part of your positioning strategy.
To find your U.S.P, start by evaluating your product objectively. Just like the steps we covered when identifying the strengths of your product and evaluating it from the perspective of your customers. Asking yourself these questions can help:
- How can it improve someone’s life?
- How can it help your customer?
- What does it offer that other products fail to provide?
- Is your product more straightforward to use than the competitions?
Before you can truly define your U.S.P, you need to know your target audience. What is most important to them? Do you know what they are struggling with the most? How can you truly connect to your target audience? What is their greatest challenge? So, you mustn’t skip any steps when working to position your business for ongoing success.
Again, the better you know your audience, the easier it’ll be to develop a U.S.P that means something to them.
There are many different strategies for creating a U.S.P for your product. Dan Kennedy’s method for identifying a unique selling proposition is answering the question, “Why should I choose to do business with you versus your competitor?”.
The very reason why you created your business in the first place could hold the key to defining your unique selling proposition. How does your business address a question, concern, or simplify a process? Such as reducing a learning curve, saving your customers time or money. This will be the driving force behind how much value you can provide and how you can create a recognizable brand in your market.
Many businesses have carefully highlighted their U.S.P that it allows them to charge twice what their competitors do and still sell out every single time, think Apple. Because the truth is, if your target audience recognizes you as the premium source in your industry, it won’t matter how many companies are offering the same product or service for a lower price.
The Bottom Line
Positioning yourself in the market, using the right pricing strategies- all starts with knowing your audience. Those closer you keep a pulse on your market, and the better you can understand what potential customers are looking for, the easier it’ll be to determine the best price point for your offers. However, never focus on trying to satisfy everyone and avoid competing on price alone.
Instead, focus on identifying your core audience. Create products and services based on their wants and needs and speak to them in a way that highlights what you offer solves their specific problems. If you do this well, you’ll be successful in positioning your business in a way that will bring you long term success.