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Competitive Pricing Advantages

4 Reasons Why Your Product Pricing Strategy Needs an Update

Setting competitive prices for your new or existing products and services can be challenging. If you set prices for your products or services too high, you’ll miss out on valuable sales. Conversely, if you set prices too low, you’ll miss out on valuable revenue. Also, providing excessive discounts can hinder a company’s profitability. In this context, it becomes vital for businesses to be proactive about identifying when and what changes you need to make to stay ahead of the competition.

So, with today’s consumers and businesses alike demanding more for less prices, how do you analyze whether your product pricing strategy needs an update? In this article, our experts have explained the 4 major reasons why businesses must revamp their new product pricing strategies to gain a competitive advantage.

A Company’s inability to efficiently price a new product can degrade the value of the brand and lead to a price war. However, revamping new product pricing strategies to meet the market demand can become a competitive advantage. Request a FREE proposal today!

Reasons Why Businesses Must Leverage New Product Pricing Strategies

#1: Company’s lack of accurate competitive pricing data

In today’s competitive marketplace, constantly monitoring and benchmarking against the competition is becoming crucial for businesses to capitalize on new market opportunities. Businesses that are still employing traditional methods for manual data collection can no longer gain a competitive advantage as manual data collection is highly time-consuming. Hence, it’s high time for organizations to revamp their new product pricing strategies and proactively respond to the competitors’ pricing strategies by efficiently tracking their new product pricing strategies and models.

Competitive pricing strategy can help businesses in this context. By leveraging competitive pricing strategies, businesses can make changes in their pricing strategies to meet the market competition and capitalize on new market opportunities.

#2: Inability to understand price elasticity

Understanding price elasticity helps businesses to analyze how customers’ respond to the price fluctuations in the market. Also, as different products and services have distinct price elasticities, businesses need to understand how customers’ react to the price changes in the market. Also, analyzing past sales data and conducting new product pricing segmentation can help businesses in setting competitive prices. Companies that fail in doing so need to revamp their pricing strategies to stay competitive in the marketplace.

New product pricing strategies work best for these brands looking to understand the price elasticity for a product or service.

With our expertise in formulating new product pricing strategies for various global giants, we can help you to estimate the accurate prices of your products or services and determine if it meets your consumers’ expectations. CONTACT US to know how our new product pricing strategies can help your business.

#3: Inability of value-based pricing strategy model

A company’s inability to adapt with value-based pricing strategy model can prove to be costly. Also, the lack of a value-based pricing strategy model subsequently impact the company’s sales rate and increases customer churn. Hence, companies that lack a value-based pricing strategy or new product pricing strategies may lose sales to competitors.

In this instance, businesses realize the real importance of revamping their new product pricing strategies. By leveraging new product pricing strategies, businesses can satisfy customers’ demands and boost customer loyalty.

#4: Employing an overly simplified new product pricing model

In today’s technology-driven business world, using traditional pricing strategies and models can longer help businesses. Gone are the days when companies leveraged cost-plus pricing by relying solely on the cost of production. It’s high time for businesses to leave behind traditional pricing models and take into consideration factors including seasonal fluctuations, competitor pricing, and product value while setting prices.

By leveraging Infiniti’s new product pricing strategies and solutions, businesses can efficiently tackle these challenges and competitively set prices for their new products and services.

Product pricing strategies for a new product

NEW PRODUCT PRICING SRATEGIESWant to know the right product pricing strategies to follow to efficiently price your new product or service? Read the article here on new product pricing strategies.

Pricing a New Product: The Right Product Pricing Strategies to Follow

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Penetration pricing strategy

Infiniti’s Penetration Pricing Strategy Helped a Consumer Electronics Company Achieve 22% Increase in Market Share

Penetration Pricing Strategy for a Consumer Electronics Company

With a large number of consumer electronics products being introduced every year, companies in the consumer electronics market are facing difficulties to increase market share and sales volume for their products. Also, as pricing largely impacts customers’ buying behaviour, it becomes vital for consumer electronics companies to competitively price their products. However, for companies that are new to the market, it is even vital to introduce some introductory offers to set up their customer base in a particular market. This is where penetration pricing comes in. Penetration pricing strategy helps businesses gain sales traction. This also helps businesses to increase market share.

Penetration pricing strategy helps businesses to lure customers away from established competitors. Request a FREE proposal to know how our product pricing strategies can help your business to achieve maximum market share within a short span of time.

Business Challenge

The client is a consumer electronics company in Europe. The client was new to the European market. As the European consumer electronics market was highly saturated, the client was facing difficulties in competitively pricing their products. The client even faced difficulties to lure customers’ attraction, build brand loyalty, and generate demand for their products.Therefore, they approached Infiniti Research to leverage their expertise in formulating a penetration pricing strategy. With Infiniti’s price penetration strategy, they also wanted to analyze the pricing strategies adopted by competitors and devise an appropriate penetration pricing strategy to gain market share and attract customers.

By leveraging Infiniti’s penetration pricing strategy, the client wanted to achieve the following:

  • As pricing plays a major role in customers’ buying behavior, the client wanted to leverage penetration pricing strategy to build customer base quickly by selling products at a lower price. By building a better customer base, the client wanted to enhance their sales rate.
  • As the client was new to the European consumer electronics market, they were facing challenges in capturing market share. With Infiniti’s penetration pricing strategy, the client was looking to provide introductory discounts to customers and capture maximum market share.
  • With Infiniti’s penetration pricing strategy, they also wanted to eliminate the market competition by offering products at a lower value compared to their competitors.
  • With Infiniti’s penetration pricing strategy, the client also wanted to create a mass market for their products and establish themselves as market leaders.
  • With Infiniti’s penetration pricing strategy, they further wanted to measure customers’ sensitivity to price changes and identify the price gap with their competitors.

CONTACT US to know how our penetration pricing strategy can help your business to formulate an efficient pricing strategy for your business.

Solutions Offered and Value Obtained

The experts at Infiniti Research followed a four-phased approach to formulate an efficient penetration pricing strategy for the client.

Conducted a thorough market pricing analysis – The experts at Infiniti Research also analyzed the European consumer electronics market players and their pricing strategies. The factors such as competitors’ product offerings, pricing strategies, market position, strengths, and weaknesses were considered during the analysis.

Analyzed the target audiences – The experts analyzed the needs and demands of the client’s target customers. The experts also analyzed customers’ buying behavior, customers sensitivity to price changes in the market. They also analyzed how consumers’ reacted to new product launches in the market.

Analyzed competitive landscape – The experts analyzed the top five competitors of the client. They further analyzed the structure of their pricing, discounts, and their market share.

Created a pricing strategy and execution plan – Based on the insights obtained, the experts at Infiniti Research formulated a pricing strategy for the client. The formulated pricing strategy plan acted as a blueprint that helped the client to efficiently price their products to gain maximum market share.

Results Obtained

With Infiniti’s penetration pricing strategy, the client was able to create a mass market for their products in Europe. They were also able to build a better customer base and achieve a high market share. By offering products at a lower price compared with their competitors, the client was able to surpass the competition. Infiniti’s penetration pricing strategy helped the client to enhance brand loyalty. Furthermore, it helped them to sucessfully establish their market presence in the European consumer electronics market.

Also, by leveraging Infiniti’s penetration pricing strategy, the client was able to:

  • Grow their market share by 22% in the course of one year
  • Capture customer traction by offering products at lower prices
  • Build customer and brand loyalty

For a new venture, figuring out how to price your products or services is highly challenging. Infiniti’s penetration pricing strategy can help you efficiently tackle this challenge. Request for more information to gain more insights into our services and learn how our penetration pricing strategy can help you achieve high market penetration rates quickly.

What is penetration pricing strategy?

Penetration pricing strategy is a business process in which the prices of products are initially kept low to reach a wide fraction of the market. This also helps businesses attract customers towards their brands and also outpace the market competition. Furthermore, penetration pricing strategy stimulates market growth and helps companies capture maximum market share for their products or services.

Advantages of penetration pricing strategy

  • Helps businesses to capture maximum market share in a short time
  • Enhances brand loyalty and also brand awareness
  • Helps companies gain a leading edge in the new or existing market compared with competitors
  • Helps achieve higher market penetration rates quickly
  • Encourages word of mouth marketing and also enhances customer experience

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competitive pricing

A Major FMCG Brand Improved Their Bottom Line Results and Competitiveness with the Help of Competitive Pricing Engagement

Today, we live in an era where the adoption of smart & competitive pricing strategies can catapult new brands and retailers to quick success. At the same time, the failure to project the right brand image through effective pricing can seriously destabilize the prospects of business establishments. ‘Competitive Pricing’ is an essential cog of a product positioning and branding strategy and has a long-lasting impact on customer loyalty and consumer engagement. A robust pricing strategy acts as a catalyst that helps manage profitability while ensuring the brand’s price image reverberates through all its marketing campaigns.  

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Here are a few reasons why competitive pricing can leverage your market success:

  • Helps you stay ahead of the global competition
  • Offers price increment opportunities
  • Improves profit margins

Client’s Background

The client- a leading player in the FMCG industry in the U.S.

The Challenge

Owing to the intense competition from FMCG companies all over the globe, a multibillion-dollar FMCG industry player realized the need to make better pricing decisions to stay ahead of the curve. Needless to say, the competition in the FMCG market is on the rise and leading FMCG industry players are on the constant lookout for new opportunities and pricing frameworks that can help them stay ahead of the competition.

Request a FREE proposal to know how our competitive pricing solutions will help you tackle market challenges.

Our Approach
A detailed assessment of the competitor’s pricing strategies enabled the FMCG industry player to gain detailed insights into the pricing strategies adopted by market leaders. Our experts developed a structured approach to competitive pricing, which played a major role in enhancing the FMCG company’s bottom line. The competitive pricing research methodology leveraged the use of competitive intelligence to gather insights on the competitor’s strategies with regard to their product offerings.

Business Impact

Following the detailed assessment of pricing strategies, a unique competitive pricing strategy was devised to empower the FMCG industry player to differentiate their brand by setting unique prices for their products. The adoption of a holistic, intelligent competitive pricing solution that customarily aligns itself to the company’s business goals and the market dynamics enabled the FMCG industry player to break through the cluttered market space with a unique and convincing proposition in terms of pricing.

The implementation of the new competitive pricing strategy also improved their competitiveness, leading to the generation of $45 million in annual revenue. As a result, the FMCG industry players have surpassed the global competition by successfully capturing a top spot in the global market space by enhancing both customer satisfaction and customer retention levels.

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market segmentation

Popular pricing strategies that e commerce companies swear by

Choosing the right pricing strategy is one of the most crucial decisions that you have to make. Get it wrong, and it could cost big for your business. Online and offline retailers alike recognize pricing strategy as one of the key value levers, and, accordingly, companies have worked to refine their pricing strategy, tactics, and tools over the past several decades in hopes of optimizing their approach. Today, with the rising use of the internet and smartphones, customers can compare prices with just a click of a button. So, the pricing strategy that companies in the e commerce industry choose must be one that not only gives them a good ROI but also gives a sense of ‘value for money’ to the customers. There are endless ways for companies in the ecommerce industry to configure Get More Infoand set their pricing strategy. Here is our pick of the top five ways to get online pricing strategy right:

Loss leader pricing

This is a crucial pricing strategy for companies in the ecommerce industry to convert their customers into loyal customers and ensure repeat sales. This strategy is generally practiced by retail giants such as Amazon and Walmart. The main idea behind this pricing strategy is to price certain products at a price that is significantly lower than that of the competitors in the e commerce industry. This is similar to the predatory pricing strategy that is mostly followed by offline retailers. This technique not only drives traffic into the store but also help in converting window shoppers into paying customers.

Basket-based pricing

Basket-based pricing is a common pricing strategy that is used by players in the e commerce industry to entice customers to make a purchase. In this technique, certain price points or products are used to incentivize customers to purchase products. For instance, it is often seen that online retailers offer free delivery if your total basket value exceeds a particular limit. This sometimes makes customers purchase more than they would have initially intended so that they can avail of the benefits.

Quick-delivery pricing

Amazon is a prominent example of an e commerce industry player who has been leveraging this pricing strategy effectively. The company leverages its state of the art logistics network to not only serve its customers at the shortest possible time but also to use it as a profit-making pricing strategy. They give customers options such as same day delivery, next day or 2-day shipping, in return for an additional premium from the customers. This is a great way for the company to keep its prices lower than the competitors but at the same time drive profitability for the business.cta ir

Real-time price optimization

With the advent of advanced technology, it is now possible for companies in the e commerce space to gain real-time insights on determining whether the rate at which the products are priced is the ideal way of ensuring profitability or not. It is not advisable to always price the products lower than that of the competitors. Instead, players in the e commerce industry can use retail analytics to identify and adjust the prices based on factors such as demand and out-of-stock situations.  Out-of-stock situations are opportune moments for setting prices at a higher rate as customers looking for these products on competing sites will surely navigate to you.

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market opportunity

Dynamic Pricing: What Are the Biggest Challenges?

Dynamic pricing has been one of the most lucrative pricing strategies that companies use to mint money. While it is not an entirely new concept, companies have been using it randomly over the years. In laymen terms, dynamic pricing is a strategy in which product prices continuously change, sometimes in a matter of minutes, in response to real-time supply and demand. Examples include Uber for taxi rides that sets its rates based on supply and demand, consumer electronics shop MediaMarkt that has installed electronic price tags to change prices depending on competitor behavior, and the gas station chain Tanq4you that bases its rates on the actual oil price and the weather condition. But in several cases, implementing dynamic pricing may not turn out to be as easy as it sounds. Here are some of the challenges that companies face while implementing dynamic pricing strategies:Request Free Proposal

Data accuracy

Dynamic pricing relies heavily on data, and when pricing is being changed on the basis of hours or even minutes, ensuring that the data driving pricing decisions is accurate is highly critical. While there’s a growing ecosystem of data providers and the techniques by which data is collected and filtered are sure to improve, businesses should refrain from assuming that bad data won’t make it into their systems.

Customer perception

Many consumers are not aware of the fact that retailers resort to dynamic pricing to alter prices on a regular basis, but as it becomes more noticeable thanks to the web, companies must consider the perception issues it raises. A customer who observes that a product can become cheaper or more expensive within minutes might get discouraged at the prospect that they could end up paying more for a product based on little more than what they would pay if they waited longer. Also, there is the possibility that some users will notice dynamic pricing, but won’t quite understand what’s going on, resulting in a reduction of trust.

Algorithm errors

Several instances from the past emphasize on the fact that algorithms are far from perfect and can produce costly errors. As retailers embrace dynamic pricing models which are of course based on algorithms, thought should be given to how mishaps can be minimized and what policies will govern when a mishap results in a significant mistake (e.g., customers being able to purchase a product at a ridiculously low price).

Change in customer behavior

As the existence of dynamic pricing becomes more evident to consumers, companies will need to come to terms with the possibility that it could impact customer behavior. Dynamic pricing undoubtedly has the potential to encourage sales, but is it possible that in some instances it could it impede sales? If customers get a feeling that the price of a product might dip in the very near future, or perhaps even on the same day, this could result in some of them deciding to hold off on a purchase. And as every retailer knows, a delayed purchase is much more likely to become a purchase that never happens or happens somewhere else.

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Supplement Market

5 Pricing Strategies That Will Help You Attract Customers

Pricing is one of the most critical business decisions that companies must make. A lot of thought, calculations, and brainstorming go into the pricing decisions, so it’s no child’s play. If you think that pricing is a one-time process for a business, then its time to give that idea a second thought. With each passing year, the market trends and customer demands keep changing. If companies fail to keep track of these changes and adapt their pricing strategies accordingly, the chances are that their overall profitability will go for a toss. Smart companies outperform their peers by quantifying, defending, and monetizing their value in the market and forcefully monitoring their actual pricing methods across customers, channels, and countries at regular intervals. We have identified some pricing trends that are expected to make it big in 2018. If improving pricing power, redefining commercial strategy, and providing inspiration for profit growth is what is on your mind for your business, then here are the pricing strategies to consider this year.

Top Five Pricing Strategies to Attract New Customers

Dynamic Pricing

This is a pricing method that was introduced and widely accepted in the travel and tourism industry. However, gradually, other companies in the business to consumer field have started to follow suit. Dynamic pricing can help exploit the willingness to pay and to introduce more sophisticated price differentiation models. For example, Uber for taxi rides uses pricing strategies based on the on supply and demand for cabs during a particular day.

Digital Pricing

Digitalization is leading to new business models and therefore new revenue and value-enhancing opportunities. The companies who can define the right pricing methods to extract willingness-to-pay efficiently are more likely to succeed in the future. One of the most substantial effects of digitization is the increasing price transparency. It leads to an increase in price elasticity, which makes the market more attractive for price-aggressive sellers to reduce prices. Consequently, it also makes it harder for premium sellers to maintain and increase prices successfully.

Behavioral Pricing

Often customers’ choice of a product is influenced by what is termed as behavioral pricing. Though behavioral pricing is not a new phenomenon, it is expected to be one of the top pricing strategies for 2018. Behavioral pricing methods have the ability to maximize willingness-to-pay by differentiating pricing based on customer value perception. Furthermore, they can also simplify portfolios and use price laddering to guide customers to more valuable products.

Customized Pricing

Customized pricing is one of the pricing strategies that companies can apply to capture customer value. Customized pricing has been used across various industries over the years – from airlines that up-sell a business class seat to customization of a brand new car. The main reason why customized pricing is gaining traction now is due to the rise of digital platforms. One of the critical success factors for conversion while communicating to a customer is the simplicity of your proposition. Traditionally, when the communication becomes too complex or tedious, the business will lose the customer. However, the rise of digital medium has changed that by making interactions more exciting and tailor-made for each customer.

Sympathetic Pricing

This might be quite contrary to business rules as the common notion goes that business and emotions do not go hand in hand. But sympathetic pricing has proven to be one of the most successful pricing strategies for improving customer loyalty and brand reputation in the recent times. Sympathetic pricing methods involve offering discounts at the right moment when people need them the most. For example: when the transport system in London was disrupted, Uber offered discounts to customers that were suffering from the delays. They applied a sympathetic pricing strategy, trying to turn a negative experience for a customer into a positive one.

To know more about the pricing strategies that are best suitable for your business

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Pharmaceutical Industry

Pricing Strategy Secrets That Airlines Don’t Want You to Know

Have you ever talked to a co-passenger on a flight and been surprised to find out that they have been charged much higher or lower for an airline ticket in the same class as yours? This is a common practice in the aviation industry. As much as it might seem unfair, the aviation industry has one of the most dynamic pricing strategies compared to any other sector. The most common of pricing strategies in the airline industry that most of us might be quite well-aware of is the demand-based pricing. During festive seasons or other times of high demand, the airline prices are often at its peak, and during the off-season, the same tickets are priced at much lesser rates. But do you think this is all that goes into consideration for companies in the aviation industry to tweak their pricing strategies?

Copy of banner IR (1)

Common pricing strategies of airline companies

Total customization

The standard price division in the aviation industry that we all know of is based on the classes­­ – economy, business, and first-class. But you would be amazed to know that airlines have dozens of subdivisions. The airline carriers usually adjust the number of seats allocated to each fare class. When one class gets sold out, the sale price will leap to the next one. Though this practice is commonly being followed currently, it is still way off from the ultimate goals of carriers. Firms in the aviation industry aim at knowing their customers better through loyalty programs, registered users, and cookie tracking since it would help them to offer personalized pricing.

Our recent engagement is a classic example of how our custom research solutions can help companies operating in the aviation industry. Give it a read.

Additive Manufacturing Challenges in the Aviation Industry

Competitive pricing

Companies in this sector have become increasingly complex and fiercely competitive in the past few decades. The growth of the airline network and the drop in the cost of commuting has taken revenue management to whole new levels of complexity. Airline companies have realized that pricing strategies such as Expected Marginal Seat Revenue (EMSR) offer the best ways to optimize fares in real-time.

This technique is useful not only on a given route but taking into account revenue-generating opportunities across the whole airline network. This is the answer to if you have wondered why flying from London to Dubai costs almost the same as flying all the way to Manila, also via Dubai. Aviation industry companies may prefer to keep seats on the London-Dubai route for higher-value passengers that fly longer onward journeys and will use pricing strategies to discourage those aiming to fly shorter trips.

Customer profiling

Companies in the aviation industry usually make some reasonable assumptions about the profile of traffic on a particular route and then alter their prices accordingly.  For example, London to the Maldives has a marked leisure profile; this has an impact not only on the ticket prices but also on the way pricing strategies change over time depending on the on and off-seasons. If the airline assumes that passengers traveling to leisure destinations will tend to book relatively before their holidays, it may start pricing seats on that route relatively high. Based on the market response, the prices would then be altered accordingly.

Brand image

The rising competition in the aviation industry gives carriers good enough reasons to not overcharge customers. However, they must be careful not to undercharge customers as well. Airlines tend to aggressively lower prices when there are still empty seats left before a flight departs. However, if this becomes the norm, there could be a serious risk of undermining the brand and alienating higher-value passengers. Applications such as Bidflyer and Plusgrade have developed applications that allow airlines to sell upgrades to the highest bidder through an auction mechanism. This acts as an anonymous way to get passengers to tell the airline how much they’re willing to pay for premium services.

To know more about the pricing strategies in the aviation industry, request more information from our experts.

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