If products are to be listed, value exchange must be realized in the market, and the interests of both the enterprise and consumers must be taken into account as much as possible. Product managers must inevitably formulate a reasonable and scientific price strategy for the product.
From a broad perspective, the formulation of product price strategies we have to face is nothing more than two situations. One is to formulate or adjust price strategies for existing products, and the other is to formulate price strategies for new products.
Existing products already have price strategies that have gone through market practice. Therefore, more situations are adjustments and improvements, while new products start completely from scratch. Therefore, this article will focus on the formulation of price strategies for new products.
Before the beginning of the text, a simple definition of new products is needed. The new products referred to here refer to new features, new functions, new applications in the enterprise or industry, or facing new market segments and new target customers. The scope of this new product includes products based on the improvement, perfection, and extension of existing products, and completely new products.
So, for these two common new product types, what kind of price strategy ideas will we adopt? Next, I will discuss with you.
At present, we have adopted more ideas and divided into three types:
The first type: Develop a price strategy based on other products in the existing product line
Generally speaking, most of the products in an enterprise belong to a certain product line or a product group. The reason why these products become a product line (group) is because these products have similar applications or are aimed at The same target market or the same market strategy is adopted. Therefore, if a new product is based on a certain product line (group), then when pricing, we can learn from the price strategy of other products on the product line. Pricing.
For example, there are currently four products on the a product line you are responsible for, and the price range is between 200 yuan and 260 yuan. Now a new product has been added to the a product line. Then, the price of this new product can be set at this range. Inside.
Because the price range they can accept for the target users facing a product line is 200-260 yuan, if it exceeds this price range, then your new product is probably not aimed at this group of target users and should be reconsidered Whether the market needs to be further subdivided and whether the current product line needs to be further optimized.
In this way of thinking, there is another situation that is more common, especially for companies that provide integrated products and services. For example, the product you are responsible for is a supplement to another product of the company, or it is better to support another product in the company. In this case, how to formulate a price strategy for new products in this situation?
It is also formulated in accordance with other products based on the existing product line, but at this time, in addition to considering the price positioning and range of your product line, you must also consider the price range and product line of the product supplemented or supported by your product. Strategy, so as to form a reasonable price strategy combination, otherwise the price strategy between products lacks unity and complementarity, which is not conducive to product development.
The second type: formulate price strategy based on competing products
In fact, this is the most used price-setting strategy for many new products. Why is it just two words and simple. Many product managers will definitely have this experience. When a new product is in the process of formulating a price strategy, the bosses will always ask you to see what the price of similar products of competitors is. The implication is that you should focus on reference. Competitor’s product prices, and then set the price of their new products.
In doing so, for companies, in addition to the “simple” pricing idea, there is another point, three words, “small risk”. This is easy to understand. I formulate the same price strategy as the competitor. Then, the competitor’s price The strategy has been tested in the market for a period of time. For the company, it means that the market has accepted such a price strategy at least for now. My risk of failure in the pricing strategy is greatly reduced, even if I take a 10,000 step back. Speaking, in the end there was a problem, and the pricing strategy failed. That was everyone’s failure and the end. Only such a “good” thing is that many companies are willing to share with their competitors, haha.
This kind of pricing strategy is especially suitable for companies that adopt the “follow” strategy. I have worked in such a company for a period of time. This company has gone from strategic goals, to product line division, to product positioning, and then to pricing. “Following” strategy, I deeply remember that at that time, no matter how much the product pricing of the companies we followed, our products were cheaper than them by a dollar.
In fact, the difference in this dollar is more symbolic, and more to tell the market that there is no substantial gap between us and our competitors, and sooner or later we will surpass you.
The above two ideas are based on the improvement, perfection and extension of products on the existing product line. Then, what should we do if we are facing a completely new product in a market?
This is the third idea we want to explore: formulate price strategies based on the target consumers’ attention to the value of the product
Completely brand-new products, for companies, lack of reference both internally and externally. Therefore, they often need to use their brains in formulating price strategies, but for target consumers, they will not have a company. Such an idea, because for them, they will use the consumer’s own thinking to think about what kind of price your product should be suitable, which is acceptable to him.
In other words, they will look for similar substitutes in the market as an important basis for judging whether the company’s prices are reasonable.
For example, the electric ceramic stove and induction cooker in kitchen appliances are products with completely different concepts from a technical point of view, but from a consumer’s point of view, they are all kitchen cookware based on electricity, and they all look the same. Therefore, if you are the product manager of an electric ceramic stove company, you must take this into consideration when setting prices, because consumers simply cannot distinguish the essential difference between the two (the essential difference is in Technical level), they will only refer to the price of the induction cooker to see the price of the electric ceramic cooker, and the price of a really good electric ceramic cooker is much higher than that of the induction cooker. Therefore, an induction cooker of a few hundred yuan and an electric cooker For thousands of electric ceramic stoves, consumers will inevitably choose induction cookers.
Coupled with the lack of adequate publicity and promotion of electric ceramic stoves, at least for now, in the next few years, electric ceramic stoves will also be a niche product.
This example shows that a completely brand-new product price strategy, for consumers, they will learn from what they think similar products as the basis for evaluation, and this point is explained in professional terms for companies, in fact, users are Recognition of new product value points.
Electric ceramic stoves have very obvious advantages, such as no picking, long life, and no radiation, but for consumers, this is not the value point they are most concerned about, or that these advantages do not constitute the high price of electric ceramic stoves. Necessary factors, for consumers, which aspect of stoves most appeal to consumers, is very simple, that is, “low cost”.
The cost of use includes not only the purchase cost of stoves, but also the cost of use, especially for products that use electricity. The thermal efficiency of electric ceramic stoves is lower than that of induction cookers. For example, it also heats a pot of water. Induction cookers are better than electricity. The pottery stove saves electricity and the time is shorter.
And this is the most attractive to consumers.
Therefore, when we formulate a price strategy for such brand-new products, we must formulate it in full in accordance with the consumer’s value concern. Where will the value concern be? In fact, it is in products that consumers think are similar to yours. , Although in your opinion, this is a completely different product, but consumers will not have your idea.
Therefore, the key to this kind of thinking is that you have to fully understand what consumers’ perceptions of your products are, or whether your product positioning meets the interests of consumers.
Regarding the formulation of price strategies for new products, roughly these three ideas are based on these three ideas. Of course, under these three ideas, there are still many specific technical aspects, which we need to discuss together.
