Join Drew Boyd for an in-depth discussion in this video Communicating price, part of Marketing Foundations.
After you set the price of your product or service, you have to communicate it in an effective way that supports your overall strategy. A simple framework for this is answering the questions, who, what, why, when, and where. Your target audience, of course, is who you want to communicate to. But it's more than just potential customers. You also want to make sure your partners, such as distributors, understand your pricing structure. Generally speaking, you want to make your prices available to the public.
Including competitors. They may be setting their prices based on yours. What you communicate about pricing is much more than just the dollar amount. When a customer first sees the price, that's a critical time to remind them of the value they're getting for their money. Be sure to tell them about any discounts that might apply. Or any other terms and conditions, such as shipping and handling charges. You want customers to have a complete and clear picture of your pricing.
If they're confused about something, they may look elsewhere. And this is the main reason why you communicate price. Customers ask themselves a simple question. Am I getting my money's worth? You need to help them answer this question or they'll do it by themselves. And they may come up to the wrong conclusion. Customers try to calculate what they're getting by comparing the total value to the total price paid. The easier you make it for them, the more they'll understand your offering. When you communicate the price depends on several factors.
Remember the customer analysis in the steps of the buying process we talked about earlier? That analysis helps you understand what factors are most important when buying your product. If price is the most important factor, then you must communicate price very early in the buying process. If it's not the most important factor, then you want to communicate it later during the phase where customers are evaluating their alternatives. They key is to make sure they understand the value they get in all the features of the product or service before they get the price.
Where you communicate price depends on the point of sale, and where people go for information about your products. If customers do their research online, you'll need to have prices on a website, either yours or a distributor's. If your prices change very often, or you offer regular discounts, it may be best to disclose price at the same location the customer buys the product. Think about the touch points of the customer experience and where those occur physically.
Then, select a location for disclosing the price that helps the customer make the connection between price and value. Oh, and one final tip. Pricing is a business activity that is governed by certain laws. It's usually a good idea to have your legal advisors review the overall pricing approach to make sure you're in compliance.
You'll also learn to address tactical challenges and present the plan to get buy-in throughout an organization, from the C-suite to the sales team, as well as use the marketing plan to guide outside agencies and vendors. Finally, you'll learn how to launch the campaign and measure its performance.
- Marketing in an organization
- Assembling the team
- Creating the marketing plan
- Analyzing your products, customers, and market
- Segmenting customers
- Creating a value proposition
- Developing a strategy
- Setting goals
- Setting prices
- Using social media
- Presenting your plan to leadership
- Budgeting your plan
- Measuring success