The Pricing Strategy AssessmentSM
Lowest Price Branding: We’ll Make It Up With Volume!
The Wall Street Journal’s October 7, 2010 Business Section reported, “The only thing missing from the U.S. economy today is demand, and the answer is for the government to supply it.” Regardless of your political persuasion, these stressful economic times place enormous pressure on printers, packagers and communicators to adopt strategies that will build back their sales.
Pricing strategies can have a dynamic impact on profits, so they should be considered as carefully as all other branding and marketing strategies. After all, over time a 10% reduction in profits can significantly impact what brand marketing your company can and cannot afford to invest in.
Price branding has a place in a branding program. Let’s look at two different printers that used two very different price strategies.
Printer #1: This first printing company decides to feature one of its pressroom capabilities. A branding campaign is prepared to run as a special 90-day promotion that offers reduced pricing to customers who send projects that fit their equipment’s parameters. The company promises at the end of the promotion to promote heavily the best print samples using direct mailings and a special website that highlights the creative printing that was produced.
Printer #2: The second printing company decided to build new sales in the next 90 days using outbound telephone calls by its sales representatives and allowing them to lower pricing, when necessary, to win new business. This decision was based on motivating the sales representatives to make more calls to everyone they knew and to be aggressive in getting new orders. New orders were brought in, including some from existing customers that were glad to have a better than average price for their everyday printing, but then the push ended and so did further orders. This left the firm in the same place they were in when they started.
Of these two printers, which do you think benefited more from their 90-day price branding? Was one approach superior to the other?
Printer #1 positioned how they wanted to be perceived by their target audience. Price was a factor, but not the primary factor, so its brand value was maintained and they achieved new sales. Because the specifics had been worked out in the beginning, the promotion attracted high quality projects and that led to high quality work. This provided the printer with additional opportunities to promote its services using actual recent work and that led to even more work!
Printer #2 on the other hand, created panic inside their company and among their clients. They painted a picture of a printing company who desperately needed more printing and devalued their brand in the process.
The bottom line is your price is a major way your customers place a value on your company. If you use price as a brand strategy you risk lowering your brand’s value among your prospects and your customers – and that is a problem. There is a joke that says, what we don’t make on individual projects we’ll make up in volume! Unfortunately, that never works.