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SANJAY'S MARKETING SUCCESS GUIDE

Driving Exponential Marketing Success & Company Growth

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  • Writer's pictureSanjay Patel

NextGen Product Pricing !!!

Updated: Jan 15, 2021



  • What product price to set ? Who to share the price with ? When to share? What to do when procurement ask to reduce the price to half or customer is unable to renew contract ? All these are answered through NEXTGEN B2B PRICING STRATEGIES !!!

  • Product/Company SUCCESS is directly related to Innovative & Authentic PRODUCT PRICING METHODOLOGIES .

  • It is THE MOST critical & directly Revenue Impacting MARKETING AREA in B2B which is getting harder day by day

  • The Success MANTRA: is bringing it close to B2C through visionary WIN-WIN strategies, setting the right PRODUCT price & communicating the VALUE it provides in an extremely simplified & trustworthy way to DMU( Decision Making Units )

  • WHAT IS B2B PRICING VISION ? : EVEN THOUGH extremely hard & demanding work but with innovative approaches, disciplined & systematic process when done optimally with talented team , we can surround ourselves with LOYAL LONG TERM CUSTOMERS who value us as trusted partners


  • WHY SO CHALLENGING ? :

  • Low cost competitors throughout the globe,

  • Currency Fluctuations,

  • Customers joining forces to form consortium groups,

  • Government price controls,

  • Tech savvy well informed customers , and

  • Customers always demanding lower prices.


  • 3 KEY DIMENSIONS TO CHAMPION VALUE :

  • Functional benefits – stating product features,

  • Economic Benefits – saving money time reliability and

  • Emotional Benefits through psychological feelings that make us feel more smarter, respected , responsible while using the product


  • How B2B Pricing DIFFER FROM to B2C?: Purchasing is done by completely separate department who are logical, not tied to emotion, negotiation savvy with prime focus on getting prices down instead of functional or economic benefit value. There comes the need for TALENTED & SAVVY MARKETING LEADERS to naturally convince them in their favor UTILIZING STRATEGIES LIKE Pricing Tiers. Organizations are more risk averse than consumers as in B2C.

  • High Level Process :Setting the price (Understand TAM & Customer Needs, Competition, Price Value Tiers) , Communicating the price ( Who, What, Why, When, Where )


  • Customer Groups

  • Loyal Customers, RETENTION

  • 100% Use Competitors Products , ACQUISITION

  • Use both ours & Competitors: RETENTION

  • New Customers , ACQUISITION


  • PRICING Strategies based on targeted Customer Group

  • Customer Category : New & Loyal Customers

  • * Focus on Value ( Functional, Economic & Psychological ) and NOT on Competitor

  • * Temporary Discount


  • Customer Category : 100% Competitor Product & Who Uses Both

  • * Focus on price relative to Competitor

  • * Features Better/More than Competitor à More price

  • * Features Worse/Less than Competitor à Less price

  • * Features equal à Equal Price


  • PRICE/VALUE PROPOSITION:

  • Price becomes a problem when Value is the problem. The PRICE COMMUNICATION always should INCLUDE functional, economic, psychological value & benefit & explained clearly to each of the DMU in different stages of buying journey.


  • Pricing Tiers

  • Good Version : Core Features

  • Better Version : Some additional features

  • Best version : All features

  • EXTREMELY CRITICAL TO HAVE THESE so as to bring the conversation/Negotiation with Purchasing Department whose prime goal is to drive price down.

  • When Value Exceeds the Price , they want the product


  • Customer Buying Journey

  • Problem Recognition

  • Information Search

  • Evaluate alternatives

  • Purchase

  • Post Purchase Behavior


  • Detail Process


  • SETTING THE PRICE PROCESS :


  • Developing Marketing Strategy

  • * Understand customer,

  • * analyze market,

  • * analyze competition,

  • * Define Market Mix,

  • * Market Position,

  • * Budget,

  • * Execute Plan ,


  • Creating a X-functional Tiger Team

  • * Finance,

  • * Marketing,

  • * Sales,

  • * Customer Support,

  • * Technology team

  • * External Partners


  • Setting the Price

  • * Must be tied to the value the product provides & NOT cost


  • Confirming the price with Customer

  • * TCO to avoid surprises when other items are there like moving from existing solution and


  • Measure/Access Results

  • * If the pricing approach got us the desired results


  • Pricing Communication Model Process:


  • Who to Communicate

  • * Partners & Distributors

  • * Everyone in Public including Competitors


  • What to Communicate

  • * The Product Value clearly mentioned along with Price

  • * Discounts

  • * Terms & Conditions

  • * Shipping & Handling

  • * Clear , Unambiguous & Simple Pricing, TCO Total Cost of Ownership


  • Why to communicate

  • * Customers always ask if they are getting the value worth the price they are paying

  • * Need to communicate with trust & authenticity the Total Value they are getting Vs The Price they are paying . Else they will try to find themselves which will NOT be correct.


  • When to Communicate

  • * Product Buying Journey : Introduction Phase à Decision Phase

  • * If Price is very IMP for Customer, then towards the early part of Introduction Phase, Else towards the end when they are evaluating

  • * Key Point is : To make the Customer aware of the VALUE, BEFORE they see the price.


  • Where to Communicate

  • * Depends on point of Sale , Company websites, Distributor’s website, Partner’s Website

  • * If prices changes often or discounts change, then at the same location where product is bought


  • RFP/ Competition

  • Always combine Price and Value discussion in a fair way


  • HARD TRUTH :

  • ABOUT RFP WITH A PRICE RANGE: Sometimes OK to not provide RFP if pricing Tiers doesn’t make sense so as to avoid Potential Loss and being transparent with all existing or new customers .

  • ABOUT COMPETITOR REDUCING PRICE: Sometimes OK to not reduce cost even if Competition reduce and bring back the discussion to Value and the competition is bound to reduce when their product is inferior

  • ABOUT Cost | Value | Price : Many people think COST à PRICE. This is NOT CORRECT and rather it is VALUE à PRICE. Base your PRODUCT PRICE on Customer’s Perceived value & NOT on Your Cost


  • NUTSHELL : WIN-WIN Pricing Strategy that Marketing Team works closely with all to provide value to current/prospective Customers !!!

  • Setting the Right Product Price based on Value,

  • Creating a Value Tier,

  • Communicating the right DMU based on journey stage ,

  • Innovative approach based on Customer Type,

  • Performing FAIR Negotiation ,

  • Enhancing Trust through Free Trials ,

  • Temporary Discount,

  • Unambiguous & Clear Price Model for everyone


  • NOTE : Customers will definitely BUY WHEN Perceived Product Value is HIGH and Perceived Price is LOW. Focus should be always to communicate with authenticity & proof that PERCEIVED VALUE IS EXTREMELY HIGH.

  • More in next post !!!


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