The Economist: Marketing by Forsyth Patrick

Author:Forsyth, Patrick [Forsyth, Patrick]
Language: eng
Format: epub
Tags: Business, Business Communication
Publisher: Profile Books
Published: 2010-09-17T04:00:00+00:00

Accommodating products and price

As planning continues and time passes, there are broad issues to be considered, such as product life-cycle and positioning. Specifically, companies must recognise that products need to be changed or updated and must keep pace with the market. Price levels must also be monitored for profitability and competitiveness.

Important considerations include the following:

Products or services may remain the same in principle as they were years ago, but they will have to change to meet changing customer needs (as Swiss watchmaker Swatch does by regularly introducing new designs).

New products or services may have to be developed both to meet new customer needs and to keep out competitors.

There may well be opportunities to offer a range of differently priced variants for different customers and different situations (as Japanese watchmaker Seiko does with its sub-brand Avia).

As a harsh economic climate forces corporate customers to seek productivity improvements in all functions of their business, so they become more demanding, but these pressures may also produce new opportunities. For example, a retailer may seek a lower price, but respond well to a supplier that can act to help increase sales, perhaps through merchandising support.

On pricing policy ask:

How aware are customers of price – the actual levels or such measures as hourly rates (for example, for car servicing)?

How do customers perceive price? Do they view, for example, a higher price as indicating higher quality or do they view price as a commodity factor with no differentiation between brands?

Are there “price barriers” in customers’ minds for what they are being offered? For example, is $10 or $100 the limit of what they will pay for a particular product?

How far can price be differentiated because of the perceived and accepted reputation that exists?

Price is crucial in the marketing mix and often receives too little attention because the decision made is simply to keep in line with the competition or to work essentially on a cost-plus basis. Price should reflect a company’s overall strategy but permit some tactical flexibility to move up or down depending on the threat or opportunity.

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