Priced to Sell
Whether your product occupies the lowest-priced rack or the highest-priced stratosphere, the number on the tag says a lot about your brand. It can even be part of your branding--your company sells the cheapest wine or the most expensive shoes, for example--and you market yourself based on that fact. But how do you go about marketing your company as, say, the $10 superstar?
First, choose your price structure with as much care as you write a business plan, says Robert Manasier, brand director for In Focus Brands, a branded business development company in Stony Point, New York. "You can use [price] to enhance or create the brand," he says. Still, make sure you take production costs into account to ensure profitability.
On the flip side, you can hurt your brand if you don't know where your product fits in the marketplace, or if you leave no flexibility to change the price to fit the market. Also, if your marketing is based on being the cheapest widget around, the minute a competitor sells its product slightly below your price, you've lost your one main selling point. "It's very hard to establish customer loyalty that way," says Manasier.
Adding ancillary product lines is key to keeping your product and company fresh, says Manasier, as is creating a longer sales cycle--not just marketing your product to be picked up once at the checkout counter, but repeatedly through different offerings.
Delivering a set amount of value is the strategy used by Mary Ann Schultz, founder of Bounce Greetings, a Chicago manufacturer of greetings printed on rubber play balls. Marketing her product as the $10 greeting, Schultz, 41, was adamant that the price not be $9.99, as it tended to evoke the drugstore shopping experience. She says $10 was the perfect price point because people could easily part with a $10 bill for her product (which includes postage costs). "We've never had a complaint on price," says Schultz. In fact, during the holidays, she considered discounting the price, but an advisor warned her against it. Instead, he suggested adding ancillary products to increase sales, leaving her brand identity as the $10 greeting intact. She took the advice, and her 2005 sales (her first full year of business) are estimated in the $75,000 range.