We all understand that there is a direct correlation between price and brand value. If you see two identical items in a store but one is more expensive than the other, the first thing we do is look for the reasoning behind it, and a lot of the time there are differences between the products. Is it quality? Why is the other more valuable?
That doesn’t mean the more expensive one always wins the sale. There are plenty of factors that go into a purchase decision, and price is only one of them. If you price a product much higher than a competitor’s, you better be bringing more to the table than your less expensive counterpart. Whether you’re a retailer or manufacturer, you have to understand that your price is going to have a direct effect on your brand value.
You have to work to earn whatever price you apply to your brand. Your brand should justify the price, not vice versa. You can’t just hold a high price because you say you’re a “luxury” brand. If you want to be a “luxury” brand, you have to have luxurious offerings. Whether that comes in the form of exceptional customer service or high-quality materials, your brand should reflect the price you apply to your products.
Step Up Your Customer Service Game
If you’re a manufacturer, you still need to be involved in the buying process. Offer channels of communication in case someone has a concern with your specific product. The easiest way to do this is through social media. Promoting your brand on social media is a great way for consumers to communicate their concerns about your products, and the easiest way for you to acknowledge and respond to those compliments and complaints. Offering manufacturer warranties is another way to get involved. Cut out the retailer middle-man and fix problems head-on.
Use Competitive Prices as Benchmarks
Figuring out how you’re going to price your products can be difficult, and that’s why it’s a good idea to look at the competition as a benchmark. Do you want to be priced above or below them? It all depends on how you want to be perceived as a brand. If you want to appear to be a value-oriented shopping destination, price below. But it never hurts to try pricing above. Testing your prices can help you find the optimal price, and oftentimes it’s higher than your competitors’.
Your initial price can shape your future brand value. Market penetration pricing requires you to price significantly higher than the competition and then dropping it as your product matures. This is good if you know your product is overall better in terms of quality. If you want your price to draw attention, market skimming might be better. This involves introducing the product at a low price, and then increasing it with time as it gains popularity.
What it Means to Have the Right Price
To have the right price, you have to offer a corresponding brand experience. If you’re higher than the competition, you have to find points of differentiation. If your price is right, and you sell to the right retailer, you won’t’ have to worry about things like MAP violations. If you’re charging a higher price, sell to resellers who are known for their customer service skills. If your product is better quality, the consumer is going to choose you over another brand.
Don’t Trip Up
If you’re going to take the luxury route, do make sure your experience goes off without a hitch. As I was doing a comparison between the Forever 21 and Brooks Brothers shopping experience, I encountered a bit of a blunder on the Brooks Brothers website. As I added a product to my bag to advance to checkout, I was greeted with a good old fashioned 404 page.
While I understand Brooks Brothers is a luxury brand, my opinion on their eCommerce presence is now a bit different. If you’ve ever stepped foot in one of their retail stores, you know their sales associates are incredibly attentive and cater to your needs. Even though this is a small blunder, it’s definitely an unexpected one to come from a luxury brand. So please be sure to deliver on your experience, especially if you’re not as well established as Brooks Brothers.
Forever 21 is absolutely looking like the winner when it comes to eCommerce. I easily chose an item and was swiftly taken to a neat, concise screen that offers complimentary products, live chat, and even the extra amount I’d have to pay to to qualify for free shipping. Plus, their price is literally a third of what I would be paying at Brooks Brothers.
Price and brand value are intertwined. The relationship between the two is remarkably substantial, so make sure your brand can meet the challenges a higher price point brings. And even if you sell at a lower price point, that does not act as a justification to throw your shopping experience priorities to the backseat. Always offer a seamless shopping experience, no matter how your brand is positioned.
Contributing Writer: Brian Smyth