Marketers should reconsider pricing and think behaviourallyby
Prices are the key marketing variable to consider in a tight economy but just as marketers are readily embracing behavioural targeting in their digital channels, they need to use behavioural principles to set price structure in a customer-centric way, says Rod Street.
1. A well administered price process
Recheck your current process. A large number of prices below ‘floor’ guides, discrepancies on account profitability and significant invoice disputes are all a good guide to process problems.
Understanding how customers view ‘prices’ is vital to identify a win-win approach to change. Detailed customer interviews, working with selected customers to understand how your product and service elements impact their business and picking the brains of your most knowledgeable customer-facing staff are the foundations for a customer centric structure.
A good understanding of costs and customer responsiveness is needed to change price structures. The pricing elements and their levels can have a huge impact on profit and it is vital to model scenarios, sensitivities and transition. But this needs good data and insight.
In making the change, good communication both internally and with customers is another foundation. Explaining, co-opting and negotiating is critical, as is choosing the sequence for engaging segments. In almost every case, it becomes important to tackle the difficult areas first or risk too many challenges to your profit position.