MM-12 9.maintian your price integrity.
What if your product hit the market and response is less enthusiastic? Now you feel intense pressure from every corner to cut the price. But cutting the price sends unintentional message that your offering has less value than you initially communicated. You are telling potential buyer you made a mistake.
IMPORTANCE OF PATIENCE
Cutting prize creates two hazards eroding profit and eroding customer life time value. Your bussiness case should tell how much profit you will sacrifice if you knock the price down for 5%, 10%. And you also did major damage to your brand.
If you do the price cut make sure you ensure that you get something in return if you give in to the price. This would preserve your price integrity.
The firm price strategy had wilted away in a single day, mainly because it was unprepared. [ from local comptition to CEO ]
If you haven’t planned the response this is not the time to overreact. This is the time to stop and think. Showing patience about pricing is more imp. Than fretting over sales number in first month. Think price last.
PREPARE FOR POST LAUNCH:
1. Be patient -Your product is finally in the market and everybody is nervous. You can prepare for the most common reaction to avoid those spontenous mistake. It should be in one of these 4 categories.
- market doesn’t understand your product value, you didn’t explain well.
- your comptition undercut the price.
- your comptition lauch a new product.
- regardless of compition price are below plan.
When European people think the car was ugly so bmw design to faceliftt the car.
2. Go beyond financial KPI and track monthly outcomes - companies usually measure key performance indicators. Typically volume, revenue and profit. You must also track sales, customer matric, operational matric… if sales are keep losing it might be the sales team training problem. You might also learn that your price might not be enough.
3. Do deal deconstruction - you need to dissect the reason why you are winning or loosing the deal. Do cross functional analysis to understand price strategy, product strategy and communication strategy were applied correctly. Do it as learning experince not pointing finger type.
4. Advocate pricing pateince - makes your team come up with 3 non-action pricing action before you approve a price decrease. It can be increase in advertisement. Adding value to the customer. Selling high end product at same price…
5. Before reacting to price change, war-game your comptition countermove - if you play chess without keeping your competitor move you will loose in few moves.
6. High sale can be high class problem - you might have lower the price than you suppose to be. If you did that instead of price hike, do it in small incremental steps.
PRICE WAR, THE ONLY WINNING MOVE IS TO NOT PLAY - understand the reason behind comptetior pricing move, leader must make sure their team knows the unfavourable outcome of price wars.