Category: Marketing & Brand Building

5 Rules for Rolling Out a Successful Local Brand into Global Markets

Posted on by Denyse Drummond-Dunn

I remember reading an article in the Financial Times a few years ago, that challenged companies to search for a new style of marketer.

Now you might be forgiven for thinking that they were speaking about the current need for marketers to be both creative and tech-savvy. But they weren’t. They were referring to the growing demand for marketers who could take successful local brands to global fortune.

After all, thanks to the internet, we live in a global market and the recent pandemic has highlighted this more than ever before, with online shopping booming. The marketer who understands when local specificities make sense and when they don’t, is the one who will succeed in today’s global economy.

 

In this networked world, more and more successful local brands are attempting global roll-outs. What does it take to repeat the success you’ve had at market level when you launch globally? Here are my five rules to fortune:

 

1. Understand the Market and How It’s Changing

This is the basis of any new product launch and applies just as well to global rollouts as it does to local brand developments. Today’s customers are demanding, so find out as much as possible about them. Understand their rational needs but also their emotional desires, even if they don’t openly articulate them.

For global rollouts, additional information is required, including a comparison of the similarities and differences between the customers in the local and future markets. This is where trend following is of particular use, even if you haven’t (yet?) developed plausible future scenarios, as I recommend here.

 

Let’s look at some of the latest trends which are growing across regions today.

  • Conscious consumerism: Consumers have become much more thoughtful about what and where they purchase.  They support companies that demonstrate the same values that they have and brands are tapping into this trend with campaigns showing their position on various topics. Check out these examples of latest campaigns:
  • I want it now! Consumers and shoppers want information – and their purchases too! – where and when they need it. This has been the case for years. But now they expect to get near-instantaneous answers to all their questions, sometimes using visual search to identify and buy whatever they see, wherever they see it. Ikea’s Place App offers shoppers the possibility to snap an article they like and then see it in their home environment. Ikea also offers a visual search function for shoppers to identify an item seen in a magazine or real life, and then find similar ones. Dulux’s Paint Colour Visualizer offers shoppers a similar service; you can try out paint colours virtually in your home to see how it will look with your furnishings before you purchase it.
  • Personalised Experiences. Despite the desire for data privacy control, consumers are ready to provide their information in exchange for a better, highly personalised experience. ZozoSuit is one example
… Click to continue reading

You’re Not Competing In The Category You Think You Are! (The 5 Steps to Category Identification)

Posted on by Denyse Drummond-Dunn

The first step of any business is to identify the category in which they are competing. This may surprise you, but you’d be amazed just how many brands are not in the category they think they are. When was the last time you checked how your customers saw you?

Just think about the consequences of an incorrect attribution; you would be concentrating on competitors that your customers never compare you with! And you would waste resources defending yourself against the wrong brands. Talk about squandering valuable resources! That’s why I decided to dedicate a whole post to this important topic.

But before I get started, I suggest you first read the post (Customer Centricity is Today’s Business Disruptor, Insights its Foundation) as background information. In it you’ll discover the full description of the seven steps of the CATSIGHT™ process, which I know will also be useful to you. In the article, I summarise the very first step of Insight development, that of category definition, like this:

C = Category

Whenever you want to develop an insight, the first task is to decide on the category you want to study. This may seem obvious to you, but in many cases, it isn’t as clear as you might have thought.

For instance, suppose you are planning on launching a new fruit-flavoured soft drink. You may think that you are competing with other juices or perhaps other soft drinks. But rather than just assuming the category in which you are competing, I highly recommend that you check; you may be very surprised.

Identify the category by zooming in

In working with one client who was in this exact situation, we actually found that their main competitor was an energy drink!

The reason for this was because this category is seen as being for lively, energetic, fun-loving people who need a boost. Whether this comes from the caffeine of an energy drink, or from the added vitamins and minerals of real fruit juices, which was my client’s offer, it didn’t seem to matter.
If we’d only looked at other fruit-flavoured soft drinks, we would have missed a whole – and much larger – segment of potential category consumers. By starting our analysis as wide as possible by looking at all beverages, and then slowly zooming in as we learnt more, we were quickly able to discover this perhaps surprising positioning for the new drink.
This shows the power of taking the consumers’ perspective, especially when segmenting a market. But more about that in a moment. 
The above example is a great start. But so many clients ask me to help them with their own category definitions, that I decided to detail the five most important steps in defining your category, so that you can do it for yourself for each of your brands and products.

Step 1. What is the category definition you are currently using? 

In any process, we should always start by identifying where we are today. In the case of your category definition, it should be the … Click to continue reading

How People Recognise Brands: I Can Guarantee It’s Not What You’re Thinking!

Posted on by Denyse Drummond-Dunn

How do you think people recognise brands? And yours in particular? Is it by its logo, its colour, its pack, its jingle? Well, you may be surprised to learn these are all only pieces of the puzzle. A brand is a combination of elements, that together make it recognisable. But consistency and compatibility are often the two missing parts that are most often forgotten in building a brand.

Before I get started, I would like to suggest that you read a highly popular post on the topic of brand image here on C3Centricity, if you missed it before. It’s called “What Every Marketer Needs to Know about Brand Image, Equity, Personality & Archetypes” and will give you some great background information.

It covers the topic of brand image metrics in quite some depth, so is a great primer. But I feel that there is so much more to brand recognition that needs to be considered, than the elements that I mentioned in that post.

For example, more and more brands today additionally rely on a face, a voice, an aroma, a unique packaging style, a slogan or a sound that immediately identifies them. And when they do, their brand image gains in depth as well as emotional engagement.

In fact I believe that brands that lack connection with their customers are missing these powerful additions. They rely on mere basics to build their brand’s image, but they are no longer sufficient in today’s online -dare I say virtual? – world.

So here is my very personal perspective on some of the best examples in each of the additional areas I just mentioned. Feel free to add your own in the comments.

FACE

Progressive’s Flo and Dr Rick

Some of the faces which represent brands are of celebrities, while others are of unknown people who become celebrities thanks to the brand’s advertising.

One of the first faces I think of for a brand is Flo from Progressive. She won the hearts of Americans, ever since she was first introduced in 2008, with her helpful but quirky discussions with potential customers.

Flo made insurance less confusing and more friendly through her “girl next door” looks and sparky attitude.

In 2012, an animated box was added to their campaign concepts, to represent the company’s products in what was hoped to be a more fun and young-spirited way. Apparently, the vast number of ads with Flo – over 100 – had resulted in a “love her or hate her” relationship, but the box didn’t have the success of Flo.

About five years ago Progressive finally found the answer to attracting younger adults, coming out in 2017 with the “Group session” ads, one of which you can watch below. These were later morphed into self-help sessions with a group leader called Rick, who comes back in 2021 as Dr Rick (see more below). 

Dr Rick claimed to help the younger adult target group Progressive wanted to attract by claiming to help them from becoming … Click to continue reading

The Risks of Not Knowing All 12 Essential Elements of Your Target Customer

Posted on by Denyse Drummond-Dunn

I think it’s pretty clear to everyone in business that NOT knowing your target customer costs a lot – sometimes the business itself! (Think Kodak, Nokia, Borders)

So let me ask you this; how well do you really know your own target customers? Are they men, women, younger, older, Fortune 100 companies, local businesses? If you can at least answer that, then you have the basics, but how much more should you know about them?

Well I can help you there, with these 12 essential elements of a customer persona or avatar. 

 

 

Background

I was recently working with a local service provider that was looking to improve their online presence. They were keen to have more impact on social media and had asked for advice about the best platforms, optimal frequency of publishing and possible content ideas.

They are a new client for me, so I think they were a little surprised when I didn’t get straight into the “sexy” topic of social media. Instead, I started by taking them through the basics of target customer identification. Lucky for them that I did!

When we had finished the exercise, we had actually found five different targets for them to address, rather than just the two they had been addressing until now. This clearly would have an impact on both where, what and how they communicated online.

It is for this reason that I always recommend that every brand and business completes a target persona and regularly updates it every time they learn something new about their customers. I also encourage you to keep it handy, ideally always visible on or around your desk. That way you will always be thinking customer first whenever you are working on a new project.

So let’s imagine that we’re having our first meeting together and I’m asking a few (well 12 actually!) questions about your customers. How many can you immediately answer?

 

The 12 Essential Elements of a Target Customer Persona

C3Centricity has designed a simple template that helps clients have all the essential information about their customers in one place, summarised on one page. It’s called the 4W™ Persona Template; if you haven’t already done so, you can download it, together with a detailed workbook explaining exactly how to complete it. Just click on the image below.

I would highly recommend you download it right now, before continuing to read, so that you can follow along with the one-pager in front of you.

 

Here are the 12 essential elements you need to have at hand in order to complete the template:

1. WHO – DEMOGRAPHICS: This is usually a “no-brainer” and is how most organisations describe their customers. However it’s not really original and definitely not competitive, although they are an essential foundation.

But there is so much more you should and absolutely must know about your customers, so read on.

2. WHAT THEY USE: Whether you are offering a product or providing a service, you … Click to continue reading

13 Most Inspiring Marketing Quotes and Questions to Live By in 2022

Posted on by Denyse Drummond-Dunn

Did you know that using marketing quotes can improve your plans? Do you have a plan you are following that will (hopefully) enable you to reach your goals?

To meet our objectives, we often look to make changes, large or small, in our organisation. At times like these, I find it useful to motivate with inspiring marketing quotes from people much wiser than I am. If you are looking for ways to motivate and inspire your team, then I am sure you will enjoy these.

This is my selection of great quotes from some of the best marketers around, together with a relevant question to ask yourself for each. If your favourite quote is not included, then please add it to the comments below the post.

 

#1.  “Strategy and timing are the Himalayas of marketing. Everything else is the Catskills” Al Ries 

This quote refers to the Catskills, a province of the Appalachian Mountains, located in southeastern New York and only 1270m high. It compares them to the Himalayas, a range that includes some of the world’s highest peaks, including Mount Everest (8,849m).

It uses this comparison to suggest that to succeed in marketing you have to afront the highest peaks of strategy and timing, and not be satisfied with scaling simple hills. In other words, be in the right place at the right time with the right offer. Simple!

QUESTION: Are you going to upgrade your marketing this year to meet this lofty challenge?

 

#2.  “In marketing I’ve seen only one strategy that can’t miss – and that is to market to your best customers first, your best prospects second and the rest of the world last” John Romero

I love this quote because it refers to knowing and understanding your customers. The best ones, however you define that, come first and your best prospects come second. If you’d like to know if you’re targeting your very best customers and best prospects, then check out the following post: How Well Do you Know Your Customers? 13 Questions your Boss Expects you to Answer

QUESTION: Do you know who your best customers are and everything you should about them?

 

#3. “Business has only two functions – marketing and innovation”  Milan Kundera

This post shows the often forgotten importance of marketing to business. I know those of you in sales or operations etc will complain, but if customers don’t know and love your brands then you don’t have a business. It really is as simple as that. I also like that innovation is included, because especially today, customers have become so demanding that we need to constantly upgrade our offers to them.

QUESTION: Does your business value marketing? If not, how can you help them to recognise its value?

 

#4. “The wise man doesn’t give the right answers, he poses the right questions” Claude Levi-Strauss

Are you better at asking questions or answering them? Which is more important in your job? Why? A leader doesn’t have all … Click to continue reading

10 Ways to Immediately Improve Your Customer Centricity

Posted on by Denyse Drummond-Dunn

We all know that adopting a customer-first strategy is essential for business growth and profitability. However, customer centricity has become even more important today, as a result of all the changes in our customers’ behaviour following the global covid lockdown. We are now even more impatient and demanding of businesses, and quick to complain publicly when things go wrong, or rather when we are not totally satisfied.

All companies need to put their customers clearly at the heart of their organisation. But I know that many struggle, even in more normal times, to be customer-centric. They just don’t know where to start. Am I right? If you’re in this situation yourself, then this article is for you. In it I share ten simple actions to accelerate your organisation along its path to an improved customer-first strategy.

 

#1 Review & Revise the Description of your Target Audience

Do all your brands have a clear description of their target audience? These days we tend to speak about personas or avatars.

Complete this 4W persona template for customer centricityIs it as complete as it should be? If not, then regular readers will know about and probably use the C3Centricity 4W™ template for storing all this information. You can download it and get the accompanying workbook for free here.

In your avatar, you must include not only your customers’ demographics and consumption / purchasing habits, but also information about where they do these things, what values they have that you can tap into and what emotions motivate them to purchase and use your brand.

 

#2 Assess the Optimum Way of Connecting with Your Customers

Do you know the best way to contact your target customers, as well as their preferred place and time to connect?

Review how you communicate with your customers and what information exchange there is at that time. Is it one-way or two? Are you in a monologue or a dialogue?

Obviously the second is what it should be. You can learn far more about your customers by listening, especially when they are ready to share their information with you.

For an original take on engaging your customers see “You’re missing out on a Free Communication Channel!” (Any guesses what it is?)

#3 Identify the Needs Your Brand is Addressing

Maslow's hierarchy of needsDo you know what needs your customer has and which of them you are tapping into?

They certainly have more than one need, but you must identify and address only one at a time.

If you attempt to address more than one and especially if they are not sequential, your customer may be confused.

Mixed brand messages on what the brand can do for them, will leave your customers perplexed. This will, in turn, reduce the likelihood that they will be convinced your offer can meet their needs and objectives.

Knowing where your brand sits on Maslow’s hierarchy of needs has one additional benefit. It can increase the success of regional and global launches by identifying cultures with similar levels of a specific need.… Click to continue reading

Never Give Up! How to Succeed in Business When Everyone Else is Failing

Posted on by Denyse Drummond-Dunn

We all want to succeed, don’t we? Succeed in business and to succeed in our private lives as well.

I was recently reminded of a famous and inspiring quote from Winston Churchill’s address to Harrow School in the UK back in 1941. It was certainly one of his shortest speeches, but probably also one of his most quoted. He said:

“Never give in, never, never, never, never”

You can read his full speech – which is not much longer! – here.

Hearing this quote got me thinking about failure. Failure in our lives, our businesses, our jobs, our relationships. And more importantly, about how we often fail merely because we give up too quickly. Unfortunately, we’ll never know, but we can do something to avoid failure. We can do a lot!

Now whereas I believe that advising you on your private life is best left to my other platform https://finding-your-happy.com, I do feel sufficiently knowledgeable to speak about your business failures here.

I recently wrote about the 7 reasons most companies fail to adopt a customer-first strategy. They were the conclusion to a post on what a customer-first strategy is, and what it isn’t. If you missed it, then click the link above to read the full article.

If you want to learn more about how to adopt a customer-first strategy, then I’m sure you’ll be interested in checking out my new course called “A Customer-First Strategy for Accelerating Brand Growth.” It is a success roadmap for putting your customers at the heart of your business for faster growth & profitability.

Over the many years of blog posting, I’ve written many posts on numerous topics, including my solutions to failing in countless areas of marketing. I therefore thought it would be useful to share four summaries of the most important articles related to failure in business and innovation in a single post. Let me know what you think.

 

 

How you React to Failure Could Help You Succeed in Business

For this first summary of a post, I’d like to share not a list of solutions but a selection of inspiring quotes on reacting to failure. I think it sets the stage beautifully for the three other summaries to come.

In the full post (which you can read by clicking the above link) you can also find suggested actions for each of them. They will make you realise that there is great opportunity in every failure! So don’t be afraid to fail. Just don’t miss the chance to learn a valuable lesson!

1. “It’s fine to celebrate success but it is more important to heed the lessons of failure” Bill Gates, American Businessman

2. “Failure is not fatal, but failure to change might be” John Wooden, American Coach

3. “By failing to prepare, you are preparing to fail” Benjamin Franklin, American Politician

4. “Failure is simply the opportunity to begin again, this time more intelligently” Henry Ford, American Businessman

5. “The difference between average people and achieving … Click to continue reading

Your Brand has an Image, but Does it Have a Great Personality?

Posted on by Denyse Drummond-Dunn

Your brand is not what you think it is! It’s what your customers think it is; its brand image, personality and value to them.

I was lecturing at Miami University a few years ago on brand image and personality. These topics created a lot of interest and discussion, which they should, being two vital elements of branding. They need to be clear and consistently represented in all brand communications.

If you’re having issues with your own brand in either of these areas, you’ll find the following article both interesting and valuable.

 

Why We Buy Brands

According to Wikipedia, a brand is:

“a set of marketing and communications methods that help to distinguish a company from competition and create a lasting impression in the minds of customers.” 

Although this definition in my opinion, is a little sterile for something as exciting as branding, I do appreciate that it mentions customers. However, for me, a brand is created in both the minds and hearts of its customers.

There has been so much said about the importance of emotions and resonating with the customer, that we shouldn’t forget it. But be honest we often do! And this is where image and personality play vital roles. They are both more or less created in the heart, rather than in the mind of the customer.

We usually buy brands without even knowing why we buy them. We can, of course, provide a clear, reasoned answer if asked, but explanations come from the mind. The heart is what makes us buy.

 

Branding Elements

A brand is made up of a number of components, with which people learn to identify and recognise it. These include its logo, colour, pack, shape, taste, aroma, sounds and feel. There may also be other things that are directly associated with the brand, such as a celebrity, an event or a cause it supports.

A brand needs to have a clear image, personality and equity in the minds of its customers. These come not only from these branding elements but also from the customer’s own personal experience with it.

All these factors must be respected and complementary to build a strong brand with which customers can identify themselves. Therefore, It is vital for marketers to know and understand what their brand means to its customers, not just to their organisation.

 

Brand Image Essentials

A brand is associated with many thoughts and ideas, that we translate into statements or attributes for measurement purposes. These are what current and potential customers think or feel about it. They may have developed from exposure to its communications, as well as from their own personal experiences.

These elements are usually grouped into three types: the rational/functional benefits, the subjective/emotional elements and the cultural/relational factors.

The third group was added by David Armano of Edelman Digital more than 15 years ago. I like his additional idea because the relationships a brand builds with its customers have become vitally important in today’s social-media-dominated world. I have … Click to continue reading

Five Brilliant Ideas to Boost your Insight Development

Posted on by Denyse Drummond-Dunn

Insights are the pot of gold that many businesses dream of but rarely find. Why is that? Are you one of them? If so then I have some practical ideas on how you can get much, much better at insight development.

 

#1. Insights rarely come from a single market research study

Management often thinks that insight is “just another word for market research”. I remember one of my previous CEOs saying exactly that to me just before he addressed the whole market research and insight global team at our annual conference. I’m sure you can imagine what a panic I was in as he walked up to the mike!
Core Strength Training and Three of Its Benefits for Your Back – Canadian Chiropractic Association (CCA) – Association chiropratique canadienne single dumbbell chest press free download pdf owner’s manual for image imtl99000 home gym.
Insights are demanding to develop and are rarely, if ever, developed from a single piece of market research. Each market research project is designed to gather information in order to answer one or more questions. Whilst it may enable a business to make a more informed decision based upon the objectives, insight development is quite a different process.

Insight development involves integrating, analysing and synthesising all the data and information you have about a category or segment user. Then summarising it into knowledge and turning that knowledge into understanding. Only then are you ready to develop an insight.

All brands should have (at least) one insight on which its image, personality and Big Idea (for communications) are built. For example

  • AXE (Lynx in UK): (young) men want to attract as many beautiful and sexy women as possible. This is one of their newer ads, where the seduction is a little less in your face and more subtle – but still there.

 

  • Haribo Starmix: There’s a child inside every adult. This “Kid’s Voices” campaign has been running for years and manages to surprise and delight with each new episode. Which is your favourite? Please add a comment below.

 

  • Dulux sample paint pots: I love to decorate my home, but I don’t want to look stupid by choosing the wrong colour. Although these are now a standard offer for many paint brands, Dulux were the first to understand the problem facing potential home decorators.

Dulux sample pot example of insight development

Insight development will provide the basis on which you will define the actions that are needed to change the attitudes and / or behaviour of your target audience. It also provides a solid framework on which to build your Big Idea for your communications’ strategy.

 

So there you have them, the five ideas and numerous examples that will help you to develop better insights more easily.

Although you probably already have your own process for creating them, I know from experience how hard it can be to find insights from all the information you gather.

I hope this short article has assisted you in your search for those “golden nuggets”. Do … Click to continue reading

The 23 Keys to Creating Raving Fans Part 2

Posted on by Alan Hale

This is the second part of “The 23 Keys to Creating Raving Fans” post by Alan Hale from CMG (Consight™ Marketing Group) in Chicago. Don’t forget that you can download the full white paper using the link at the bottom of this post.

In addition to using NPS, we also like to use other diagnostic questions to see how we can improve. In general, it is critical to get the importance level of each function as well as our performance score. If the customer is willing to discuss the competition, the insight will be valuable in how you compare to the competition as well as to the best in class vendor. They also will give you specific actions to improve.

 

The Customer Loyalty Wheel™

The following is how we look at customer satisfaction, loyalty and creating and Raving Fans.

It all begins with the trust and alignment and ends in creating Raving Fans.

 

8. A few criteria are explained in further detail.

Trust. If the supplier continually breaks promises they have made, there is no trust. The relationship will not deepen, and in fact might eventually be terminated.

Quality. Quality is an ante to play the game. If your product does not perform according to your specifications or breaks down too often, the account will find another supplier. We had a client who moved their production overseas to reduce costs and increase margins. The quality was very poor and the product frequently broke. The client could not understand why they were losing business!

Risk. Pre-sale, it is important to reduce or minimize the risk factor so the customer is more likely to buy. When you buy the wrong toothpaste at home, your family might be disappointed. When you buy the wrong CRM (Customer Relationship Management) or ERP (Enterprise Resource Planning) system at work, you could be fired. When you sell a product or service new to the market, find out how to minimize risk. This could be having someone on site, providing results from an independent lab, or showing a list of positive testimonials from well- known companies.

Be easy to do business with. Don’t be so difficult to deal with. Exchange the defective product, have customer service solve the problem, issue accurate invoices. Train customer service, give them the power to make decisions up to a certain level. Everything being equal, a customer would rather give business to someone who is easy to do business with. Conversely, if you are 10% of their purchases and 50% of their problems, expect to be terminated. Don’t be a PITA (a pain in the arse). Everyone has problems. Make it easy to resolve. There is research which states customers are more satisfied when a vendor heroically solves a problem versus having no problem at all. We recommend you do not try to game the system i.e. by making artificial problems you know you can heroically resolve.

Be responsive and proactive in communications. We will give … Click to continue reading

How to Make a Great Customer-Centric Website Design

Posted on by Denyse Drummond-Dunn

Website design is a variable that changes as fast, if not faster than we can get our latest creation published!

In just the past twelve months, digital adoption has expanded five to ten times faster than was expected, thanks to the pandemic and lockdowns. This, together with the increased economic uncertainty and loss of predictability, has driven customers online in ever greater numbers.

This migration has further shifted the balance of power to the customer, who now has far more control of their relationship with brands. As if this weren’t challenging enough for marketing, customers have also become less loyal and more open to new experiences.  

That’s why it’s important for a brand to always be improving their online presence. Not the “rearranging the deckchairs on the Titanic” type of superficial updates, but changes that make the experience better for current and potential customers. What are they? Read on to find out.

What Google wants

What Google wants, Google gets. Since it launched its core web vitals last year, some websites have dramatically increased their search result rankings (Like C3Centricity did!), while others have disappeared off the front page, and the following pages too!

Google announced the introduction of Core Web Vitals last year as a set of metrics related to speed, responsiveness and visual stability, the three most important ones for a good customer experience. These are:

  • Largest Contentful Paint: This is the time it takes for a page’s main content to load. An ideal LCP measurement is 2.5 seconds or faster.
  • First Input Delay: The time it takes for a page to become interactive. An ideal measurement is less than 100 ms.
  • Cumulative Layout Shift: The amount of unexpected layout shift of visual page content. An ideal measurement is less than 0.1.

Google said it would give six months notice before introducing these metrics, to give everyone time to adapt and improve their websites. I haven’t yet seen an announcement but I have seen changes in my rankings (for the better) so I am wondering if they have in fact already been introduced. Do you know if they have?

Taking the perspective of the customer

One of the most frequent reasons why websites fail is because the creator has not taken the perspective of the visitor.

The content has been designed by an organisation with the objective of distributing information that it wants to share with its current and potential customers. Not what they believe their customers might need or desire. And even less the differences between the needs of current and potential customers. Even when the customer is considered, it usually comes as an afterthought, often as a review the day before its launch!

Customer-centric web designs use customer input all along their development, not as a late-stage verification that customers can use it, which is what many companies measure. (if at all!) There are so many opportunities to see how customers are using our websites that there is no excuse for … Click to continue reading

24 Factors to Consider in Pricing your Product, Service or Solution.

Posted on by Alan Hale

We have a treat for you today. It’s a guest post from the highly respected global expert on customer centricity, Alan Hale of Chicago.

He writes about the importance of getting pricing right and generously shares twenty-four (!) factors to consider when pricing your product, service or solution.

Over the past several decades, I have managed over 250 projects, and am currently serving as the President of Consight Marketing Group. During that time,  I have noticed that some of these clients experienced customer erosion or profit sub-optimization due to poor pricing practices. The following article discusses some of the issues seen, as well as other pricing challenges described in other marketing journals and textbooks.

  1. Pricing needs to cover your costs. Pricing needs to cover COGS (cost of goods sold), and contribute towards an allocation of fixed costs like rent, utilities as well as profit. Selling a high volume of products does not guarantee a profit. “We will make it up in volume” does not make sense.
  1. It is related to capacity, the economic supply and demand. If you have strained capacity like oil pipelines, prices are substantially raised. Conversely, if a contractor has no backlog, they might be willing to discount prices. For you econ majors, it is the intersection of the Marginal Revenue and Marginal Cost curves.
  1. Price according to the Market Lifecycle. Early adopters in the growth stage pay more than laggards in a mature or declining market. A major computer manufacturer used to price their line of PCs 10% higher than the competition due to their brand, perceived status and support. As PCs became more commoditized, the pricing premium came down. If you have a well-known brand name with a high amount of loyalty, you can charge a premium. If it is a mature/commodity item it is difficult to charge more. Would you pay 50 cents more for a pack of nails on the retail shelf?
  2. Price insensitivity is positively correlated with ROI. Cost is not as important in the business arena if there is a high ROI. Look at ERP (Enterprise Resource Planning) systems that can cost millions upfront over the first few years with consultants and implementation. But it saves the organization tens of millions over many years.
  3. Pricing depends on the amount of the cost of the components versus the total cost of the product. Bottling companies fill bottles with cola or other liquids. These polypropylene bottles are significant to the costs, and contract prices are negotiated heavily every year or contract period.
  1. Pricing is dependent on selling to the MRO (maintenance repair and operations) channel or OEM (original equipment manufacturer). Because of volume OEM’s can demand much lower pricing. Car manufacturers can buy tires at a much lower price than the customer off the street for example.
  1. Pricing is related to value. I have been privy to many research and consulting proposals. Some companies do a cost-plus calculation, the labour will cost so many hours, at an average
… Click to continue reading

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