What price is right?

Pascal Bianchi — Sun, 22 Feb 2009 09:38:00 +0000

The pricing war began a long time ago.

Today, using promos such as “buy two get one free”, “3 for 2”, “2 for the price of one” and all the other imaginable schemes, distributors are obsessed with gaining market share from their neighbour by offering lower prices. From sale to price reduction, they have only one desire: to protect their margins by keeping their own clients at least, and if possible winning some over from their competitors. A veritable balancing act that is also subject to the law of the marketplace.

On the other side of the fence, the industrialist is scratching his head: “How can I accurately evaluate the price at which I should sell this new product?” All the more so as he often has several brands and dozens of references in a single aisle and can’t let his “new” product be shot down by another one. It must also be correctly positioned among the ubiquitous “private label” products, and the competing products of other brands or “signature” products. He must justify his price in relation to the ”best price” products that are increasingly capturing consumer interest.

So many parameters that require study, simulation, possible testing and a greater deployment effort as prices become increasingly volatile! Product pricing or “price positioning” has become an art today, requiring lots of time, energy and money, if traditional methods are used, to have the best chance of pinpointing the “right price”.

In any case, the process is necessary to ensure profitability while remaining attractive to customers. This positioning is particularly important for highly competitive products. Every penny earned without losing consumer trust is of capital importance. Every penny or client lost can mean economic disaster. And advertising can’t do it all. The most attractive, best marketed product will still not sell if its price positioning is not managed correctly.

A virtual aid for “price positioning”

In this context, a tool like ActiSKU can effectively assist an industrial brand in its research. It can do so quickly, flexibly, at low cost, and with excellent chances that the virtual experience will reflect reality.

By positioning the 3D-product model – whether new or remarketed – among competing products using virtual planograms, panellists’ behaviour can be studied without risk, as it all takes place in a virtual world, but a world in which real consumers and panellists express themselves. The industrialist can very quickly determine how far is too far, whether the price is the only attractive feature, and measure the effects of particular prices with respect to other brand products, etc.

ActiSKU could also be used more actively, to test for the “right price” for sale of large volumes during large-scale commercial operations. The “nature of the consumer” (examined in the small article referenced below) is a determining factor in the purchase of a product. Age, socio-professional status and other factors can all be studied very simply and effectively using ActiSKU, which was designed to do just that.

I also suggest reading a small pricing article that stimulated my own personal reflection: link to the article

ActiSKU - Tag - Price Positioning

What price is right?

The pricing war began a long time ago.