Quick Links the 2010 Weird & Wacky Holiday Marketing Guide
|
Now Available!
|
Featured Article
|
|
How Do You Put a Price on That?
|
|
|
Quote of the Month
| "The secret of getting ahead is getting started. The secret of
getting started is breaking your complex, overwhelming tasks into small, manageable
tasks and then starting on the first one." ~ Mark Twain
|
Mission Statement
|
Words of Wisdom E-newsletter will attempt to always deliver sage advice and tidbits to assist you in your business and personal growth & development. Our purpose is simple; support, encourage and supply. In an attempt to provide you with quality content and I welcome your feedback.
As always any tips you would like to share would be welcome additions. Email me at [email protected] with any comments, articles, or tips that you would like to see considered for inclusion.
If you would like to have a featured advertisement on this newsletter contact me as instructed above with 'AD:' in the subject line. You are always welcome to visit and leave your comments on Words of Wisdom Blog at http://gmarks.wordpress.com/.
|
On A Personal Note
|
Welcome back to Words of Wisdom Ezine. Last month, after I wrote and sent you your ezine I received this month's Feature Article on the same lines. So, I thought I would share it in its entirety in hopes that you would realize the importance of pricing your products and services accurately.
Just before you receive this newsletter I will be heading back to the USA from my annual Swiss adventure. Saddened that is now a part of my past and yet elated that this is an annual event. Therefore, I look forward to the next trip.
Maybe next year one of you can take the trip of a lifetime and visit somewhere you always wanted to go. Where would that be? I would love to hear about your dream vacation.
I hope you find the information, as always, informative and useful. It is for you and the benefit of your company that I continue to offer this Words of Wisdom Ezine.
Wishing you a God filled day! Ginger Marks
|
Start Generating New Profits and Growth Tomorrow Morning by
Rafi Mohammed
|
Pricing is one of the most powerful - yet
underutilized - strategies available to businesses.
A McKinsey &
Company study of the Global 1200 found that if companies increased
prices by just 1%, and demand remained constant, on average operating
profits would increase by 11%. Using a 1% increase in price, some
companies would see even more growth in percentage of profit: Sears,
155%; McKesson, 100%, Tyson, 81%, Land O'Lakes, 58%, Whirlpool, 35%.
Just as important, price is a key attribute that consumers consider
before making a purchase.
The following 10 pricing tips can reap
higher profits, generate growth, and better serve customers by
providing options.
Stop marking up costs. The most common
mistake in pricing involves setting prices by marking up costs ("I need
a 30% margin"). While easy to implement, these "cost-plus" prices bear
absolutely no relation to the amount that consumers are willing to pay.
As a result, profits are left on the table daily.
Set prices
that capture value. Manhattan street vendors understand the
principle of value-based pricing. The moment that it looks like it will
rain, they raise their umbrella prices. This hike has nothing to do with
costs; instead it's all about capturing the increased value that
customers place on a safe haven from rain. The right way to set prices
involves capturing the value that customers place on a product by
thinking like a customer. Customers evaluate a product and its next best
alternative(s) and then ask themselves, "Are the extra bells and
whistles worth the price premium (organic vs. regular) or does the
discount stripped down model make sense (private label vs. brand name)."
They choose the product that provides the best deal (price vs.
attributes).
Create a value statement. Every company
should have a value statement that clearly articulates why customers
should purchase their product over competitors' offerings. Be specific
in listing reasons. This is not a time to be modest. This statement will
boost the confidence of your front-line so they can look customers
squarely in the eye and say, "I know that you have options, but here are
the reasons why you should buy our product."
Reinforce to
employees that it is okay to earn high profits. I've found that many
employees are uncomfortable setting prices above what they consider to
be "fair" and are quick to offer unnecessary discounts. It is fair to
charge "what the market will bear" prices to compensate for the hard
work and financial risk necessary to bring products to market. It is
also important to reinforce the truism that most customers are not
loyal.If a new product offers a better value (more attributes and/or
cheaper price), many will defect.
Realize that a discount
today doesn't guarantee a premium tomorrow. Many people believe that
offering a discount as an incentive to trial a product will lead to
future full price purchases. In my experience, this rarely works out.
Offering periodic discounts serves price sensitive customers (which is a
great strategy) but often devalues a product in customers' minds. This
devaluation can impede future full price purchases.
Understand
that customers have different pricing needs. In virtually every
facet of business (product development, marketing, distribution),
companies develop strategies based on the truism that customers differ
from each other. However, when it comes to pricing, many companies
behave as though their customers are identical by setting just one price
for each product. The key to developing a comprehensive pricing
strategy involves embracing (and profiting from) the fact that
customers' pricing needs differ in three primary ways: pricing plans,
product preferences, and product valuations. Pick-a-plan, versioning,
and differential pricing tactics serve these diverse needs.
Provide
pick-a-plan options. Customers are often interested in a product
but refrain from purchasing simply because the pricing plan does not
work for them. While some want to purchase outright, others may prefer a
selling strategy such as rent, lease, prepay, or all-you-can-eat. A
pick-a-plan strategy activates these dormant customers. New pricing
plans attract customers by providing ownership options, mitigating
uncertain value, offering price assurance, and overcoming financial
constraints.
Offer product versions. One of the easiest
ways to enhance profits and better serve customers is to offer good,
better, and best versions. These options allow customers to choose how
much to pay for a product. Many gourmet restaurants offer early-bird,
regular, and chef's-table options. Price sensitive gourmands come for
the early-bird specials while well-heeled diners willingly pay an extra
$50 to sit at the chef's table.
Implement differential pricing. For any product, some
customers are willing to pay more than others. Differential pricing
involves offering tactics that identify and offer discounts to price
sensitive customers by using hurdles, customer characteristics, selling
characteristics, and selling strategy tactics. For example, customers
who look out for, cut out, organize, carry, and then redeem coupons are
demonstrating (jumping a hurdle) that low prices are important to them.
Use
pricing tactics to complete your customer puzzle. Companies should
think of their potential customer base as a giant jigsaw puzzle. Each
new pricing tactic adds another customer segment piece to the puzzle.
Normal Normans buy at full price (value-based price), Noncommittal
Nancys come for leases (pricing plans), High-end Harrys buy the
top-of-the-line (versions), and Discount Davids are added by offering
10% off on Tuesday promotions (differential pricing). Starting with a
value-based price and employing pick-a-plan, versioning, and
differential pricing tactics add the pricing related segments necessary
to complete a company's potential customer puzzle. Offering consumers
pricing choices generates growth and increases profits.
Since
pricing is an underutilized strategy, it is fertile ground for new
profits. The beauty of focusing on pricing is that many concepts are
straightforward to implement and can start producing profits almost
immediately.
What better pricing windfall can your company
start reaping tomorrow morning?
About the Author: Rafi Mohammed, Ph.D is the author of The
1% Windfall: How Successful Companies Use Price to Profit and Grow
(HarperBusiness). He has been working on pricing issues for the last 20
years. Rafi Mohammed is the founder of Culture of Profit LLC, a
Cambridge, Massachusetts-based company that consults with businesses to
help develop and improve their pricing strategy. He also holds the title
of Batten Fellow at the University of Virginia's Darden Graduate School
of Business (in residence, Spring 2001). A frequent commentator on
pricing issues to the print media, Rafi has also made prime time
appearances on CNBC as an expert pricing commentator. He is an
economics graduate of Boston University, the London School of Economics
& Political Science, and Cornell University (Ph.D.).
|
Tip of the Month
|
Stop File Pile-up
Minimize duplicates of documents. Retain only the final version of letters and proposals. After all, the
old versions primarily contained material you decided not to use! Keep this original in a plastic sleeve
to prevent damage or loss from computer crashes and one copy on your hard drive for easy access.
Until next month... |
Subscriber Feedback
|
Great quote! It definitely wise
to remember that we can't sow and reap the very same day.
Mirdza www.AbundantEnergyHealthclub.com Health. Fitness. Energy.
I hope you are learning much and implementing the lessons learned in the WOW Ezine. If you enjoy it, why not tell your friends how to get their very own copy? I would love to hear from you how WOW Ezine has affected your business and you.
Sending in your comments guarantees you free marketing! Get your business' URL listing absolutely gratis by sending in your comments today. If you have comments or questions that you would like to see included, or even a suggestion for a topic, please contact me at [email protected] with the word 'Feedback' in the subject line.
|
Classified Ads
|
Now Available in PDF, MobiPocket & Kindle!
The 2010 Weird & Wacky Holiday Marketing Guide, Your business marketing calendar of ideas.
Available on MobiPocket, Amazon & Lulu for $19.97 http://www.HolidayMarketingGuide.com
=====
Stay in touch with your customers throughout the year with real greeting cards Consider how much greater of an impact a custom card branded with your logo and message could be. Contact DocUmeant Designs to create the card cover that will help you look professional and smart.
For more information check us out online at http://www.DocUmeantDesigns.com or email us at [email protected]
New customers, mention you saw this ad in the WOW ezine and receive 10% off your first order.
=====
Pre-order your copy of the Third Edition, Presentational Skills for the Next Generation, by Ginger Marks. Available in both print and eBook format. This third edition is filled with even more presentational tips packed between the covers and still available for $19.95.
Coming soon in both print and digital versions to Amazon. To pre-order your digital only version email me at [email protected] today.
|
|
Thank you for spending a few minutes with me. I welcome your feedback and support. Until next month.
Sincerely,
Ginger Marks
DocUmeant Designs
|
|
|