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Plan to Succeed With Strategic Marketing
By: Wendy Lewis
Posted: August 1, 2011, from the August 2011 issue of Skin Inc. magazine.
page 3 of 5
Your pricing strategy is mostly influenced by your requirement for profit and long-term objectives. If the offering has sufficient differentiation to justify a higher price and the goal is to generate revenue quickly, consider setting your prices on the high side. However, if the ultimate mission is rapid market penetration in order to exert control over the market, consider setting your prices low to attract clients early. If the goal is to roll out your product or service into the market in a big way, consider featuring more generous introductory discounts, time-sensitive promotions and media outreach to build excitement and incentivize clients. Most spas fall somewhere in the middle—they may not be the market leader, but do not wish to price their services and products so low that it impacts profitability. In this case, the most reasonable strategy is to price at a level comparable to that of competitors.
Decisions about pricing, promotion and distribution will be heavily influenced by key factors in the industry and marketplace. These factors should be analyzed to create an effective pricing strategy, and then regularly monitored for changes. It is important to remember that prices can always be reduced if clients are not buying; however, it is more difficult to raise prices once clients get used to deals and discounts.
Also, most consumers will not want to hear from you too often. If you are bombarding them with overly frequent promotional messages, you run the risk of generating resentment and causing them to opt out of your database or block your tweets and posts. Be sensitive to the fact that clients are already subjected to a daily barrage of “deals” from popular geo-targeted sites such as Groupon and Living Social. Also, environmental factors may positively or negatively impact the industry and your market growth potential. By evaluating these considerations, the choice may be made to put the product or service on hold for a later date, or tweak it so it more closely meets the needs of the target market.
The potential for market penetration is determined by whether you are promoting your services to past clients or hoping to attract new clients, as well as their awareness of what you are offering. If your target consumers are new to the spa lifestyle, for example, they may not be familiar with the most popular treatments or understand their benefits. In this case, the first component to your strategy should be one of consumer education to make the offer relevant. More sophisticated consumers are probably aware of competitive pricing and can recognize a good value proposition.
Some consumers may be willing to pay a higher price because your product or service provides a superior solution for their concerns. The amount of time it will take clients to make a purchase decision is influenced by their confidence in your offering, the frequency and quality of competitive deals available, the urgency of the need for what you are offering and the risks involved in making the purchase decision.