Скачать с ютуб What Is Penetration Pricing? -Episode в хорошем качестве

What Is Penetration Pricing? -Episode

In this episode of Pricing College – Aidan and Joanna discuss penetration pricing and whether it is a smart way to grow a business – or could it create problems down the line? TIME-STAMPED SHOW NOTES: [0:00] Intro [00:40] Joanna explains that new entrants can favour this tactic. [01:00] Aidan says we may focus on a low price to win market share. [01:50] Some companies need to hit a break even volume – and penetration pricing can help them. [02:30] Not everyone buys on price – many buy on value. [02:50] Is it a tester – or intro concept to win more market share. [03:20] Joanna says it can be very difficult to increase prices once customers have had low prices. [04:30] Some new entrants have been able to enter a market at a higher price. [05:40] Are people actually bored of existing products and so shopping around. [06:20] Purchasing can be a habit [07:15] Always ask what is the strategy – is it simply market share? [08:50] Always ask what is the strategy – is it simply market share? In today’s episode we want to talk about, What is a penetration pricing strategy? Basically, it’s when you have a new entrant in the market where the products are fairly similar to other products out there already but they want to break into the market. They’re gonna do so by taking somebody’s else’s market share, maybe one of the bigger players. When we are talking about capturing market share in this instance, we’re generally thinking about pricing it at a rate so competitive or thinking probably a low price that will make these other competitors cheaper seeming to be a similar product that people can make an immediate switch for and save money. But market differentiation isn’t always based on prices, you have to personally think about the product and the product’s innovation. You need to know that your product or be it similar to other people’s products, has to have an edge, or a difference to capture people’s attention. Then think about the pricing, because research has shown that by dropping pricing too low you don’t necessarily break even and get the numbers that you want because not everybody buys on the price they buy on value. This could be a failing of the penetration strategy argument, the assumption is that you can easily just increase prices and the market won’t mind. It’s just not the case and many prices will tell you that. But there are some good examples of new entrants that have come into the market with similar products and have been able to justify more above-average prices. One of them is a competitor to Doritos and they’re called Harvest Snaps, I don’t know if you’ve had them, Aidan, those dried peas and lentils salty snacks they’re very popular, very similar and competitor to Doritos but command a higher price even though the weight and the package is smaller. It becomes a habit. I think with the Harvest Snap example, they came in a good time. Consumer sentiment now is much more in favour of healthy eating, people still however love salty snacks and we know that obesity is still on the increase. People are still consuming fatty goods at the same time people want healthier alternatives so that came in on that sort of site geist and they were able to get and claim that additional price premium and at the same time take market share which is the objective of the penetration pricing strategy. I think in all things pricing in business you have to consider why you’re doing something and what is the strategy behind it. Then once you have the strategy, you look at the tactics to implement. Often there’s no right answer but you have to know why you’re doing it and what you want to achieve from it. Penetration pricing sometimes can go alongside market share objectives where a lot of companies still have it’s almost a chest-beating concept where they want to have the largest share in that market and that’s the point of pride, even if they’re losing money. You’ll see that in any industry from the automotive industry traditionally to pretty much anything. It’s what does your company want to achieve? Is this a suitable tactic? and Does it work? I’ll finish off by saying if you’ve got a product or service that is a great service and people want, that will improve their lives and give them value. Selling it at a too low price can’t be the right idea unless you have to get acceptance or people have something holding them back from trying it and price is what’s holding them back. If that’s what your market intelligence tells you, potentially that’s the right option other ways, always ask some more questions. This is what prices do. Looking at optimal pricing, what is the best price? Yes, it could be low but, does it have to be the lowest? That’s the question and this is what you've got, you’ve got to test but don’t test with rock-bottom price first because you’ll find it incredibly difficult to get the price back up and then you’ll forever be thinking I’ve undersold myself.