Price Increases Make Marketing More Challenging
Each year, thousands of companies consistently raise prices to increase margins and offset growth in various costs. For anyone working in corporate America, you are quite familiar with this tactic. For marketers, rising costs are always a challenge.
As marketers, when we have to market and sell the same items at a new, higher price, we may find that the tradition campaigns become less effective. This is especially true when we hear objections from our customers. If there have been little or no changes to a given product, then it is next to impossible to overcome objections related to price.
The biggest issue that many marketers have about the dreaded price increase is losing customers to lower priced competitors. This is especially true in segments where competitors products are priced less than your offering. There is always someone else that your customer can buy from and sometimes that is a very real option. You will be glad to know however that a recent study found that few customers migrate to a competitor based on prices alone.
There are a number of reasons why customers do not jump ship so quickly. The bottom line is that switch has costs associated with it. These costs are both and emotional as well as financial.
Customers have been conditioned to find the sale or ask for a discount. When introducing a price increase, customers do not want to incur the full impact. This is why they will continue to ask for discounts even after a price increase has been stated. As noted above however, even with a price increase, customers are not necessarily going to leave you.
Below I list just a few things to consider before communicating a price increase to customers. Do what you can to lighten the load or simply divert attention to something of greater value.
Increase the value of your product and raise the price. Doing so allows you to justify the price to your customers. This removes any type of obstacle associated with price increases that are simply a way to earn the company more money but provide no benefit to the consumer. Determine how you could provide additional services, support, or terms to support a price increase.
Know the cost to switch vendors. Research your competitors and understand their pricing. Does the offer they use clearly explain the pricing of their product? Your customer may perceive a competitor as costing less but in actuality their services cost much more or provide less features. Do your homework before introducing any type of price increase.
Segment your price increase. Not all customer are equal so treat them differently to make the transition smooth and get the biggest bang for your buck.The truth of the matter is that your customers are different. Some have been doing business with you for a long time. Others are working with you for the first time. Your price increase should be reflective of the individuality of your customers.
In closing, one thing to keep in mind is that you should really understand who your customers may consider purchasing from if you weren’t providing them products or services. Then, be sure to understand what their pricing structures look like.
If you have a stronger package at a better price than you competitors, switching is not an issue. If your offering is less valuable and more expensive, then perhaps you need to reevaluate your pricing. As a marketer, your job is to create a perception of value or remedy for a given need. Identify that need and focus your messaging on meeting that need. When you do, price is rarely an issue.
Michael Fleischner is an Internet Marketing Expert with more than 14 years of marketing experience. He is an author and founder of The Marketing Blog. Explore his search engine optimization book, SEO Made Simple, to enhance your internet business.. Free reprint available from: Price Increases Make Marketing More Challenging.
