A Price strategy no longer means beating the competition on price or charging what the market would bear. Many other factors such as increased choice, customer awareness and knowledge have affected the way consumers perceive value, and brands by extension. Convergence of technology has also blurred the line between markets.
As a result, market dominance is now more than just better prices or quality. Below are two ways you can adapt common pricing strategies to gain market share.
The Penetration Pricing
The penetration pricing strategy needs to be combined with innovation to prevent the product from being perceived as cheap. In addition, the front-line employees such as customer service representatives need to be trained on how to take good care of the customers. Where cost savings can be made and passed on to customers by cutting on expensive packaging or preserving energy, this needs to be communicated to customers. It gets them to buy into the process and make them better brand ambassadors. It is even better if the cost saving measure resonates with the customers' values.
Penetration strategy can also be used to great effect in an exclusive market by breaking through the price barrier set by the market leaders. If for instance, the cheapest price for a high-demand, high-margin product is USD 1,200, you can come in at USD 997, and break through the perceived USD 1,000 price barrier. Your most likely customers will be first time buyers of the product who had been kicked out by the price range. You need to reassure these customers of the quality of your product while reminding them of the savings.
The Psychological Pricing Strategy
Psychological pricing reflects to a pricing strategy that appeals to the non-rational side of the buyer's mind. This can be done in two ways.
The first strategy applies where there is little price differentiation and no clear market leader. You can choose to price slightly above the competition so as to gain price leadership. Consumers tend to associate higher quality with higher prices in case of semi-generic products. Spend extra on your packaging to make it really stand out and reinforce the quality.
The second referers to numbers. Products priced in round numbers tend to be less preferred to those with odd prices. A product selling at USD 99.99 will always be preferred to one going for USD 100. I hope these tips have opened your imagination to new ways you can use your price strategy to gain market share.