Simon Says Copy Your Competition
While teaching Marketing for Managers at Langara College, I recall showing a video to my students about setting the right price. There were two key points that resonated with me.
The first is to avoid copying your competitor’s pricing model for the sake of following the leader. When setting the price, you need to ask yourself, do I know if my competition’s pricing model is profitable? Assuming it is could be a costly mistake.
The second point addresses the issue of not positioning your company as the “lowest” or “best” price. When your organisation goes with the “lowest” price strategy, you make it impossible to develop brand loyalty amongst your customers. As soon as a competitor enters the market with a lower price for the same product or service, you’re hooped.
Going with lowest price for short term gain will cause you long term pain. Your pricing strategy needs to represent the complete experience and benefits that your customers will receive before, during and after they make their purchase.