As businesses try to adjust to today’s tumultuous economic environment, they must consider their shifted market pricing strategy to remain competitive. With changing customer demands and new competitors entering the market, it is essential to stay ahead of the curve and have a shifted market pricing strategy accordingly. From understanding customer needs to assessing the competitive landscape, there are many factors to consider when considering the best pricing approach.
With the right combination of research, analysis, and a shifted market pricing strategy, businesses can adjust their pricing to remain competitive and maximize profits. By taking the time to understand the current market and make informed decisions, businesses can develop a shifted market pricing strategy that allows them to stay ahead of the competition.
Understand Customer Needs
Any shifted market pricing strategy must begin with an understanding of customer needs. If a business charges too much, many customers will simply go elsewhere. If a business charges too little, it may be able to meet demand, but profit margins will likely be squeezed. For businesses in most industries, the best way to understand customer needs is to survey their customers.
This can be done in person, over the phone, or online. If the survey is conducted over the phone or online, participants can be offered a small incentive for their time. The exact questions asked will depend on the business, but in general, the survey should aim to explore customer needs in terms of price. For example, customers’ price sensitivity, willingness to pay a premium, and expectations for pricing.
Assess the Competitive Landscape
Once a business has a clear understanding of customer needs, it must then assess the competitive landscape. A company should research its competitors’ pricing strategies, profit margins, and customer satisfaction. This can provide insight into how other businesses in the industry are pricing and the profit margins they are likely generating.
The research may also reveal what customers say about the products and services of various competitors, which can provide helpful information. For example, if most customers are expressing dissatisfaction with a competitor’s delivery times, that can be useful information for a company looking to offer a similar product. If the business has a website, it should consider the pricing models used by advertisers on the website.
This can provide insight into how different websites with different audiences are pricing their products, which can be helpful information for a company trying to determine its pricing strategy.
Analyze Current Pricing Models
Once the competitive landscape has been assessed, a business should analyze current pricing models. A business may have a general idea of the pricing model it should use, but it should determine this with a critical eye.
For example, a business may realize its pricing is too low, giving it low-profit margins. It may then decide that switching to a higher price point will allow it to optimize profit margins. One way to analyze current pricing models is to plot competitors’ prices on a graph.
The graph should plot the prices of the top three competitive products, including the business’s product. This can help companies to visualize the pricing models used by their competitors and determine the best pricing strategy for their company.
Leverage Pricing Strategies
If the competitive landscape and current pricing models have been analyzed, businesses should consider leveraging pricing strategies. A shifted market pricing strategy can differentiate products or services, attract customers, and maximize profits.
Set prices to Maximize Profits
The first step in setting prices is to determine the costs of the product or service and the desired profit margin. The second step is to consider the demand for the product or service, which can be determined through research, surveys, and competitor pricing analysis.
The third step is considering the customer’s willingness to pay a premium for the product or service. The last step is to compare the costs, demand, and desire to pay to see the minimum price the product or service can offer and still generate the desired profit margin.
Adjust Pricing to Remain Competitive
As the business environment changes, so must a company’s pricing strategy. Businesses should regularly assess the competitive landscape, the current pricing models, and their costs. This should provide insight into the demand for the products and services and the company’s ability to generate profits.
If the business finds its pricing too low, it should consider raising the prices. If the company sees its pricing as too high, it should consider lowering the prices. Businesses that want to remain competitive must remain flexible and adapt as the market changes.
By regularly assessing the competitive landscape, the current pricing models, and costs, businesses can make informed decisions about their pricing and adapt them as needed. With the right combination of research, analysis, and shifted market pricing strategy, businesses can adjust their pricing to remain competitive and maximize profits.