What is Pricing Power? (And How to Get it) | eCommerce Matters Ep. 027
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This week, Philip and Rob discuss Pricing Power. What it is, how to get it, and some examples of brands that really have it. Not something that exists in isolation from the rest of your strategy, pricing power is relevant to your brand, your stock, and most of all, your customers.
See the full blog post for a collection of shorts from this week's episode, including example brands, handy definitions, and a great bit of imagery to make sure you remember the key take-aways!
Hosts: Philip Huthwaite (CEO & Founder of BlackCurve) and Rob Horton (Product Director at BlackCurve).
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🎧 Listen on major podcasting platforms.
🎧 Listen on Apple.
🎧 Listen on Spotify .
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Full Video
Video Highlights
What is Pricing Power?
How do you define Pricing Power? Philip Huthwaite and Rob Horton explain - providing both the technical, and the practical definitions.
How do you get pricing power?
Philip and Rob discuss two examples of well-established brands with Pricing Power, in two very different ways.
Pricing Fun
This week, both the props come with pricing metaphors, and a bit of danger! They'll certainly help you remember the fundamentals of what Pricing Power is all about, and the part it plays in pricing strategy.
Rob is assigned a new nickname: ‘The Fisherman of Pricing’, and he might resign over it. He's joking.... we hope....
Podcast Summary
Introduction
In the podcast, the hosts discuss the concept of pricing power and provide valuable insights into strategies that businesses can employ to achieve it. Throughout the episode, they share numerous examples from different industries to illustrate the various aspects of pricing power and offer practical advice for businesses seeking to enhance their pricing capabilities.
The hosts introduce pricing power as the ability to raise prices without significantly impacting customer demand. They emphasise that pricing power is essential for businesses to establish a competitive advantage, increase profitability, and ensure long-term success in the market.
Building a Strong Brand
A strong brand is identified as a key element in pricing power. The hosts discuss how renowned brands like John Lewis have established pricing power by leveraging their brand reputation. They highlight John Lewis' ability to charge higher prices based on their large brand, good reputation, and emphasis on quality. This enables them to target a middle to upper-middle-class market that values quality over price.
Unique Value Propositions
To enhance pricing power, businesses should offer unique value propositions that differentiate them from competitors. The hosts provide examples such as extended warranties and personalised services. They mention how John Lewis, known for its exceptional customer service, offers a guarantee that justifies slightly higher prices compared to competitors. This demonstrates the importance of providing additional value to customers to justify premium pricing.
Understanding Customer Preferences
Understanding customer preferences is crucial for pricing power. The hosts discuss the importance of conducting market research and gathering customer feedback to align pricing strategies with customer needs. They highlight the example of local businesses that have gained pricing power by catering to specific customer preferences, such as providing personalised recommendations or local expertise.
Local Focus and Community Impact
The hosts emphasise the significance of local focus and community impact in pricing power. They discuss how businesses can leverage their local connections and engage with the community to foster customer loyalty. They provide examples of local shops that can charge slightly higher prices because customers value the sense of community and supporting local businesses.
Data-Driven Pricing Strategies
Data-driven pricing strategies play a vital role in maximizing pricing power. The hosts emphasise the importance of utilising advanced analytics and conducting price testing to optimise pricing decisions. They discuss how businesses can analyse customer purchasing patterns, competitor pricing, and market trends to identify optimal price points that balance profitability and customer demand.
Influencer Marketing and Brand Power
The hosts discuss the impact of influencers on pricing power. They highlight the example of Gymshark, a brand that has leveraged influencer marketing to create a powerful brand image and demand for their products. Gymshark's brand power allows them to price their products within a certain range, and customers are willing to pay because they trust and admire the brand.
Conclusion
In conclusion, the hosts reiterate the importance of pricing power for businesses seeking sustainable growth. They summarise the strategies discussed in the podcast, including building a strong brand, offering unique value propositions, understanding customer preferences, emphasising local connections, and utilising data-driven pricing strategies. By implementing these strategies, businesses can enhance their pricing power, increase profitability, and establish a competitive edge in the market.
Throughout the podcast, the hosts provide real-world examples that demonstrate how businesses have successfully achieved pricing power. These examples include John Lewis' reputation for quality and exceptional customer service, local businesses that leverage community support, and brands like Gymshark that have harnessed the influence of social media influencers. By learning from these examples, businesses can gain insights into effective pricing strategies and apply them to their own operations.
In summary, the podcast offers a detailed exploration of pricing power and provides practical guidance for businesses aiming to enhance their pricing capabilities. By building strong brands and understanding the customer.
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