Brand building and pricing

Although price is one of the four key variables for the definition of marketing, in reality, a marketing manager concentrates his activity around the issues of identity, values, positioning or value proposition of the brand.

Sometimes due to organization reasons and others because of the dynamics of the business sectors, the fact is that the focus of marketing areas is not usually in the treatment of price as a variable. And when this happens, although tactically the price treatment can be satisfactory, in the long run this can produce strategic and competitive weaknesses for the brand.

Perception of price in the digital age

Perhaps the exception in the incorporation of the price as a key marketing variable are luxury brands and low cost brands, which from the very moment of conception understand the strategic impact of price on all its value proposition.

The vast majority of brands, whom do not operate any of these extremes, should first reflect on how price in the digital age is perceived to make it a truly strategic variable.

Far beyond the price of a product, a category, or a particular business sector, the way the concept of pricing is viewed has varied substantially for users. And this manifests itself in three essential aspects: the variety, the sensibility and the perception of value.

· Variety. Until the arrival of the digital world, consumers understood the price within a range of reduced possibilities, such as the sale price or list, discounts, promotions or seasonal sales. With the arrival of the internet, the range of possible prices for products or services is much wider and includes previously unknown options such as free, freemium, pay as you go, membergetmember, paywith a tweet or bulkprice, among others.

· Sensitivity. Consumers are more informed than ever and the different ways to research and compare prices online is very simple and affordable. In addition, proliferation and competition among ecommerce encourages users to actively search and compare offers before deciding.

· Perception of value. The relationship between price and value proposition has always been complex. While brands such as Apple have dominated and associated these two concepts since the start, other brands have had to go a long way to build that association, as Samsung has done or as Huawei is beginning to do by warmly creating the Honour brand. But in addition to this complex relationship of building to create equivalence between high value and high price, now more than ever the perception of value is subject to external influences. Remember phenomena’s such as Black Friday or the impact of the fact that a celebrity uses a product, as it happened with the beginning of brands, such as Hawkers sunglasses.

The price to create a brand

The aspects mentioned above influence the way to create a strong brand from its origin. There is no single way to give the price that strategic role that it must have, there are different ways such as early incorporation or diversion of care or early incorporation of the price.

In innovation processes, from the prototyping phases of new products or services, the focus is on technical or functional viability, the price comes in a second phase of market testing. Companies like Google incorporate the treatment of the price from the conception phase and in this way they propose objectives that go from commercial viability of prices to the the new product capacity of adding or subtracting in the price perception of the brand at a global level or diversion of attention over price.

The price works very well when it is not the motive of the value proposition (except in the cases of the luxury or low-cost industry). If a brand puts the price at the centre of its strategy then it needs to shift the attention to other attributes. Cabify or Car2Go are interesting examples of this. They are the cheaper alternatives if you do an analysis of the competition with the traditional taxi with which they compete, but their focus is not on price. In the case of Cabify, there is a very consistent proposal of availability and quality of service, and, as well as being cheaper. In the case of Car2Go there is a proposal of flexibility and sustainability, and, in addition, the price is less than that of a taxi.