Tag Archives: Customer Profiling

3 Golden Rules of Pricing for Value

For any business setting the price of your products is one of the hardest decisions that you have to make (along with picking a brand name, choosing the logo colour, deciding on your range…!) There are a few different approaches that you can take, but the most important thing you need to do is build value. This post will discuss the role of value in pricing and show you the 3 golden rules for building your price on a value proposition.

What is Value?

Value is a perception. It’s the reason why a well cut, good fitting little black dress for $150 can be as savvy a purchase as buying 3 tanks for $20. The price paid is considerably different, but so is the expectation of quality, enjoyment and longevity. Value is the combination of all our feelings towards the item we are purchasing. To set the price, we need to understand the value of our product to our consumer.

Many years ago I was the category manager for a premium cosmetics and perfume company. When it came to setting the price on skin care products that were perceived to rewind the aging process, we set the price by analysing what the consumer would pay, based on what it was worth to them – the value they saw in the product. The product cost was around $10, yet the consumer valued it enough to be willing to pay well over ten times that amount.

In our post “How to Measure Success” we looked at how to analyse your gross profit and your wholesale margin, which are both valid ways to set your retail price. But some products are worth far more than they cost to produce, be it because of desired design, quality workmanship or inherent benefits, and this is where developing your price model around value is most beneficial.

3pricing for value profit margin Golden Rules of Pricing for Value

1.       Understand Value-Based Pricing

When you set price using a value based model your objective is to determine the level of satisfaction a customer derives from your product and what price they are prepared to pay for it. How valuable is the solution your product brings to their life? How long do they perceive it will last? How important are the attributes to them?

Defining value includes analysing tangible and intangible attributes – that is what we can and cannot touch. The price of a Mercedes-Benz is set by what the brand believes the consumer will pay. The value is based on what they can touch – leather seats, alloy wheels, superior styling; but also what they can’t – associations of prestige, confidence and luxury.

There is no formula for value-based pricing, as each product will have its own value. You may find it helpful to do a competitive review to see how others are pricing similar offers and also survey your target market to understand what your offer means to them.

2.       Create a Value Perception

Creating a value perception involves positioning your product or service in the market so that it is desirable. The more consumers want your product the more they will be willing to pay. How to do this depends very much on the type of product or service and who the target customer.

Generally speaking you can create positive value perceptions by paying attention to:

  • The presentation of your brand elements including your logo, brand name and website / store front
  • Building social media networks to have large numbers of engaged and active followers
  • Educating your target on the benefits your product can bring (remembering both the tangible and intangible)
  • Demonstrating brand advocacy through customer reviews and testimonials

 

3.       Maintaining your Value Proposition

When you use value-based pricing, your approach hinges on your target market buying into your offer and seeing the value in it. As it comes time to promote your product, the strategy you choose is critical. Thinking back to Mercedes-Benz, how often do you see an ad for Mercedes-Benz:

“Mercedes Benz A-Class, was $90,000, now $50,000. For three days only!”

A product that is marketed on its value needs to maintain that value and it can easily be tarnished. If you can sell your product for half the price you were charging, your consumer will start to question its true cost, and the value they see in it may decline.

Value adding strategies are the best way to maintain value in your product while creating new reasons to buy. The most well-known value add strategy is the free gift. Offering a free gift with purchase does not devalue the original product in any way, you may be directing some profit into funding the gift instead of using some profit to discount the gift.

Free gifts can also be used to drive multi unit purchases e.g. Spend $52 dollars to get your free gift, setting the spend qualifier above your key products.

With the rise of online stores, another strong value add offer is Free Postage on a required spend. Firstly, we suggest you have a flat postage rate in place e.g $6.95 Flat Fee Postage, that way you have created a value for the postage; then set a minimum spend to receive the postage free e.g. Free Postage on orders over $100. This will encourage multi unit purchases, delivering you more profit per transaction, helping you fund the free postage profitability.

Following the 3 golden rules of pricing for value has the potential to deliver you more profit than pricing to make a margin requirement. What is your product? Can you price for value? As part of our mini marketing plan, we analyse your competitors pricing models and give you recommendations on how you should price within the market. For more information visit our product page.

Until next time, V is for Value and I hope you found it valuable!

Mary-Anne


How to Reach Your Target Market

How to target a market is one of the most common questions we get from clients. We all know that our product or service (in most cases) is not for everyone, but how do we clearly define who the target market is? Once we know who they are, how do we go about getting ourselves in front of them?

This post will help you identify your target market, understand targeted reach and give you 5 tips on how to reach your target market.

Identify Your Target Market

Many new products and services are born from an idea, a passion or sometimes just by accident. Usually it is to answer a consumer need. Maybe you have had a personal experience where something was lacking from the market, or you have a talent that can be easily turned into a business or maybe you see a service and think “I can do it better!”

Naming that consumer need is our biggest clue in being able to identify our target market. If we are answering a consumer need, we can then look at the characteristics of those who fit into that group of consumers.

But what if it is unclear what this consumer need is? Or if you aren’t sure which consumers would be interested? We can look to identify our target market by utilising market research (see our post on Market Research). We can survey groups to quantify who our offer appeals to and then look at the characteristics of those groups, or we can review research that has been done before (for example www.abs.gov.au) to analyse who our target could be based on the data that has been collected.

We can also identify our target market by looking to our competition. Who do they target? How do they target them? You may even want to begin to think about why they target them? Understanding your competition can give you ideas by observing who they are targeting and also by analysing who they are not, which may represent an opportunity for your business.

Once we have identified our target market we can begin to classify them based on (see our post on Analysing Market Research):

  • Demographics
    • Are they male or female?
    • What age bracket do they tend to fit in?
    • What is their income?
    • What level of education do they have?
  • Psychographics
    • Personality factors
    • Lifestyle Factors
    • Interests
  • Behaviours
    • Brand loyalty
    • Value of Quality
    • How they shop
  • Geography
    • Location in relation to our service or producttarget reach

Our aim is to have a picture of a typical consumer or consumer groups. Clearly understanding your target market is the first step in planning how to reach them.

Magazine publishers are probably one of the best practice industries for identifying and communicating target markets. See in this example how NME clearly define who reads their magazine.

Understanding Targeted Reach

Understanding targeted reach is being able to identify how many people in your target market are going to see the marketing or promotional opportunity you are offering. Many clients send us emails offering them advertising space in a magazine, online directory, goodie bags and more; they all want to know the same thing “Should I do this?”

When you know your target market, it is much easier for you to assess these opportunities, because what you are now looking for is the reach; that is the percentage or number of your target market that will see your message.

For example, when you are told an online newsletter goes out to a subscriber base of 50,000, you are immediately impressed. That is a large number of people to view your offer. But, without being able to estimate how many readers are in your target market, the number has no relevancy.

You need to ask questions based on what you know about your target market: “What percentage are women?”, “What percentage live in Adelaide?”, “What percentage have a dog?”. The questions you ask are dependent on your business and the consumer you need to reach.

Use the answers to reassess the original number and then assess your targeted reach and cost per view (see our post on Calculating your Cost per View). Do you now deem this a suitable insertion to reach your target market?

5 Tips to Reach your Target Market

1.       Connect with those that already reach your target market

When you have a profile of your target market, you can then start to research the types of media they interact with, look for

  • Magazines
  • Newspapers
  • Blogs
  • Online communities
  • Facebook pages
  • Newsletters
  • Radio Stations

Approach these media outlets and find out what advertising opportunities are available. If they have already captured the attention of your target market, you can then reach out with your marketing message.

2.       Connect with complementary, but not competitive businesses

We can’t very well ask our competitors to promote our business, but we can look for complementary businesses.

If you make artwork for children’s rooms, consider contacting other businesses that target your market, for example children’s clothing, children’s furnishings, or children’s toys. Approach these businesses and suggest exchanging advertising on each other’s websites or in each other’s newsletter, helping you both to reach more of the target market.

3.       Improve your SEO

Another way to reach your target market is to ensure you are there when they go looking for your product or service online. Understanding the keywords that your target market use when searching (see article on keywords) will help you create your website, to ensure you match your content to how they describe your product or service.

4.       Talk in the language your target market understands

Looking at the profile of your target market, make sure you talk in a language that they understand. Only use jargon or complex words if it is appropriate to your target market.

Appreciate what motivates them to purchase; is it price? Is it quality? Is it service? Then ensure you write your marketing message to match.

5.       Utilise PR

In our first tip we talked about looking for advertising opportunities within the media that your target market is connected with. Another key way to reach your target market within that media is by undertaking public relations (PR) strategies.

PR is a very broad area of marketing and for the purposes of this article; we are only going to discuss a narrow segment.

You can engage media to talk about your product or service by writing (or having written on your behalf) Media Releases (Check out Handle Your Own PR). If successfully pitched, these Media Releases can lead to articles in the newspaper, in magazines and more. these are at no cost to you and often hold more power with your target market, as they are not seen as marketing messages and gain the credibility of the source they are published in.

Also subscribe to media callout services such as www.sourcebottle.com.au to keep on top of any PR opportunities that you could use to promote your product or service.

Making a consistent effort to reach your target market will ensure over time you grow your business and also maximise your marketing spend. Do you know who your target consumer is? How do you communicate this to others?

Until next week, R is for Reaching your Target Market and also for finally resuming the A-Z of Marketing.

Mary-Anne


How to Market a Small Business with a Small Budget

Starting a Small Business is an investment of time and money. As a small business owner, you invest large quantities of both and naturally you feel frustrated when the results don’t reflect what you’ve put in.

This post is a “How To”, giving you some ideas on making the most of your financial budget and time invested into your small business.

 

How to Advertise a Small Business

When you run a small business, you will find yourself inundated with advertising proposals. Every proposal that comes in promises you the earth and assures your investment will pay off in valuable sales or sales leads.

It can be hard to differentiate between the advertising requests you get. When it comes to weighing up a proposal, make sure you ask enough questions to assess if it’s right for you. At a minimum make sure you ask:

  1. How many people read the publication / browse the website?
  2. How are these figures compiled, are they externally audited? (i.e. are they real and trustworthy?)
  3. What is the age / gender / location breakdown? or
  4. Who is the age / gender / location target?

Compare the information you receive to your target market profile. Does the advertising fit your business? Does it closely target the consumers your product or service is aimed? Or does it cast a very wide net in which some of your consumers are present?

Estimating how many of your target market will view the advertisement helps you analyse the true value for money. You can work out the cost per view by dividing the cost by the estimated number of target consumers who will view the ad. For example; an investment of $1,000 to target 10,000 consumers costs us 10 cents per view, where as an investment of $100 that reaches 200 consumers costs us 50 cents per view.  Although the advertisement may reach a greater number of people, we are only interested in the cost per target consumer, as the rest is wastage for us.

How to drive PR for a Small Business

When you successfully drive PR for your small business, the benefits can far outweigh the time investment needed. With an increase of review websites, product and news blogs and traditional media branching into online spaces, there is more opportunity than ever before to get your product or service talked about.

Have a go at writing your own press release if you have the time or get it done professionally if you have the money. Send out your press release to every contact you can and don’t forget to hound your local paper – they need to be supporting small business in their area and that includes yours!

How to get the most out of your Website

We all pay attention to the colour scheme, the layout, the pages and the pictures, but often critical data such as the Title Tag and Meta Data which aren’t seen by browsers, but are read by search engines, are neglected.

Maximise the money you invest in your website by knowing how your target consumer searches, then ensure your content, title tag and meta data are all maximising these search strings, so your website screams at search engines “PICK ME! PICK ME!”

We run a Website Effectiveness Audit for $49.95 and this often diagnoses the key reasons why your website isn’t ranking in searches and bringing in the traffic you wanted it to. When your website is search optimised, it runs effectively and delivers you more profit against your initial investment.

How to get the most out of your Social Media

The biggest investment you will put into your Social Media is your time and when you start out that seems like something you have in volumes, but as your business grows, your time budget shrinks.

Limit the amount of time you spend on Social Media each day, as it can easily be a distraction from what your true business is. We recently read this great article on “Why Social Media is a Waste of  Time” and thought the tips for time maximisation here were fantastic.

Budget your Social Media time investment so it is split between:

  • Networking / Attracting New Consumers
  • Following Up on Enquiries
  • Sharing Valuable Content

There are great tools to help you manage content across multiple Social Media outlets at the one time, I personally love Hoot Suite to manage Facebook and my new Twitter  account simultaneously.

How to Ask for Help

Lastly, sometimes we need to admit we can’t do it all, whether it is because we are not qualified or we simply do not have enough time.

Paying an expert for a few hours of advice saves you time and money in the long run, rather than muddling through trying to learn and execute simultaneously. The more technical the problem, the more valuable the help will be.

Reach out to small businesses that can help your small business. There are a multitude of virtual assistant businesses that give you the support systems of working in a big business without the actual staff and spacing costs. Could someone else manage your Inbox? Could your Social Media content be executed on your behalf? Would you finally get that PR Campaign out if it could be printed and stuffed into envelopes for you?

Sometimes the best H word in Marketing is HELP!

Until next week H is for “How To” and for not being afraid to ask for help.

Mary-Anne

www.wiseupmarketing.com.au


Turning Surveys into Solutions

Last week we took an in depth look at Market Research and how to hold your own census, and we promised to follow with how to analyse your results, so here it is!

In our discussion of the 5 steps to host your own census, the first step was to:

Define your problem We generally undertake Market Research to solve or shed more light on a problem e.g. “Why are our sales decreasing?” Or to prove or disprove a theory e.g We are losing sales because our prices are too high. So start by writing your problem down at the top of your page, as a nice big heading, everything from here has to help us solve that.

So dig out your piece of paper (which if its anything like ours now has coffee stains, phone messages and assorted flower doodles all over it) and refresh your memory as to why you went to all this trouble in the first place. What were you wanting to shed more light on? What question needed answering? Which theory needed proving? When it comes to analysis, this problem will again be the hero at the top of our page. By the time we finish mining the data we received, we want to feel informed and educated and ready to spring into action.

If you used Survey Monkey, take advntage of the inbuilt analysis tools or transfer your data to a spreadsheet. If you used email or a form, you will need to collate all your data into a useable format (If you are confident using a program such as Microsoft Excel or Mac Numbers, I would highly recommend it as this will allow you to evaluate your data and turn the responses into tables and chart,s bringing your findings to life visually).

When we designed our survey we looked into the importance of different question types. Now that we are ready to analyse, we need to consider how we asked the question, in order to decide how to analyse it:

  1. Qualitative answers are best typed as a list and read over a few times, before making generalisations, identifying themes and noting any key insights. When it comes to qualitative responses we have to think about weighting, not getting too caught up in what one person says and we need to think about responses as a whole in context of who our target market is this is. This is where our demographics help (more on that later…). With our qualitative data if we left an area for other comments, we would read over all responses and make generalisations like “most consumers think we are doing a good job and don’t need to change anything”, “when asked for any other websites they use often, a few responses mentioned eBay”
  2. Quantitative answers can be easily analysed by summing and averaging responses and also by comparing different demographic groups. The great thing about quantitative data is that you have set the boundaries of the response type in your inital question design, making collating the data and drilling down (moving from a top-level view to sub groups of respondents) much easier. If you click the image below, we have completed some examples of creating data tables to collate responses, and then using different charts to make the data come to life.
  3. The Demographic questions which we ask at the end of our survey put the responses into context. This allows us to break out each question into different groups, to look at how those groups differ and also discard responses from groups that we may not deem relevant to our survey. As an example of how the context will help ensure we make our decision based on relevant results, first consider the above graphic where we saw that 54% of all respondents liked our current layout a lot, initially this is exciting news, but, is it relevant? If we then look at the graphic below, and imagine our target market is Women aged 56-70, we can see how valuable splitting by demographic is, all of a sudden we are presented with the fact that of all women surveyed only 7% aged 56-70 like our layout a lot, compared with 20% aged 41-55 and 18% aged 26-40, this immediately puts up a red flag (where we thought we had a lovely green one). It seems as though our current layout is too young for our target market, we would then look at responses between these three groups to other questions to diagnose the specific issues, and then form an action plan.

Once you get started you may find analysing your data is a bit like falling down a rabbit hole. You start thinking of more and more questions and keep drilling down in different ways to get the answers. At the end you should hopefully have some very powerful insight to assist you with your initial problem, plus a whole lot of answers that you didn’t know you asked for.

So now you need to spring to action, but first a final thought:

  1. Reflect – take a moment to think about everything you have learned and consider are you looking at the good and the bad?
  2. Listen – what are the top 10 useful facts?
  3. Re-Confirm – clarify with your target market that you have understood ask another one or two questions let them know how valuable their input has been so far
  4. Act – take what your target market are telling you and implement and tell them you did it because of their input
  5. Start again – do it all again in 6 months. Look for the changes in responses and whether your action improved key areas

So how did your survey go? If you need more help with how to analyse, just let us know where you get stuck! Next week we will launch a 26 part blog, we are very excited about it… any ideas what it might be?

Mary-Anne

www.facebook.com/WiseUpMarketingSolutions


5 Steps to host your own Census! (Or Market Research for Small Business)

Being a passionate and dedicated Marketer, over the years I have become near obsessed with measuring; measuring results, measuring profitability and of course measuring the target market. To the average Australian the Census is 20 minutes of their life spent form filling, of which there seems to be no immediate benefit and no future return. For me, the avid Marketer the Census means the collation of data that will allow demographers (people who study the populations characteristics), students and marketers (and I am sure others), the opportunity to extract data, compare shifts, and come up with fantastic statistics – like “43% of Australians had Take Away for dinner on Census night” (Ok so maybe not that one).

So already on a Census high, when I came across a question about Market Research on a Motivating Mum Forum by Clever Mama owner Danielle, I decided the topic to explore in my first blog post was staring me in the face! Market Research for Small Business.

Creating a survey, sending it out and analysing the results is not new news in the Marketing World, however the digital age has certainly made it a lot easier. I personally recommend Survey Monkey, it’s Free (for a basic package), easy to distribute, it presents very well and most of all it has great in-built analysis tools, while still letting you download all the data to excel to really get into the nitty-gritty of it. Although if you don’t want to get that technical, you can make a survey in word, email it out, then collate the results in an excel spreadsheet.

So big or small,  here are the 5 Steps to host your own Census!

  1. Define your problem We generally undertake Market Research, to solve or shed more light on a problem e.g. Why are our sales decreasing? Or to prove or disprove a theory e.g We are losing sales because our prices are too high. So start by writing this down at the top of your page, as a nice big heading, everything from here has to help us solve that problem.
  2. Brainstorm your content Now start to brainstorm, write down words, sentences, thoughts, competitor brands, anything you think is contributing to your problem, anything you would like to know more about that would help. Imagine your ultimate consumer is sitting in front you, this is your chance to pick their brain, as at the end of all this we want to know our ultimate consumer inside out.
  3. Organise your questions Although it has been disproved that the attention span of a goldfish is 3 seconds, when it comes to Market Research it’s best to still think that is a fact, so less is best. We want as many full responses as possible, and to get this we need to maximise attention, therefore we need to minimise effort and time to complete the survey. There are two types of questions we can ask, as explained in the picture below. Using quantitative techniques will maximise completion as they are quick and easy to answer, and will also maximise your ability to undertake simple analysis.
  4. Create your Survey Organise your questions logically, so you uncover more at each question, use quantitative first, then finish with one or two qualitative so your consumer has a chance to tell you anything you didn’t think to ask . e.g 1. Select the brands you have heard of from the list below. 2. Have you heard of Wise Up? 3. On the scale below select how you feel about the Wise Up brand. 4. Rank the 10 characteristics below in order of importance when you are selecting a Marketing partner 5. Now rate out of 5 how you feel Wise Up performs on each Characteristic. 6. What services do you wish Wise Up also provided (please list below) 7. Is there anything else you think would help us improve? (please write in the box).
  5. Don’t forget the demographics It is important to end with some demographic questions (think of the Census!) it could help to know Gender, Age Bracket, Country / State of residence, Metro / Regional etc, these help in 2 ways, firstly we can make sure we only analyse relevant answers e.g If your product is women’s lipstick you might want to discard data supplied by Men, or females under 15 and secondly we can look for differences by demographic e.g 60% of Women 18-25 like our logo but 70% of women 26-34 don’t like our logo, depending on who we are targeting this is more valuable than knowing 55% off all respondents liked our logo. Demographics help us put our findings into perspective, and paint the picture of who our ultimate consumer is.

Now all that’s left to do is try your survey out on a few friends first, iron out any wrinkles, then take a deep breath and send en masse.

Next week I will do a post on how to analyse your survey responses, but in the meantime, have you done any surveys before? How did you design them? How was the response? Or are you working on one now, feel free to send your draft to me and I’ll help you iron out the wrinkles.

Mary-Anne

www.facebook.com/WiseUpMarketingSolutions

 


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