Pricing your Product Accurately

In few of the previous blogs, I discussed a number of theories around strategy, strategic directions of the company and competitive strategies. Whichever strategy a company adapts, Pricing plays a significant role in adapting a differentiation or a cost leader strategy.  (Porter, M.E., "Competitive Strategy: Techniques for analyzing industries and competitors" New York: The Free Press (1980))

Buying behavioral analysts affirms the point that majority of lower, middle and middle upper class market segments are highly concerned on the price tag, and price plays a significant role in purchase decision making. From a seller’s perspective having the right price on the product will ultimately determine the successful sale or the product

There are three main views on Pricing strategies,

Economist View on pricing

In understanding the economists’ view to pricing, please see the graph which highlights the movement in supply and demand with Price and Quantity as key variables. As it is inevitable when the price is low there will be a significant demand on the product and as the price increase the demand goes down with affordability.

When the price is low, supply will be low and as the price increases there will more suppliers with the possible margin improvements due to price increases. Thus the ultimate price will be defined by the equilibrium of supply and demand.

Marketers View

Pricing plays a significant role in the marketers view towards pricing. As you already may know marketing tactical strategies are built around four main pillars which are knows as the 4P’s in marketing. 4P’s include Product, Price, Place and Promotions.  Pricing is the second most important pillar in marketing and as per marketers view the pricing is defined by the customer. As per the marketers view a product should be priced at an amount which the customer is willing to pay.

This is also in line with the Japanese concept of target pricing. Where the pricing for the product is first defined and then manages the cost structure to have an acceptable margin for the product.

Accountants View

 Accountant’s view to pricing is does not work on a hypothetical framework as the economist or the marketer’s view. Accountants view to pricing considers the total expenditure (Both Variable and Fixed) for the product and adds a standard profit mark up to arrive at the pricing for the product.

Three main pricing views takes into account different dynamics, a company to leverage on pricing as a key market strategy should take into consideration all these three views in deciding the correct price for the product. 

Managing your Personal Finances 1

There are so many discussions around defining an optimum equation to manage personal finances. Managing personal finances has become so difficult nowadays and many are drowned in huge debts. This vicious debt cycle starts right at the point a person starts earning money.

Second day at Work

The very first day we start working in our first job, the next day we will be getting a call from a fancy reputed bank offering a credit card. We think that these banks love us so much and they perceive us as wealthy men and the next thing we know, we end up with multiple credit cards. Credit cards nowadays come with fancy credit limits and into the bargain they couple credit cards with very attractive credit card shopping offers. All of a sudden we start spending forgetting whether we can afford or not.  Spending money Vs. paying using a plastic card psychologically affects the spending patterns and credit card companies successfully leverage on this. And this continues, then they offer us car loans, then housing loans and by the time we are in mid age all we will be having would be huge debts and higher percentage of income is spent on interest.

Overcome the Vicious Credit Cycle

How to overcome this vicious cycle? What are the specialist views on this vicious cycle? Rich Dad Poor Dad defines the ultimate finance freedom is where your investments generate earnings similar to your investments. Warren Buffet advises, that we should never depend on a single source of income.

Majority after reading these statements will say it is easy said than done. The starting point is to know what an investment is. In very basic terms it is an asset which will generate an income. The common assets that can generate income are publicly traded shares, savings accounts, fixed deposit accounts.

Do we need huge capitals to start investing? It could be 5% of the monthly salary or even 1% of the monthly salary.  If we start investing the investment would accumulate monthly and grow monthly. 

Increasing your net wealth can be done in two ways. You can increase the income, through multiple sources of income, investments increasing your asset base. Or you can reduce your costs. Reduce credit card expenditure which will result in decreasing both interest and debt costs. 

Personal Branding as a Rocket Science

There are so many discussions over the concept of personal branding. I did some research on this concept of personal branding to understand the underlying principles over it. Well it does not sound rocket science at all if you have a goal and an action plan to achiever the goal. 

What is your Brand?

If you take a brand like Body Shop for an example. What is the first impression that you get. It is a brand with a social purpose. Body Shop never use animals to test their cosmetics products. For us to perceive Body Shop as a philanthropic brand with a social purpose every time we see or hear about it, is a result of years and years worth of work. They knew how they want to position themselves in the market and they did it over the years keeping to its key principal never to test cosmetics on animals. 

Personal branding process is also similar. Its about how you want yourself to be perceived others. What values you want to be represented by. It is simple, for example if "Being Macho" is how you want others to perceive you, you better start going to a gym and karate classes so that you build your physical appearance to suit how you want others to perceive your self.

Action Plan 

First step,  is that you have to know exactly how you want others to perceive you.  These are called brand values. The key messages your personal brand represents. Next step is you need to have an action plan. The time span will vary based on the deviation from the current brand positioning. The time span will be longer if there is a significant deviation from the current brand positioning.

Well congratulations, with the amount of social networking in the modern days life makes easy to launch a good communication plan for your personal brand. Each and every post, each every page you like, each and every status update that you put represents what you are. You can take control of this. You can purposely ensure that your posts are in line with your brand values.