Using price monitoring to value new products
Price positioning is one of the most important decisions to be made when launching a new product. Both the attractiveness of the offer and the profit on sales depends on the prices. However, the valuation process is complex and you should take into account at least several factors – not only production costs or supply and demand but also prices of similar products on the market. So how do you accurately price new products to optimize profit and attract consumers?
New product pricing – where to start?
The first and natural step in the process of determining the price of a new product is to count the production costs, and then the margin that we would like to achieve. It is worth looking at the other items from the portfolio so that the price of the new product corresponds to the positioning of your brand. It is also important that the new product is properly perceived by consumers – as economic, value for money, or maybe premium? The market price should largely depend on this type of vision and strategy.
Pricing on a market basis
Regardless of the initial assumptions, each concept in the next step should be verified in relation to the market situation. Innovative products that do not yet have their counterparts are valued differently, compared to substitutes or products similar to those already available. In the first case, the price should be primarily the result of marketing research conducted on representatives of the target group – the prices of other companies’ products play a subordinate role here. In the second, however, it is the monitoring of competitive prices that should be key to making a decision.
Monitoring competition and setting recommended prices
Monitoring competition is a mandatory element in the valuation of new products. The positioning of other brands with a similar offer is an important information that says a lot about consumer preferences and achievable strategies. It may also be useful to review the prices of competing products in historical terms and see how positioning has developed over the months or years. It is also worth looking at offers from individual retailers to verify your sales channels in the next step.
Distribution is the key to success
According to European law, the market price cannot be imposed by the manufacturer – it can only be suggested by them. So, the key to success is to find sellers and partners who are likely to follow the recommendation. Cooperation with retailers is an extremely important element of introducing a new product. Some stores are prone to underselling, which can have a negative impact on the entire market. Cooperation with stable partners and achieving favorable sales results with them can encourage other sellers to maintain the price level desired by us, and thus ensure a successful launch.
Automated price monitoring will be a great help when valuing new products. Proper positioning is able not only to attract customers and provide a profitable margin but also to build the desired image of a given brand and distinguish it among the competitors’ offers. If you are looking for a proven and trustworthy monitoring tool, please contact us – at Dealavo we provide high-quality data every day that supports the creation and optimization of marketing and sales strategies of companies from various industries.