Price is one of the most important elements of the marketing mix, as it influences the perception of value, demand, and profitability of the products or services you offer. Therefore, it’s essential that you price your Hair Care products competitively. In this article, we will explain what a pricing strategy is, what factors you should consider when setting it, and what types you can apply depending on your situation.
Price is a factor that drives most purchase decisions followed by the wide range of the product portfolio and the advantages provided by loyalty programs. This is reflected in the report “Shopper Attitudes to Retailing“The report, prepared by Kantar-WorldPanel, on the perception of retail chains.
According to this study, 74% of households base their choice of establishments on value for money. Therefore, defining a competitive price for your hair care products is a critical step that can move the balance toward the success of your business. We dive into what factors you need to consider in this roadmap. Join us!
What should a competitive pricing strategy look like?
When we talk about pricing strategy we refer to the set of processes and methodologies used to price your products or services effectively. A good pricing strategy should:
Align the price with the value perceived by the customer.
Be consistent with your brand’s image and value proposition.
Stand out from your competitors’ offerings.
Be profitable for your business covering costs and generating profits.
Be flexible to adapt to market changes market changes and to the needs of your customers.
What factors should you take into account when pricing your hair care products?
To establish an effective pricing strategy for your Hair Care products, you should analyse the following factors:
Product life cycle
It is the process from its introduction to its exit from the market. You must take into account what stage your product is at (launch, growth, maturity, or decline) and how it affects demand, competition, and profit margin.
For example, if your product is new and can be differentiated from other products, you can opt for a high price to take advantage of the initial interest and recover the investment. If your product is at a mature stage and has many competitors, you can opt for a low price to maintain or increase your market share.
These are all costs involved in acquiring, marketing, and promoting your product. You must calculate the unit cost of each product and the break-even point, which is the minimum sales level you need to cover costs.
From there, you must calculate the profit margin you want to obtain for each unit sold, taking into account the added value of the added value you offer and the elasticity of demand (the sensitivity to price change).
You should investigate their prices, quality, positioning, and market share. You can then compare your offer with theirs and decide whether you want to match, beat, or undercut their prices, depending on your competitive advantage and your target segment.
The target audience
You must know their characteristics, needs, preferences, habits, and buying behavior.
According to McKinsey,consumers are increasingly shopping in different price ranges, so you need to know them all in depth to decide which one to move into.
You will then be able to estimate their willingness to pay for your product, their perception of value, and their loyalty. You should also take into account whether your customers are price-sensitive or not. attributes such as quality, design, innovation, and sustainability.
What types of pricing strategies can you apply to your Hair Care products?
There are different types of pricing strategies that you can apply depending on your situation. Here are some of the most common ones:
Cost-based pricing strategy
It consists of setting the price by adding to the unit cost of the product a percentage or a fixed amount as a profit margin. It’s a simple and safe strategy, but it does not take into account the value perceived by the customer or the competition.
You can use it if your costs are steady and predictable, if you have little competition, or if your product has rigid demand.
Value-based pricing strategy
It consists of setting the price according to the value that the customer attaches to the product or service. It’s a strategy that maximises profit and customer satisfaction but requires market research and clear differentiation.
You can use it if your product has high quality, innovation, or exclusivity, if your target segment is not very price-driven, or if you can create a unique shopping experience.
Competition-based pricing strategy
It consists of setting the price based on competitors’ prices. It’s a strategy that allows you to adapt to the market and demand, but it can lead to a price war or a loss of identity.
You can use it if your product has little differentiation if your target segment is very price-driven or if you want to penetrate a saturated market or defend your position.
Dynamic pricing strategy
It consists of adjusting the price according to market conditions and customer profiles. It’s a strategy that allows you to optimise profit and demand but requires an advanced data management and analysis system.
You can use it if your product has a fluctuating demand. If you can segment your customers according to their willingness to pay or if you want to take advantage of e-commerce opportunities.
To conclude, establishing a competitive pricing strategy for your Hair Care products is not an easy task, but not impossible either. You only need to analyse the internal and external factors that affect your business, choose the strategy that best suits your objectives, and monitor the results to make the necessary adjustments.
There is no magic formula that applies to all cases, but you must adapt it to your reality and your market.
Remember that price is more than a number: it’s a communication, positioning, and differentiation tool that can make or break your business. So don’t leave it to chance or copy it from others.
At Starbrands, we want to help you offer the most competitive prices. For this, in addition to offering you high-quality products and differentiation, we have a partner program that will make the process much easier for you. Want to know how? Don’t hesitate, to contact us and we will give you all the info you need.