Unlocking Brand Potential: The Power of Positioning, Perception and Pricing

Your brand’s success hinges on three interconnected pillars: positioning, perception, and pricing. These three concepts are tightly correlated if you want to build a market-leading presence and drive profitability using brand.

The purchasing decision is heavily influenced by price, value and perception for every product — irrespective of category or actual price.

As the name suggests, perceived value is a subjective way of estimating the benefit a customer believes they’ll receive upon purchasing a product or service. Factors such as functionality, quality, brand reputation, and emotional benefits play into what your perceived value is.

Perceived price however is an interpretation of cost of the product to its benefits. Example, a high quality product that offers better than expected benefits will be perceived as reasonable.

This brings up the dichotomy of price and value:

• Benefits outweigh price — consumer will purchase
• Percieved value outweighs price — consumer will purchase
• Positioning on core USPs, enhance perceived value — consumer will purcahse

https://beloved-brands.com/pricing-strategy/

Why is positioning important:

Positioning, in summary, is a perception definition document that lays out

• who’s pain points do you want to solve for
• what makes your brand better than your competition
• what is your undeniable moat that’s going to help you stay unique

Why positioning and pricing are interlinked:

1. Positioning defines your perception, then influences your pricing strategy. If you position as premium or luxury, you can command higher prices because consumers associate these prices with quality and exclusivity. Positoning reflects on brand experience, which has a direct correlation to perception and therefore pricing.
2. When you define your audience, you understand their psychographics, and when you do that you can align pricing better. A misalignment between positioning and pricing can lead to consumer confusion and dissatisfaction. Don’t overpromise and underdeliver.
3. Justification of price through positioning: When you do a market analysis you’ll know what your brand has and doesn’t. That’s a good time to think about how to differentiate using factors such as craftsmanship and exclusivity for example.

Effective positioning gives you a pathway into pricing decisions as it shapes the overall brand perception in the marketplace — ultimately driving business success. Approximately 50% of consumers use price as a primary indicator to compare a brand’s market position against its competitors, according to research by Brand Beat Magazine.

A misalignment between positioning and pricing can lead to consumer confusion and dissatisfaction. Take a real time example, if H&M were to suddenly raise its prices significantly without enhancing perceived value, it might alienate its budget-conscious consumer base. Which goes to show how closely linked pricing and positioning are.

Now that you’ve understood positioning, here are some ways to price

1. Mature market, high-value customer: Focus on maximizing revenue from niche markets with fewer clients. Brands like Rolex exemplify this strategy by targeting affluent consumers who value luxury timepieces.
2. Niche market and specialized offering: Concentrate on core differentiators to justify premium pricing. Premium pricing is often seen here. Patagonia is a great example here, they position itself around sustainability and ethical production practices. Their customers are willing to pay more for products that align with their values.
3. Low-value market, intense competition: Here, focus on sales volumes and competitive pricing to attract budget-conscious audiences.
4. Tailored pricing strategies for customized solutions: Here there are usually long sales cycles and negotiations that finally define the price. think of a consultancy company like McKinsey or a tailored SaaS tool here.

Beco — a quick case study

Beco was founded in 2019 by Aditya Ruia and his team, offering biodegradable and eco-friendly household products.

Their positioning hinges on being environmentally responsible, and their consumers are looking to reduce their carbon footprint and make sustainable choices in their daily lives.

As for pricing, their value-based pricing strategy works incredibly well for them. The pricing is similar to conventional options, making the decision-making process smooth and easy for consumers.

In September 2022, Beco secured $3 million in Series A funding to expand its product line and increase retail presence across India. This is an indication of strong market demand driven by effective positioning.

Conclusion

There is a strong correlation between price, positioning, perception, and profit for it is a fundamental principle that every successful brand must master.

Positioning establishes your value proposition, which then informs your pricing strategy. When you align these three, you build an image for your brand, which then fosters customer loyalty, and drives sustainable profitability.

Pricing and positioning are not merely a reflection of costs; it is a powerful tool that communicates your brand’s value to the market.

Thoughtful pricing strategies will set your brand apart in an increasingly competitive environment.

Thanks for reading! I’m the founder of The Fingerprint Labs, a strategic brand studio for challenger brands. We’ve worked with 100+ brands in DTC/E-comm/FMCG and Tech to create, build and evolve their brands.

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