Pricing 360°: How understanding consumers’ perception of your brand is key to making better pricing decisions

How can businesses achieve unparalleled growth and maximize profitability in today's competitive landscape? At boobook, we believe the answer lies in our data-powered strategic consulting, anchored firmly on four interconnected pillars: brand, product, pricing, and customer/consumer. By understanding and leveraging these fundamental elements, we guide businesses toward excellence and sustainable growth.

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In the coming weeks, we're excited to share a series of articles focusing on these pivotal pillars, more specifically on how strategic price setting is driven by the other 3 pillars. This insight is crucial in an era where gaining a competitive edge is not just beneficial but necessary for survival and success. Understanding the intricate relationship between these pillars enables businesses to boost growth and ensure maximum profitability effectively.

Kicking off our "Pricing 360" series, we begin with a topic at the heart of product success or failure in the market: Brand perception. The way consumers perceive your brand has a profound impact on their purchasing decisions, a fact no business can afford to overlook. We will demonstrate how a deep, nuanced understanding of your brand, seen through the eyes of your consumers, can empower you to make pricing decisions that not only resonate with your target audience but also drive growth and success.

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Why having a clear view of your brand perception matters

The equilibrium between brand perception and pricing decisions is crucial for businesses striving for strategic growth and a stable market position. It involves a complex analysis of supply and demand economics combined with brand psychology. Contrary to common belief, a high price doesn't always signify premium value, and a lower price doesn't necessarily mean affordability. To truly enhance pricing strategies, understanding the signals your brand sends out in the market is essential.

Pricing strategy involves setting the optimal price for your products or services to maximise revenue or profitability and achieve business objectives - without pricing your brand/products out of the market or course. Pricing decisions will significantly impact sales volume, but also market positioning, and, indirectly, brand perception. The right pricing strategy can also help you attract (new) customers or maintain competitiveness.

So, what is the connection between these two essential components of your overall marketing strategy, and why should you align them? Brand understanding and aligning your pricing strategy with your desired brand positioning is essential because it helps you to create a consistent and coherent brand experience for your customers. When you achieve an accurate and positive customer brand perception, this, in turn, enhances their trust and loyalty, which is translated into increased sales and profitability.

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When companies benefit from brand understanding

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Here’s an overview of when and why companies will benefit from understanding how the market perceives their brand.    

• Linking pricing to brand positioning: Understanding how customers/consumers perceive your brand helps you identify and define your brand's unique position in the market. It allows you to understand how customers perceive your brand, and it enables you to identify the key differentiators that set your brand apart so you can create a compelling value proposition. This, in turn, influences pricing decisions. If your brand is perceived as offering unique benefits or solving specific customer problems, customers may be willing to pay a premium price. For example, if your brand is associated with high-quality and premium features, you can set a higher price point to reflect that perception. On the other hand, if your brand is positioned as affordable and value-driven, a lower price point may be more suitable.
• Launching a new product or service: Brand perception analysis is extremely valuable when developing or launching new products, product features, services or even (sub)-brands.
  It helps companies understand customers’ expectations, motivations, or feelings towards your brand. By mapping the target market's perception of your brand as well as your competitive landscape, companies can make strategic decisions to extend their offer purposefully and successfully.
  
• Rebranding/repositioning: When a company undergoes rebranding or decides to reposition its brand in the market, brand perception analysis becomes essential. It allows companies to assess their current brand identity and their brand DNA and identify gaps or opportunities for improvement. Companies can strategically plan and execute their rebranding efforts by understanding how the brand is currently perceived vs. how it should be perceived.

• Competitive analysis: Brand understanding is an excellent approach to conducting competitive analysis. By mapping competitors' perceptions and positioning, companies can identify opportunities for “the blind spots in the market” and build further on their strengths and weaknesses. This analysis provides the foundations for developing effective strategies to gain a competitive advantage and stand out in the market.

• Marketing and communication: Developing effective marketing and communication strategies isn’t the easiest task. However, with brand perception analysis, companies can better understand how their brand characteristics align with customer needs and expectations. By leveraging these insights, companies can create targeted marketing that resonates with their key audience, increasing brand awareness and customer engagement.

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How to measure and understand brand perception

There are different ways to capture the market's view of your brand and your competitors. Note that the view of competitor brands is critical in this exercise, as a brand is always perceived in comparison to other brands.  

One view might be to look at sales. Who sells most and least, especially how the volume changes when a brand is on promotion, as promos tend to be less necessary for more premium / high-quality brands. However, we know that sales (even promo sales) will only give a limited view of how brands are perceived.  

Another possibility is to collect brand perception views from the sales team, as they are often the closest to the market. However, these views might be biased towards specific customers or retailers.  

The best option is to talk directly to the consumers to get their view on how they perceive different brands—brands they either bought or are aware of. I.e. Which brands do they associate with high quality, reliability, trendy, premium, fun, innovative, mainstream, etc.? Alternatively, some of these perceptions can also be captured through social media analysis.  

Typically, the outcome of such an exercise is presented in a two-dimensional map called a "brand image map". It visually shows which characteristics brands are associated with and in which competitive space they sit, i.e., who the main competitors are from a brand image perspective.  

Ideally, a brand sits in white space, meaning competitors do not closely surround it and are away from the middle. The more a brand sits in the middle, the more its image is less distinct.  

Depending on the brand's goals, its desired brand image will differ. Value-driven brands strive to be considered premium and exclusive, while volume-driven brands will be closer to the mainstream.

In conclusion

Brand perception analysis is a vital tool for your branding and pricing strategy. When used effectively and complemented with other types of insights it can support businesses in strategic decision-making and help build strong brands.

Brand image analysis and pricing strategy are clearly intertwined in building a successful brand. By understanding the perception of your brand and its unique value proposition, i.e. your brand identity, you can effectively align your pricing strategy to maximise profitability and achieve your business objectives.  

Combining the insights gained from a brand image map with a landscaping exercise on current competitive pricing will further help you establish the optimal price (as in a price in line with the market) for your products or services, ensuring that you attract the right customers and drive long-term success.  

If you need to optimise your brand positioning and pricing strategy, get in touch! Our team is here to assist you in developing your ideal pricing strategy.

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