Quality is remembered long after the price is forgotten.
-Gucci Family Slogan.
The place of segmenting, targeting, and positioning (STP)
In determining the price of a product, you need to consider the STP framework: Segmenting, Targeting, and Positioning.
Segmenting divides a broad market into smaller groups according to preferences. Segmentation may be demographic (age, gender, income), geographic (location), psychographic (lifestyle, values), or behavioural (purchase history, brand loyalty).
Targeting focuses on the most viable audience rather than trying to appeal to everyone.
Positioning creates a particular perception in the minds of customers whenever they recall the product or service.
Apart from helping to identify and expand the market, STP is a strategic marketing approach that supports pricing decisions. Each segment of the market has its own pricing and offerings.
Marketing mix
Another factor in this discussion is the marketing mix. Marketing professionals explore the 4Ps for tangible products (Product, Price, Promotion, and Place) and the 7Ps for services, adding People, Process, and Physical Evidence. This helps in determining what happens in each market segment and in making informed pricing decisions.
Price vs total cost
You cannot discuss price without considering total cost. To determine total cost, consider the following from the point of view of a manufacturer or importer:
Psyche cost: The mental energy and research involved in developing the product concept.
Energy cost: The physical effort required to produce or import the product.
Time cost: Time invested in bringing the product to market.
Monetary cost: The actual financial investment in production or importation.
Total cost plus markup determines selling price.
Pricing: My experience
We operate strongly in the training and consulting industry, which is considered high-ticket because it delivers significant value. Intellectual work is not cheap. To deliver a good job in training and consulting, you must work with competent teams. If you want outstanding results, pay for excellence. Excellence comes at a price.
Benjamin Franklin said, ‘‘The only thing that is more expensive than education is ignorance.” I agree. If you think education is expensive, try ignorance. It costs far more. Don’t focus solely on the price of a good product or service; consider the benefits.
When I published my first book, The Selling Champion, 13 years ago, it sold for N2,000. Some felt the price was high, while others believed it was a bargain. Today it sells for N10,000 and has been revised three times, with another upward review underway.
The book has notable endorsements, including Brian Tracy, Dr Leo Stan Ekeh, Prof Vincent Onodugo, and Pharm Sir Emma Ilozor. Mazi Sam I. Ohuabunwa wrote the foreword and described it as a ‘‘well-cooked book.’’ I have since written ten impactful books covering business, family, and personal development.
Your duty as an entrepreneur or professional is to ensure your offerings are top-notch. When customers receive value, they will continue to buy. I define value as ‘‘When performance meets or exceeds expectation.’’ Always go the extra mile. This is how to build strong brand equity.
Remain strategic, innovative, and consistent in delivering great value. Follow the right path and determine your selling price. That is how to lead in the market.
Always remember the basic formula: Selling price = Total cost + Markup.
