The holidays always remind me of a season of possibilities. When I was a little kid, I thought of possible great gifts Santa might bring and things I could do in the new year. Now that I am older, I anticipate my kids coming home to celebrate Christmas with us; and I think of the possibilities for their lives. I realize their possibilities really depend on the choices they make, and their willingness to ask, “What if?” for themselves. The more they can ask that question about their jobs, business problems, societal challenges, and their personal lives, the broader their range of possibilities.
“What does that have to do with pricing and marketing?” you might ask. Well, this is also a good time to consider some possibilities for your business. Even if everyone is competing the same way in your industry, it might be possible for you to do something different and improve your profitability. Consider some past examples when others have asked “What if we did it differently?”:
- What if we segmented customers according to whether they pay personally or get reimbursed by their company? Those being reimbursed might be less price sensitive and will pay more. (Airlines and hotels)
- What if we offered a discount for regularly scheduled shipments? It will be more efficient for us and the customers, saving us both money. (Amazon, Chewy, and many distributors)
- What if we created a premium brand and charged premium prices for products similar to our existing products? (Lexus, Infinity, and Acura)
- What if we offered a discount for self-service? (Started with gas stations, but now includes toll roads, banks, event tickets, etc.)
- What if we offered an annual subscription for free shipping? (Amazon Prime, now many others)
- What if we charged more for high-demand periods and less for low-demand periods? (Started with electric utilities, now Uber, Disney, etc.)
- What if we charged customers for each hour the jet engine was used, and included all maintenance? (GE Aircraft Engines “Power by the Hour”)
- What if we created a community just for a segment of older people who don’t have children at home, and offered a wide variety of activities and opportunities to meet new people? (The Villages, Del Webb)
- What if we offered new smaller packaging with a lower price, but a higher price per unit? (Coke and Pepsi)
I could keep going, but you get the idea. Although it is possible to be successful by doing what others do, the companies that have been most successful, have usually asked, “What if we do it differently?” Many people fear going outside the norms in their industry. They worry if they do something different, they will lose business. However, it is impossible to change the game with that mindset.
Consider the possibilities of changes you can make that will be sensible to customers and competitors. Are there changes that would create new incentives to benefit your customers and you? Are there possibilities to address a need that customers would be happy to pay for?
Remember, your customers buy from you for several reasons, only one of which is price. Your service and your ability to meet customer needs are nearly always more important. If you have a reputation of identifying customer needs and then serving those needs, make sure your pricing structure and your price changes are consistent with serving those customer needs. If your products and services provide value and your customers like doing business with you, they have reasons to keep buying from you. Don’t forget – your competitors are trying to make money too. They will often follow a change in price structure that makes sense.
Considering the possibilities does not mean taking foolish risks. It means looking at your markets and environment and looking for alternatives that can change the game. It means not being constrained by the way things are, but rather considering the way things might be. There are plenty of examples where someone asked, “What if?” and their entire industry was better off as a result. Don’t be afraid to consider the possibilities and lead your industry.
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