Another factor that drives a company’s pricing strategy is its positioning in the market. Firms that are leaders and/or have a unique product can price according to the value of their product to customers, whereas firms that do not have such a strong market position will need to set their prices in relation to other providers.
“In the alcohol beverage industry, market-leading brands drive price changes, and everyone who prices themselves relative to these brands needs to react to maintain their position,” notes a sales director from an alcoholic beverage firm.
These differences can also be seen within firms, with the same product having a different market position across geographies. While an item might be considered premium in one market, it might not in another. We can see greater variation, as more brands face local competition, the local market variation has become more distinct and can require far more customization this will require conscious and collective decision making when global brands are involved.
"No one is a born pricer, everyone moved into pricing through finance, marketing, or another role,” said a manufacturing firm's pricing director in April 2023.
Having the right tools is not enough
While having insightful data and tools to understand pricing is key, firms need to know how to use them to formulate pricing and then execute correctly. During our conversations with multiple pricing experts across industries, we often heard that there was a distinct lack of specialist pricing expertise.