Strategic Marketing Plan #10: Pricing and Packaging, Creating an Experience
I simply love Apple. Design and branding have never come together so elegantly to reward the customer experience. The package is simple and uncluttered. The product, presented like a precious jewel, is protected with all the right placeholders, displaying the product clearly and securely with easy-to-navigate packaging. Customers opening an Apple product box feel the privilege.
Imagine how that privileged feeling would turn peevish and perturbed if the iPhone came in a blister pack requiring a box cutter for release. Or if it were held in place by plastic bands that ripped the guts of the packaging as you removed the product. And what if that package had four or five colors of text and photos blaring the product message, creating visual noise above which you might nearly miss the “ooh” and “ahh” of the actual product reveal? Different response.
Is one of those scenarios better than the other? Well, that depends. Who is your target audience, and what is it that you want your customers to feel when they open or receive your product? Apple designed its packaging to reflect a peaceful, elegant, upscale product and image. Products that sell on price as the primary advantage are probably best displayed in a package that is the cheapest option, such as a blister pack, regardless of the inconvenience.
Choosing how to price and package your products is important. If pricing authentically represents the brand, customers will be thrilled with it, even if they are hacking away with a box cutter to get at it. That’s where it is smart to begin considering price. After going through the exercises in this strategic marketing plan, you know where you stand in the marketplace. Are you competing on price? Packaging should reflect that. Are you competing on quality? Same here. Your product should be presented in a way that is synchronous with your brand identity. Price isn’t the only determining factor, but it’s way ahead of whatever is in second place.
Pricing your product may involve more than you think. Considering costs, competition, and customer preferences, you know what you have to make on each unit in order to make money. That should not be your primary consideration. It is important to review pricing of your competition, listen to your customers, and watch the market carefully.
For new companies, setting initial product price establishes a sense of place in the market. It says to the customer that your product is better than Product A, priced in the basement of your product niche, but maybe not as good as Product B, priced a bit higher than yours. As you consider your price, know that most companies overestimate how price factors into a sale; price is rarely the sole advantage that converts customers.
Customers of price-sensitive products will tell you price is key. Why shouldn’t they? They want you to give them a deal. If you’re selling based on price as a differentiator, you’d best be ready to produce and sell a ton of product in order to make your revenue targets. You’ll likely have to work harder, longer, and more efficiently to fulfill any extra orders that might result from a low price. Many products are suited to this model. If, however, your customer is making a purchase of any importance, it is highly unlikely that price alone will covert to sales.
For Big Wood Ski, as a fairly new company, pricing is crucial. Bex and Caleb considered the cost of respectable, well-known, mass market, big brand ski lines when setting their prices. Most of the big brands fell between $800 and $1200 for their top skis. Big Wood Ski, however, isn’t marketing to the big-brand ski customer. Their market is the high-net-worth individual who is interested in something extraordinary. Pricing Big Wood Skis competitively with mass market, big brand skis would be marketing suicide. Pricing them above that market, in alignment with other custom ski brands, is key in establishing their position as a high end, exclusive, custom ski designer and builder.
It was very tempting for Bex and Caleb to try to compete with those big ski manufacturers on price. The mighty struggle and desire to keep pricing low to try to seed the market and get skis out the door and on the slopes is reflected in the current Big Wood Ski pricing strategy. Emphasizing the current price as an introductory one, available for only a short time, accomplishes the market seed while allowing a significant price increase in future seasons.
Hand in hand with price is packaging. It says a lot about the product, as described in the beginning of this post. If you’re selling in bulk or on price alone, packaging does not much matter, as long as the product is delivered in reasonably good shape. If you’re establishing a brand, it is very important to package authentically, reflecting your brand ID.
For Big Wood Ski, that means standing out from the crowd in a ski shop, and only in shops dealing in upscale markets. They have taken an artisan’s approach, developing a signature display that conveys the craftsmanship of the skis, sets them apart from ski row by isolating the display in a standalone unit, and emphasizes the beauty of the wood and finish. Big Wood Ski is delivering a product in a special way that ensures the customer feels the privilege of ownership. It means no packing peanuts and reused boxes. What else might Big Wood Ski plan to do in the future, as they grow and prosper?
These skis are art. Why not package them that way? Why not include the mounting hardware to display them on the wall, as owners Bex and Caleb intend for some customers? Home to two stunning hardware producers, Sun Valley could provide a wonderful homegrown product assist.
Providing a shipping crate that is rough hewn, representing the western identity of the brand, while giving an extra push of posh, such as a microfiber drying cloth to spiff them up after a few runs down the hill, will go a long way toward endorsing the luxury and privilege of the product. Perhaps Bex and Caleb could even offer a leather slip or carrying case branded with the Big Wood Ski logo, which would add to the ownership experience. Put these gorgeous skis in a plastic bag inside a cardboard box filled with Styrofoam? Very different result.
Of course, luxury packaging can be pricey. It’s part of the deal. If your company is up and running smoothly, but you’re working to grow further, exploring options that underscore branding is a good way to gain an edge. If you’re young and hungry, employing these branding points can be difficult. Depending on your market, however, it could be worth the price. The luxury market expects a product to deliver an experience. A product bought based on price does not.
Both pricing and packaging are extremely important to the success of your product. Carefully think through the process, and spend as much as you can to research the possibilities for creative, unique, appropriate packaging that sends the perfectly tuned message to customers: they bought the right product. Next up: distribution and routes to market.