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Pricing above the Market Average with Prestige Pricing


10 June 2022
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Many people often assume that a high price or cost is proportional to high quality. In addition, people generally have a tendency to believe that a business places high costs on a product or service for a specific reason.

That mentality is the basis for a pricing strategy known as prestige pricing. This is a tactic that businesses use to shape the perception of a premium brand by charging a premium price.

 

Understanding Prestige Pricing in Marketing Products

Prestige pricing, which can also be called premium pricing or image pricing, is when a company sells a product or service at a high price to give consumers the impression that the product is of high value. In most cases, businesses do this to attract consumers who are interested in projecting a high status or prestigious image.

This strategy is often closely related to brand perception. Companies that take this approach often have products that are recognized for their superior quality or value that they add to the lives of customers. The pricing method is based on the assumption that consumers will feel more value at a higher price so that high-priced products are commonplace.

Prestige pricing strategies may vary depending on the brand's objectives and the company's offerings. If you want to implement this strategy, take a look at the competitors in your market and see how they are pricing products that are similar to your business. With a unique value proposition that differentiates your product from the competition, you will be able to justify a higher price point.

 

Pros and Cons of Prestige Pricing

Although it is often perceived as something commonplace, prestige pricing is also a pros and cons in its application in the marketing process. In its implementation, there are various opinions that arise regarding the reputation of the business to the customer's response.

- Pros: Increased Revenue

The most obvious advantage is increased revenue. Successful prestige pricing can also improve your business' reputation in the marketplace, especially if customers are willing to post about your brand on social media. This type of organic marketing is very valuable, because it comes from customers who have experience with your product, not the company's internal marketing team.

- Pros: Brand Differentiation

Prestige pricing can also help differentiate your brand from other brands that may be trying to capture the same target market. Done right, prestige pricing can help differentiate and group your brand from similar offerings effectively.

While there are slightly lower priced items that may be similar to your own, prestige pricing can set a different level of product for the brands and products you offer.

- Cons: Higher Marketing Cost

Disadvantages of initial marketing costs, where you have to spend on consistent and comprehensive marketing to establish your business as a premium brand and convince buyers that your product is worth the cost. If other, similar brands had more success with this approach, you might end up spending a lot of that for minimal results.

- Cons: Decreased Sales Volume

Sales volume is another possible loss. Because your product has a higher base price point, your overall target consumer or customer shrinks because you are targeting a smaller segment of high-end buyers.

As a result, it is critically important to find price points that generate sustainable income based on specific market demographics, and develop ways to expand into new territories or buyer segments to ensure revenue is not monotonous.

 

What is a Prestige Pricing Strategy?

Prestige pricing strategy focuses on how to convince potential buyers that the product or service you offer is worth the price offered. For prestige pricing to be effective, businesses need an approach that supports the value of prospective offerings.

The simplest way that is usually applied is to adjust the customer's subconscious perception of what to give from a prestigious product. The following are four key elements of a prestige pricing strategy that a company will implement:

1. Forming an image or image

It is important to build a brand image that sets you apart from the competition and positions your product or service as a highly valued option in the marketplace. One example is a brand has an image or image that is known for its usability and durability.

This allows the company to charge significantly higher fees than its closest competitors, despite the fact that many similar brands share similar features. This means the company is spending time and money to shape its brand image.

Brand image or brand can be formed through websites, social media, and sales channels. All these means must position their products as products used by the target market and want the best so that customers are willing to pay for it.

The same strategy applies to building your brand if you want to do prestige pricing. First, find a specific niche or target market: which product or service range do you focus on?

Next, define a set of target customers and create a consistent brand image and experience across all your channels. Finally, provide a product that meets initial expectations and gets people to talk about your brand, which in turn can strengthen your image.

2. Increase perceived value

Next you need to increase the perceived value of your most popular offerings by creating a targeted pricing strategy. You can consider psychological pricing by taking advantage of consumers' perceptions of a product's value based on its price.

The psychology of the number nine (9) offers the clearest example: a product priced at Rp. 19,000 instead of Rp. 20,000 is often perceived as more affordable and of slightly lower quality.

If you want to create the impression of a premium product, round numbers are the right choice. While limiting your pool of potential buyers, it subconsciously creates a greater sense of value among customers and sets your brand apart from competitors.

3. Make the best choice

The choice of users or consumers is very important in building a premium brand. The goal is to provide the user with a set of choices that naturally lead to your preferred option. This concept is sometimes called “Magicians Choice” where the user is given a choice that always leads to the same result.

A similar choice strategy can be applied to prestige pricing by offering different price points for different product categories. Naturally, you can divert buyers to the highest revenue generators and also capture high-end customers.

4. Limit supply carefully

Limited supply is also a key component of an effective prestige pricing strategy. At first glance, it makes more sense if a product is available to everyone who wants it and can afford it. This short-term income often outweighs the long-term benefits of generating excitement for a product that is not widely available.

By carefully limiting supply to increase demand, you can also raise prices and create more consistent interest in your brand. Remember not to take this situation too far, otherwise if no one can get your hands on your product, then customers will be lost to competition.

Implementing a prestige pricing strategy is not an easy thing to do, but it has the potential to provide good profits if successful. Therefore, it is important for companies to understand the basic principles that form the basis for determining pricing strategies that company professionals can learn through the Marketing Pricing Strategy program.

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Product branding is now increasingly important in the era of ever-growing globalization and digitalization. Technological advances and the development of social media have created a more dynamic and competitive market.

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Definition of Product Branding

Product branding is a strategic process of creating a unique identity for a product or service through various elements. Branding is not only related to visual aspects, but also includes perceptions, values ​​and emotions associated with the product.

With effective branding, a product can create a strong and memorable image in the minds of consumers. Ultimately this will contribute to the success and sustainability of the business.

Types of Product Branding

Product branding includes various types of strategies that can be used to create a unique and strong identity for a product or service. Here are some common types of product branding:

Corporate Branding

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Product Branding

Create a unique identity for individual products that differentiates them from other products on the market. Example: Coca-Cola with its signature soft drink products.

Personal Branding

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Co-Branding

Several brands collaborate to produce new products or services. This can help expand market reach and increase credibility. Example: Collaboration between Nike and Apple for Nike+iPod products.

Geographic Branding

Promoting products or services based on a specific geographic location, often using origin as a competitive advantage. Example: Parmigiano-Reggiano Cheese from Italy.

Retail Branding

A strategy used by retailers to create a unique identity for their stores. Example: IKEA with its unique store concept and furniture products.

Benefits of Product Branding

The importance of product branding lies in its ability to change the way consumers view and interact with your product. Here are some reasons why product branding is important:

Differentiate from Competitors

In a market filled with similar products, strong branding helps your product stand out. A unique and different identity attracts consumers' attention and gives them a reason to choose your product over competitors' products.

Building Consumer Trust

Consumers tend to have more trust in products that have consistent and professional branding. Good branding creates a perception of quality and reliability which ultimately builds consumer loyalty.

Facilitate product introduction

Effective branding makes it easier for consumers to recognize your product among many other products. Visual elements such as logos, colors, and packaging, as well as auditory elements such as slogans and jingles, all contribute to building product recognition.

Facilitate product introduction

Products with strong branding can often be sold at higher prices than products without clear branding. Consumers are willing to pay more for products they know and trust.

Steps in Building Effective Branding

Building effective branding is key to ensuring your product is not only known, but also remembered and loved by consumers. The following are some important steps that need to be followed in building effective branding:

Determining the Target Market

The first step in building branding is understanding who your target market is. Knowing your consumer demographics, psychographics and behavior will help create the right message and identity.

Building Brand Identity

Brand identity includes the brand name, logo, colors, typography and other visual elements. Make sure these elements reflect your brand's character and values. Consistency in the use of visual elements is critical to building recognition and trust.

Creating a Brand Message

Brand messaging is how you communicate with consumers. It includes taglines, slogans, and narratives that tell your brand story. Messages must be clear, consistent, and relevant to your target market.

Implementing Marketing Strategy

In the digital era, a strong online presence is essential. A professional website, active social media profiles, and a good content strategy will help you reach and interact with consumers more effectively.

Supporting Innovation

A good understanding of user needs and expectations can drive innovation and better product development in the future.

Product branding is a crucial element in modern business strategy. By building a strong identity and creating consumer trust, effective branding can bring long-term success to your product.

By following these principles, you can ensure your products are not only known, but also loved by consumers.

Product branding is only one of many management strategies that companies can carry out. Understand more about the various elements of management strategy through the Strategic Brand Management program from prasmul-eli.

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Human resource management or HRM (Human Resources Management) is something that is important for business owners to know.

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Moreover, a successful company depends on the quality of its human resources. This makes good HRM necessary to achieve company goals.

Understand more about what is meant by HRM, its functions and benefits for your company in the following review.

Understanding HRM

HRM or Human Resources Management is the activity of organizing and managing employees in a company to implement the vision, mission and business goals.

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The following is a more complete explanation of the HRM function in the company, including:

Recruitment and selection

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Training and development

The second HRM function is as a designer and implementer of training programs.

The training provided must be able to improve employee skills, knowledge and competence.

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The program includes hands-on training sessions, case studies, and real projects that require employees to apply their new knowledge in the context of everyday work.

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Performance manager

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Communication intermediary

The next function of HRM in the company is as a communication intermediary between leaders and employees and vice versa.

Information such as policy announcements and company developments, as well as input on a problem, is usually communicated first to HRM.

For example, a company faces a policy change regarding flexible working hours. Before the official announcement to all employees, the company leadership conveys the information first to HRM.

HRM is then responsible for communicating the policy to all employees.

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Employee welfare manager

HRM is also responsible for ensuring the safety, comfort of the work environment and security standards for employees.

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Likewise, when a staff member is to be appointed senior, he or she will receive provisions first so that they are better prepared for their appointment.

Conflict management

HRM is a key role in handling conflict among team members or between the team and leadership. They can mediate, resolve disputes, and find solutions that support a harmonious work environment.

By mediating, they facilitate constructive discussions and reach an agreement that satisfies both parties. These actions help maintain a positive work atmosphere and support team productivity.

Benefits of HRM for Companies

If the HRM functions above run well, the company can obtain several benefits:

  • Play a role in achieving departmental or company targets as a whole which has an impact on increasing profits.
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That's the information you need to know about what HRM is, its functions and benefits for your company. A good HRM system is one that is able to produce a solid, productive and profitable team for the company.

However, an HRM system that was successful 5-10 years ago is not necessarily still relevant today. An HR manager must keep up with various changes ranging from the way business is managed, technology, to the expectations of today's job seekers.

If you want to explore HR that is relevant today, follow the short program HR Today: Building Employee Excellence from Prasmul Eli.

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User Experience (UX) is a crucial element in the success of products and services in the digital era. In various applications, UX plays an important role in determining how users interact when using a product.

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This article will thoroughly examine various aspects of UX, from understanding to its practical application in the business world.

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User Experience (UX) is a concept that covers all aspects of a user's interaction with a company, service, and product. The goal is to create a satisfying and enjoyable experience for users, and meet their needs and expectations.

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User Experience (UX) Function

The function of user experience in product development is vital to achieving success in a competitive market. By understanding the various key functions of UX, companies can create optimal experiences and in turn increase retention and loyalty.

Here are some of the main functions of UX:

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Increase User Retention and Loyalty

Positive user experience drives loyalty. When users feel comfortable and satisfied with a product, they tend to continue using it and even recommend it to others.

Increase Efficiency and Productivity

Good UX can increase user efficiency and productivity by providing an intuitive and functional interface. Users can complete tasks faster with fewer errors, which means they can focus on more important things.

Reduce Customer Support Costs

Products with poor user experience tend to cause frustration and confusion for users, which ultimately increases the need for customer support. By investing in improving UX, companies can reduce the number of support calls and requests, which in turn can lower operational costs.

Increase Conversion Rates

In the context of e-commerce or sales-oriented applications, good UX can increase conversion rates. By designing a clear and simple user path from start to finish, users can make purchases more quickly.

User Experience (UX) Components

Each UX component plays an important role in creating a holistic and satisfying experience for users. The following are the main components of user experience, including:

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  3. Visual Design: Attract users' attention through aesthetic and functional visual elements.
  4. Information Structure: Organizing content and information so that it is easy for users to find and understand.
  5. Accessibility: Ensure that the product can be used by everyone, including those with disabilities.
  6. User Satisfaction: Measures the extent to which users are satisfied with the experience they get.

The Importance of User Experience (UX) for Business

Implementing the right UX  can build stronger relationships with customers, increase loyalty and ultimately drive business growth.

The importance of user experience in business can be seen from the various benefits it offers, some of which are:

Increase User Satisfaction

The first benefit of user experience is that it can increase customer satisfaction. A good experience makes users feel satisfied and happy using the product or service. This can increase user loyalty and retention.

Reducing Costs

Products designed with good UX can reduce customer support costs because users experience problems or confusion less frequently. This reduces the number of calls and assistance, which in turn reduces the workload of customer support teams and lowers operational costs.

Increase Conversions

Websites or apps that have good UX tend to have higher conversion rates. This is because users feel comfortable and easy in achieving their goals, such as making purchases.

Building Brand Reputation

Positive experiences can improve brand image and reputation. Users who are satisfied will usually recommend the product or service to others.

Supporting Innovation

A good understanding of user needs and expectations can drive innovation and better product development in the future.

User experience is a very important aspect in product and service development. By focusing on UX, companies can increase user satisfaction, reduce costs, increase conversions, and build a strong brand reputation.

UX is just one aspect that you need to master in the world of Digital Marketing. Optimization still needs to be done in the realm of search engines, websites and social media.

Understand more about the application of digital marketing to companies through the Digital Marketing Fundamentals program from prasmul-eli.

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