Page 3: Price
Ben Sherman has to assess which markets its products are aimed at and set a price to match. There are a number of pricing strategies that a business can use for its products including:
- cost based pricing where the selling price is set to cover the cost of manufacture.
- market orientated pricing.
Market orientated pricing covers several different approaches:
- market penetration, where a new product is priced low to attract a high volume of sales
- market skimming where a new product has premium pricing to give high revenues whilst the product is unique in the market
- premium pricing, where there is a uniqueness and exclusiveness about the product so that it can command a high price
- economy pricing, which tends to be for no-frills, basic products, where the cost of manufacture and marketing are kept to a minimum.
The price of a product relates to its perceived value. Lower priced items will expect a higher volume of sales, whilst fewer sales of luxury products may achieve the same revenue through higher pricing.
A 'product map' shows where products are positioned in the market. Each product type behaves in a different way. Customers are willing to pay more for 'aspirational' products, such as designer wear. These products or brands show that those who own or wear them have a degree of success in their lives. These brands are not price sensitive, as people are willing to pay premium prices for individuality or for the latest styles.
Low price brands often copy the market leaders and may be generic own brands, such as those produced by supermarket chains. The main purpose of price here is to indicate value for- money and such brands do not expect customers to show loyalty.
Ben Sherman produces mostly medium-price range products. Its position in the market for clothing is shown on the product map diagram. The mix of product and price is clearly evident here. These brands are identifiable by their quality and style.
Ben Sherman uses brand identity images like the plectrum logo and the Ben Sherman script label in subtle ways. Its products are good quality and individually styled and therefore the price reflects this. There is a relationship between product quality and price (revenue per sale). The pricing also impacts on the level of sales. Ben Sherman's pricing best matches aspect B.