Creating a Sustainable Competitive Advantage

There are several concepts you must consider to create a sustainable competitive advantage for your business and your brand. Here are some of them:

• Dream big. 
• You must have deep insight into your customers' values, attitudes, hopes, aspirations, anxieties, fears, needs and desires.
• Perform deep market segmentation analysis. This should include need segmentation.
• Discover customers' frustrations and pain points, things they wish could work better. 
• Address all of those frustrations and pain points. 
• Challenge your category definitions and your business model assumptions. 
• Consider vertical and horizontal integration.
• Consider product/service bundling and unbundling. 
• Drive your business off of proprietary systems, technologies and processes.
• Find a way to make your business scalable. 
• Create a business model that benefits from network effects.
• Your business and brand must stand for something and live consistently by a carefully chosen set of values. 
• Link your sales and marketing processes and messages seamlessly.
• You must say "no" to revenue sources that are not in your bulls-eye. Otherwise, you will become distracted and be taken off the game that you are best suited to win.
• Actively engage with your customers on a regular basis, even before revenue streams occur.
• Constantly reinvent your business model, products and services. Throw out what doesn't work and keep what does. In this way, continue to evolve. Your competitors will not stand still. 
• Stay in the business flow. Stay close to your customers and your markets and your competitors.
• Form as many strategic partnerships as possible. Always try to create a win-win situation.
• Do not try to steal share from competitors. Rather, focus on creating enhanced value with your customers and in the industry. Expand the pie rather than trying to take someone else's slice of it.
• Become an expert and a thought leader. 
• Play your own game. Do not get sucked in to matching your competitors' every move. 
• Craft your brand's story. Make sure it is emotionally compelling and purchase motivating. 
• Find the big influencers in your industry. Befriend them. Learn from them. Influence them.
• Always be honest. Never lie about anything. If you lose your trustworthiness and integrity, you lose everything.
• Remember, your business will only do well if it focuses on helping its customers, employees and business partners. Organizations thrive because they are meeting real needs and helping others achieve their goals. 

Important Pricing Concepts

Pricing strategy is an element of brand positioning that is hardly ever talked about. So I thought I would summarize some of the more important pricing strategy concepts here. For a more in-depth coverage of this topic, Brand Aid covers this in much greater detail.

Here are some of the more important concepts:

• Cost plus pricing insures a profit on each item sold but is a very unsophisticated approach to pricing.
• People often compare a product's price to a reference price that they maintain in their minds. This reference price can be influenced by memory of past prices, prices of other products on the same shelf, the last price they paid for a similar item, the way the price is presented, the order in which people see a range of prices and several other cues that the marketer can influence.
• Price sensitivity and price elasticity are similar concepts. They focus on how sensitive people are to price changes. One way to think about this is how units will move up or down as a ratio to how much the price is increased or decreased. One would be advised that sensitivity can change, especially as certain price thresholds are crossed.
• Price as a signal to quality. In many categories, especially professional services and luxury goods, higher prices can be a signal to higher quality. If the price is low, the product or service is thought to be inferior. In these cases, a higher price actually increases demand.
• Price segmentation is a way to maximize profits by offering a variety of prices based on different customer need segments. Airlines segment prices, as do concert halls.
• Loss leader pricing uses a very low (sometimes unprofitable) price on a high visibility item (often heavily advertised) to lure customers in, who will presumably buy other items at full retail. Retailers often use this approach.
• Setting price based on customer value. With this approach, one determines what the product or service is worth to the customer and then sets the price accordingly. Hopefully, the customer value far exceeds the product's or service's cost. 
• Aligning prices with distribution channel perceptions. A brand might sell different versions of its products at very different prices in Walmart versus Lord & Taylor, for instance.
• Bundling or unbundling products and services will allow for different prices to be charged. 
• Altering the quantity to change the price point charged. This approach is often used by consumer packaged goods. 
• Penetration pricing refers to pricing the product very low to penetrate or quickly gain share in a  new market. 
• Price skimming refers to pricing the product very high initially, usually to recoup product development costs, and eventually lowering the price as more competition comes into the market. This approach is often taken by pharmaceutical companies. 
• Price discounting. This approach is often used to "juice sales" in the short run but usually has a negative long-term impact on brand value perceptions.
• Value pricing usually means offering the product at a low price point relative to the average price point in the category.
• Premium pricing usually means offering the product at a high price point relative to the average price point in the category. Premium pricing is related to the concept of price as a signal to quality.

I hope this has provided a useful overview of the different approaches one can take to pricing a brand and its products and services.