Each of us knows how important the role of prices is in trading. Most customers visiting any store at some point in their purchases pay attention to the prices of the products they are interested in. This factor may attract the attention of a potential customer, determine the advantage over the competition and ultimately encourage (or, on the contrary, discourage) making a purchase. In e-commerce, price plays an even more important role, so you should carefully rethink your ecommerce pricing strategy.
E-commerce strategies – what they are and how to create them
The right strategy is the basis for the functioning of any business and this applies not only to such elements as marketing. Conscious decisions on price positioning in the ecommerce online store affect not only the prices of products, but also their quality, distribution and promotion. Price positioning can be luxury, premium, medium, low and ultra-low. The price items e-commerce focuses the most on are medium, low and ultra-low. In this group we are dealing with the greatest competition and dynamism, which requires constant monitoring of the market and the prices available on it. Ecommerce pricing strategies should be based on the preferences of the company’s target group. They should be tailored to the industry, the specifics of the products offered and the purchasing persons, their behavior, status, lifestyle, needs and requirements.
Pricing strategy – the key issue
As we have already mentioned, prices are of great importance in the purchasing process, especially in the e-commerce industry. An attractive price combined with good quality, an effective and personalized marketing campaign is usually the key to attracting customers who will come back to us and thus maximize sales. For this reason, the pricing plan and related activities are one of the most important points of an online store strategy.
Below are some of the most used pricing strategies in e-commerce.
Market penetration strategy
Market penetration is a particularly popular online store strategy when entering the market with a new product. At this point, companies set low prices while ensuring good quality and communication to gain the largest possible market share. Such activities can guarantee great popularity and visibility of a particular company, which ensures a large number of returning customers and thus a large share in the industry.
Price skimming
Price skimming is another popular ecommerce strategy. However, it requires a prestigious brand that offers innovative products and a certain group of recipients. The offer is first aimed at people who have a budget to quickly purchase a new, more expensive product, thus they are less price-sensitive. This is related to effective marketing campaigns presenting a specific product as groundbreaking. The next step in this ecommerce pricing strategy is to gradually drop the price in order to reach an audience paying more attention to the budget.
Prestigious pricing strategy
Another type of online store strategy is to set consistently high prices. This is usually associated with the introduction of luxury products and preceding it with high-profile campaigns aimed at emphasizing the prestige of the brand and products. Such offers are directly aimed at people with a large budget and paying attention to the brand. Often, such e-commerce strategies can be observed in the fashion, jewelery or technology industries.
Everyday Low Prices Strategy
Another e-commerce strategy is the concept of the Daily Low Prices. It is characterized by the introduction of low margins to obtain more sales. The ecommerce online store using this option is known for relatively low and fixed prices without major promotional efforts. Such companies do not have much rebate opportunities due to the already low base prices.
High-Low strategy
The last of the presented online store strategies is characterized by the domination of the offer of more expensive products than on the market, but the simultaneous presence of several extremely advantageous promotions. Such discounted products are called traffic generators because they attract visitors to your site, who may also decide to buy additional, not on sale products. This pricing strategy is especially popular in brick-and-mortar stores. In online trading, it can turn out to be risky. Internet users have the opportunity to use price comparison websites which, although they can show a favorable promotion, on the other hand, browsers can quickly notice higher rates for the vast majority of products offered. This may adversely affect the attractiveness of the brand.