What’s the relationship between price and value? Pricing a product or service is often a fraught endeavor, especially for entrepreneurs and innovators in burgeoning industries in which price history or competing products may not provide a solid reference point. Determining the price of a new product requires determining its perceived value to consumers. However, this is rarely a clear-cut decision due to the many factors that influence consumer decision-making.
Pricing strategy, a discipline shared by entrepreneurs, marketers, psychologists, and economists alike, offers several guideposts that help determine value for a new (or improved) product. Going beyond the determination of value, pricing strategy also considers the psychological impact of price on consumer’s perception of that value.
In movies, television shows and magazines, entrepreneurs are idolized and presented as individuals with laser-focused plans who are willing to work through obstacle after obstacle to make their big vision a reality. While most entrepreneurial success arises from an understanding of where you are and where you want to be (i.e. the big vision), this emphasis on stubborn determination is a bit overblown and, frankly, bad for business.
The truth is: great entrepreneurs must be willing to change. The really good ones understand that new businesses and products are unreliable, and they will likely need to change their idea at some point in the future. In the startup world, we refer to these changes or strategic shifts as “pivots.”
While I was reading the other evening, I came across a tremendous metaphor. Conner Forrest, a writer for TechRepublic, equated admitting your own business’s failures to calling your own child ugly. No one wants to admit that their ideas aren't all that revolutionary or innovative. Acknowledging flaws in our products — ones we have built, invested in, and grown — can be a painstaking process.
However, our success is often defined by how well we handle failure. Not one successful person has achieved their goal without encountering several setbacks and learning experiences along the way. It's certainly difficult to feel like we're on the road to success in the face of a languishing product, but we can refocus our efforts to learn why our product is failing and how we might push it through to market success.
Let's take a look at a few ways to accomplish this:
In my experience mentoring startup founders, I've interacted with many entrepreneurs who have put together fantastic products and services, but have little awareness about the proper branding strategies to give them a boost as they go to market. Many of them assume that they can emulate the strategies of similar products to gain their share of customers.
It’s no secret that there is a link between powerful branding and success in business. However, in an attempt to attach themselves to the success of established corporations, many entrepreneurs employ similar branding techniques as the organizations that have been in the marketplace for decades. More often than not, these entrepreneurs are left confused and frustrated. They wonder why their own campaigns failed while these older brands continue to succeed, even though their products might be more innovative and of superior quality.
Kick-Starting Your Brand
Building a brand is different than maintaining one. Most new businesses don't have the resources to burn through marketing budgets with expensive TV ads and experiential marketing events. So how can new products compete?