How To Build A Brand From The Pricing Strategy Of Luxury Brand

In the international market, most Chinese enterprises, or acting as modern factories, produce products at the cost of high pollution and very low wages, and finally distribute profits with brand enterprises in an extremely unbalanced way; Or they constantly reduce their meager profit margin to enter the foreign market, but they often face a series of countervailing and anti-dumping investigations, but there are almost no internationally recognized brands.

The technical difference is one reason, and the management level is another reason. But there is an equally important but often overlooked problem: how to price? The low profit but quick turnover under the inertial thinking is not applicable to the marketing of the brand with high value. This article is based on the successful Luxury brand Based on the pricing strategy of, this paper studies the missing parts in the pricing strategy of Chinese enterprises, and provides reference for the establishment of high value-added brands of enterprises.

China's low-cost manufacturing products based on cheap labor to reduce cost space international market The living space in China has been gradually compressed, and various anti-dumping and countervailing investigations against Chinese manufactures have emerged in endlessly. Therefore, it is an urgent need for enterprises to jump out of the red sea of price competition and theoretically seek a blue sea with greater development space.

The reason for this dilemma is that there is no substitutability between products, and the only way to compete for market share is to reduce the price. To break this deadlock, in addition to technical breakthroughs, the establishment of brands, especially those with high added value, is a more widely applied marketing method.

The research shows that price has a negative feedback effect on product quality. Therefore, the importance of establishing a high-quality brand and breaking through the dilemma of China's high-end brands in terms of pricing is equal to or even more important than the overwhelming development of "innovative intellectual property". This article reflects the use of pricing brand positioning The most typical product of luxury pricing related research, to provide some reference for the development of related domestic enterprises.

The survey shows that only 12% of enterprises have seriously studied pricing, and only 2/3 of them can make good use of relevant research results. In fact, the pricing manager's thinking is often limited to: what price should we set to recover costs and achieve profit goals.

However, this pricing method only considers the impact of cost on price, ignoring the reverse effect of pricing on cost, that is, the closed-loop of "cost price sales cost". In strategic pricing, it not only covers price setting, but also includes mining profitable markets, exchanging information on rational pricing, and managing pricing processes and systems. The most important thing for China's high value-added brands is to match the price with the value delivered to consumers.

In fact, when consumers buy products, the price factor plays an extremely important role. Generally speaking, consumers determine their own psychological price through their perception of product quality. This psychological price is not a certain value, but a range, that is, the price threshold.

The price threshold is the boundary of psychological price, that is, the acceptable price range. The upper limit of absolute price threshold refers to the highest price that can be accepted by customers, and the lower limit of absolute price threshold refers to the lowest price that can be accepted by customers. When the price of a commodity exceeds the upper limit that consumers may accept, consumers will think it is not worth buying; When the price is lower than the lower limit of consumers' psychological price, the price quality effect will take effect, and consumers will think that there may be a problem with the goods and they cannot buy them.

The latter view seems to be contrary to our common sense, seemingly contradictory, but in fact it is not. Although price itself is not the sales basis of luxury products, it is a positioning factor. If the same kind of high-value luxury products are provided at a low price, their value will suddenly be lost. That is, without the right price, people will look down on a product.

Therefore, the purpose of pricing is to stimulate customers' willingness to purchase goods at a price that is more in line with the real price or the real value that the enterprise hopes to convey. The key lies in the segmentation of the market and the positioning of different markets, so as to formulate corresponding prices.

Any commodity has its target consumer group. Without a targeted pricing strategy, the target consumer will be lost. The wrong oriented consumer group can not show the corresponding relationship between price and value, but will make the brand positioning deviate from the target consumer.

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High value-added brands, especially luxury brands, carry this high quality value, which is why low prices are not the best marketing means.

Luxury goods and even high-end products have a certain exclusiveness, which comes from the lower limit of the high consumption threshold of their target consumers. When the price is lowered below the lower limit of the price threshold, the brand is no longer recognized by the high-end consumers it targets, which is why luxury goods, a brand facing high-end consumers, No matter what the actual production cost is, the price will remain higher than the average level. Even in the occasional price reduction promotion, pay attention to the reasons for keeping the relatively high price.

On the other hand, unlike ordinary goods, the price of luxury goods does not change significantly with the change of supply relations. However, when the cost of luxury goods increases or the number of buyers increases, the price of luxury goods will even rise to limit the purchasing power of luxury goods.

This is also the fundamental difference between luxury goods and ordinary goods. Ordinary goods use price reduction to promote sales. For luxury brands, no matter what the reason, price changes must follow the principle that they should always stay above the change of currency exchange rate and consumer purchasing power, and in no case should the value shrink with the devaluation of the currency, In any case, we should not reduce the purchasing pressure as consumers' personal purchasing power increases.

It emphasizes the establishment of a "sense of distance" with consumers. This kind of pricing rule can be called "semi hungry pricing rule", that is, it always keeps the market in a semi hungry state, so that a few people have luxury goods.

The scarcity and uniqueness of luxury goods are the main goals pursued by customers, and when the high price of luxury goods keeps most consumers away, it is the best way for customers to experience the characteristics of this luxury goods and further elevate the status of the brand. This is also the reason why luxury goods merchants prefer to destroy their goods rather than sell them at reduced prices. Once they sell at reduced prices, the scarcity and uniqueness of luxury goods will be broken, their status will rapidly decline, and they will lose the favor of high consumers.

On the one hand, the problems faced by China's high-end brands in their development stem from the constraints of ideas. From the perspective of consumer psychology, the mentality of flaunting wealth still plays a major role in China. At the same time, the concept of "luxury equals waste" still exists.

At the mention of high-end brands, people will associate with the luxury life of the bourgeoisie, and unilaterally equate luxury with waste. This concept has seriously hindered the growth of China's high value-added brands, resulting in a long period of blank high-level consumption in China.

In fact, luxury is a neutral word, which does not include any derogatory elements. Enterprises often ignore this point in their publicity, and fail to publicize the idea that high-end consumption is not only to meet the most basic needs of life, but also a way to meet high-level spiritual needs through marketing.

The result is that on the one hand, Chinese consumers buy a large number of foreign luxury goods, on the other hand, Chinese enterprises are inevitably "half hearted" to face high-end consumers in terms of product positioning, which is also reflected in the inconsistency in pricing strategies and the frequent excessive price reduction promotions.

It can be seen from the contradictory behavior of Moutai, which not only appears as a luxury on the Hurun Rich List, but also often declares in public that it is not a luxury brand.

On the other hand, Chinese enterprises ignore that in the marketing of high-end consumer goods, more emphasis should be placed on creating demand rather than using optimal pricing in response to the market's supply and demand curve. As mentioned earlier, the consumer price threshold is affected by its perceived quality and perceived value, so the enhancement of social attributes and psychological value of products can promote the broadening of consumer price threshold.

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Relying on the symbol of identity and social status, high-end goods have higher price elasticity than necessities. Therefore, luxury goods are finally accepted by consumers by improving consumers' perceived quality and perceived value and enhancing their own social attributes and psychological expected value.

Consumers' perception of product quality comes from internal clues and external clues. At the same time, the consumer price threshold range varies with different products. Generally speaking, consumers have a wide range of price thresholds for luxury goods. The main reason is that luxury goods meet consumers' psychological and social needs. It is also the existence of this price threshold that gives luxury goods a broad space for pricing.

In the marketing practice of enterprises, the width of the price threshold has a great impact on product pricing and price adjustment. Generally speaking, the smaller the price threshold range of consumers, the more sensitive they are to price, and the easier it is for enterprises to use price strategies, especially promotion strategies.

However, high-end brands have high cognitive value, wide price threshold and great price elasticity. Widening the consumer price threshold will help enterprises expand the price space of their own products, thus helping to establish product image and cultivate brand prices.

Therefore, in price setting, the brand should have a special market price research department, collect sales data of a region, analyze the psychological changes of purchase caused by price setting, and formulate sales prices that conform to the brand image, so that it can not only create demand, but also have an accurate positioning exclusiveness in price, Only in this way can the marketing of high-end brands not only stay in the promotion of the high quality of the product itself, but also focus on the output of the value concept behind the product for consumers.