Differentiation: Premium pricing strategy

Differentiation is the most critical issue when it comes to brand building and pricing power. You maximize your penetration pricing strateg...

Differentiation is the most critical issue when it comes to brand building and pricing power. You maximize your penetration pricing strategy by offering something unique. Over time you maintain pricing power by creating a brand that stands out as unique in the mind of the customer. They pay more because of the uniqueness.

You know you're different when people tell you that you are. If people never tell you you're different, then you're not different enough.

Your brand is the embodiment of your unique ideals. Marketers call that a Unique Selling Proposition, or a USP. You need one, and is one of the most potent pricing Strategies in marketing. Having a USP that customers understand and respect gives you a powerful brand in the minds of customers, and that creates their willingness to pay a premium price. Did I mention you need a USP?

Since 2008 our USP at Liberty Jane has been, In other words we want to offer our customers original designs that are rare and beautiful. For six years we’ve worked to prove we can achieve this goal. We've also continuously tried to underscore and expand on that simple promise.

For example, when we had the opportunity to hire Karen Pascho after a thirteen-year career as a Senior Designer at Nordstrom Product Group, we knew it would help fulfill our USP. A year later, when we had the chance to hire Melinda Schlimmer, the creator of the Melody Valerie Couture clothing line, we realized the same thing.

Premium pricing strategy

Hiring these talented designers helped us reinforce our USP. The reason our business has pricing power is because we have customers that believe in our USP and business is aligned with pricing. They believe we can continuously offer them new and interesting designs. Our pricing power exists because of our USP.

And the #1 attribute of a commodity is that it is not unique.

The second attribute of a commodity is that the only thing that can possibly be unique is the purchase price. Therefore, people use the price to compete.

You don’t want to be in that space not in the doll clothing marketplace or any other type of product or service. You need a Unique Selling Proposition so that you can compete on something other than price war.

That means prospective customers don’t care whom they buy from in a commodity market. When that happens – pricing power vanishes.

But something always seems to happen, even in highly commoditized markets – customers begin to bond with the most unique brands. They find the brands that meet their ideals and energize their thinking. Customers go looking for a USP that they can believe in. The USP gives people a reason to pay a higher price.

People are willing to pay a higher price if you give them a good reason. That reason is generally tied to how your product is unique. The more unique customers believe your brand to be, the stronger your pricing power.

We regularly hear people tell us that our work has “changed the market”. That's another indicator, (expressed by our customers), that we're meeting our USP.

How do you become more unique?

Step one: focus on how you are different - not how you are the same as your competition. Identify the differentiators.

Make a list of the common descriptive statements in your niche or industry and promise to avoid them.

Want to hear the most over-used phrase in the history of doll clothes selling?

"I've been sewing for 40 years"

Everyone uses that phrase. The problem is - that phrase is not original, unique, or memorable. It's an attempt at creating credibility, but it doesn't work too well for that purpose. Mainly because doing anything for a long time and doing it well are two different things.

As a doll clothes seller you'd be much better off saying,

"I've been sewing for forty years - with one hand - the other hand was lost in a bad accident involving a Grizzly Bear "

Okay, I'm totally joking. But you get the idea. You want an original statement, not a "me-too" statement.

Sometimes people think that a USP starts with a big accomplishment that you brag about. But it doesn't.

A USP starts with an accomplishment that is unique and memorable. It needs to be something that sets you apart.

Donald Trump wisely said, "Great brands are built by great deeds". While that is certainly true, great brands are frequently remembered and talked about because of unique or memorable attributes.

Find your unique attribute.

Step two: A USP is developed and reinforced through powerful storytelling and ongoing actions.

To borrow a phrase from noted theologian Eugene Peterson,

"It's a long obedience in the same direction"

You should use your "about me" type pages to fully craft your USP and you should frequently refer people to it.

You should constantly be doing things that align with and strengthen your USP.

People will comment on a USP if they like it. They will talk to you about it and ask questions. It will produce an enthusiastic response.

The Beauty Of A USP

Some small business owners live in a world of scarcity thinking. If they see a competitor doing well they will say, "That opportunity is lost - I better give up".

Other people realize the truth - there are as many opportunities to be unique as there are stars in the sky. The marketplace is begging for unique and memorable brands.

Buyers are hunting for unique sellers. They clearly reject the commodity type sellers and seek out the unique brands. People want something to believe in.

If you have a USP clearly crafted let it shine, let it shine, let it shine.

If you don't have a clear USP, then you are selling a commodity, and you will only get commodity pricing.

If you have a USP in your mind, but the marketplace isn't reflecting back to you that they understand it, then you have work to do on your branding. Work to clarify and reinforce the USP.

When your customers start to express to you that they understand and appreciate your USP, then you'll know you're doing well standing out and being unique. Pricing power quickly follows.

Premium pricing strategy action steps

Create and polish your USP. Your USP is your secret weapon for pricing power. If customers respect your USP you will have strategic pricing power.



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Thought Leadership Zen: Differentiation: Premium pricing strategy
Differentiation: Premium pricing strategy
Thought Leadership Zen
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