However, in buying your product or service, the customers’ objective is to maximize their satisfaction by paying the lowest price. And unless you can differentiate your product from that of the competitors, it is a basic principle that customers will always buy a product with the lowest possible price.

     Therefore, how do you price your product or service in such a way  that you will generate enough profit, make your target customers buy your goods, while at the same time remaining competitive?

     Pricing is always a function of knowing your market, your customers, developing your brand or  image, and differentiating your products or services from that of the competitors.

     Having done these, you can now proceed to set a price for your goods and services. Basically, there are four pricing strategies, as follows:

     First, cost-oriented pricing. You set your price on the basis of your cost. This means you just add a certain percentage to your cost to get your target profit or mark-up. This is also called mark-up pricing or cost-plus pricing, which means cost plus desired mark-up or profit. If your business deals in retail, buy-and-sell, or distributorships, then this strategy is ideal.

     Second, demand-oriented pricing. You set your price based on the level of demand of your product or service. If the demand is strong, charge at a higher price, and if the demand is weak, then lower your price to stimulate demand and attract more customers.

     Third, competition-oriented pricing. You set your price based on what the competitors are charging. This is suitable if you and the competitors are selling the same or similar products. However, you can charge higher than the competitors’ if you have developed a brand for your business, or if you know how to differentiate your products and services by offering extras.

     Last, market-penetration pricing. You set your price lower to penetrate the market and capture a sizeable market share. This is suitable if the customers are price-sensitive, and if you want to discourage existing and potential competition.

     In the end, your pricing strategy must be a part of your business strategy to survive in the market, achieve growth, and generate more profit.

     The strategy is you create your identity and image that sets you apart from your competitors. How will you do it?  The answer is simple -by branding your business.

     A brand is a collection of experiences and association connected with a business, a product or a service. Buyers make their choices and buy a product or service according to brand identity, relying on the perception, impression, or qualities of that product or service that your business or your competitors provide.

     Branding your business offers a form of guarantee, a set of ready-made values attached to a product or service that we too can adopt upon purchase. Once buyers like your product or service, they will continue to patronize it, making them your loyal customers, no matter how many your competitors are. This is because they have already developed a loyalty to your business.

     How do you create a brand to make your business different and distinct from your competitors? This can be accomplished by taking the following four easy ways:

     1. Be close to the customers by providing them quality products and services. It is only by doing these that you can meet and satisfy their needs, tastes and preferences. In branding your business, your objective is to create a beneficial relationship with the customers and even with your target and potential market so that both parties, you and the customers, are helping each other and for you to earned their brand loyalty. Brand loyalty is the result of serving the customers effectively and well, and of communicating to them an image, impression, or characteristics of your business.

     2. Differentiate your product or service. This is a technique to make it stand out in the marketplace, and will complement the brand or image of your business. You highlight and point out the attributes, such as the quality, packaging, fast service, reliable after-sales service, that will make the customers choose to do business with you rather than your competitors. These differentiation factors are what the customers will remember the most when they are through with the transactions, resulting to their coming back and becoming your loyal buyers.

     3. Position your products and services to ensure that your brand occupy a specific place in the market, not only in relation to other brands of the same products/services, but also in relation to products that could be used under similar circumstances. Positioning can be done by product differentiation, brand image, and promotion.

     4. Promote your business by advertising. Suitable advertising appropriate to your needs can help communicate to the market about the image and brand of your business. That way, you can find your niche, which is composed of a specific group or class of buyers who need and like your products and services.

     It is only by branding your business that you will be able to fight the competition, since you have created its unique identity and image in the hearts and minds of your customers. Your business brand name will become your name, your asset, and customers will even pay a significant premium for your products and services. This is an effective way to survive the harsh realities in the marketplace.

     A niche is composed of a specific group of customers in the market, with similar needs, tastes and preferences, in which a limited and clearly defined range of products or services are sold.

     Why is it necessary to find your market niche?  The reason is obvious. The market out there is huge and large and the customers are numerous, with their own diverse needs and wants, and with countless other businesses offering the same or similar products and services. On the other hand, the resources of your business – time, funds, staff and manpower, store spaces, equipment-are limited.

     Therefore, you cannot efficiently and effectively serve all customers at a profit, in the same way that you cannot be everything to all people and be happy.  Besides, no matter how big the market is, if the products and services that you are selling are not what your target customers need, it will still not result to a sale.

     The secret is focus, focus and focus, and find your niche in the market. How to do it? 

     First, you must know your product or service-its characteristics, nature, qualities, and what it can do to the customers.

     Second, you must know who the customers are that would need your product or service.

     Knowing these two important factors will give you a clear picture of your business-products/services-market fit, and you can now proceed to find your niche.

     In finding your niche, you can analyze the market based on the following:

     1. By demography.  This is done by looking into the profile and characteristics of your target market in relation to their age, gender, income level, educational background, religion, household income, size of the family, social class status, occupation or profession. The people belonging to this demographic classification have their own sets of needs and wants, tastes and preferences which are different and distinct from the other groups. For instance, the needs of the teenagers are different from those of the seniors, while the preferences of the ladies who are office girls are not the same as those of the stay-at home girls of the same age bracket.

     2. By behavior.  This is done by dividing the market based on their knowledge of the product or service, as well as their attitude, use, and response to the same product or service. Knowing the behavior of the target market will enable you to provide a kind of products and services that are responsive to your customers’ needs and wants.

     3. By geography.  This is done by selecting the market based on the location, e.g. cities, state, county, provinces, regions, and by looking at the economic growth and volume of business in each chosen area. Knowing the level of economic growth in the particular location will provide you with indicators of the size of the market, and if it is growing rapidly, slowly, or none at all.

     4. By psychographics.  This is done by identifying the market based on lifestyles, culture, personality and values. Knowing the personality traits and lifestyles of the target customers will enable you to provide products and services that are responsive to their needs and preferences.

     Once you have found your niche, the rest is up to you to manage your business in a competitive manner to achieve its objectives, the foremost of which is profit maximization.