Product Positioning – Good, Better, Best | Strategic Pricing Solutions

We have written many times before in our blogs and newsletters that customers are not all equal.  They have different needs, they value product attributes differently, and they have varying levels of price sensitivity.  In order to address these multiple customer segments, it is common to have multiple variations of a product or service offering – a Good, Better, Best product lineup.  Beyond just creating multiple offerings, your pricing strategy needs to include getting the relative positioning right.  Your profitability depends on it.

There is no perfect number of alternatives or options to offer customers, but how many you will offer is an important question to answer.  If you do not offer enough options, you run the risk of missing some customer segments by not specifically addressing them.  Conversely, if you offer too many options, it is easy for customers to be overwhelmed with the complexity and not make any choice.  To determine your best number of offers in your product lineup, consider the ease with which customers can assess the differences, the number of competitive offerings that exist, the range of values perceived by customers, and your capability in managing the range of products or services.

In addition to determining how many products to offer within a lineup, it is also important to determine how the price of each product or service will relate to the others.  Multiple studies have shown that when faced with three or more options, customers tend to choose the middle option more frequently than the highest or lowest priced offer.  Customers often avoid picking the least expensive offer because they don’t want to feel like a cheapskate.  And they often avoid the most expensive option, because they really aren’t extravagant and do not need whatever additional benefits the highest options offer.  So they go with the middle.

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Product Positioning – Good, Better, Best.