Product Pricing Retention & Longevity
- by Ray Williams
- Marketing
Product Life Cycle and Different Buyer Groups
In the majority of the product lifecycle, a new release typically experiences an introduction phase marked by high demand, followed by a maturity phase where sales decline. During this process, buyers can be categorized into four groups: keeners, early adopters, the majority, and laggards.
Keeners
Keeners are individuals who exhibit a high level of enthusiasm and dedication toward a particular product or service. They are known for their eagerness to be among the first to acquire the product, driven by a desire to either be the trendsetter in owning the latest innovation or to create content related to it. The key characteristic of keeners is their proactive "being first" mindset, which motivates them to stay ahead of the curve. One of the notable advantages of engaging with the keener demographic is their ability to generate substantial attention and excitement around a new product launch, thus contributing to significant buzz and promotional activity.
Early Adoptors
On the other hand, Early Adopters exhibit a cautious approach by waiting for positive reviews and feedback before committing to a purchase. Their desire to be among the first to own the latest release is balanced by the need for affirmation from trusted sources, often by Keeners. It doesn’t take much positive influence for an early adopter to feel validated in their choice to invest in a new product or technology.
Majority
The majority of sales come from this group, which is the main contributor to the product's success in the market. We advise targeting this group in the long term because this is where your real profit will be.
Laggards
Laggards are the customers who are more resistant to change and tend to stick with older versions unless enticed with substantial discounts.
Based on our large transaction data, new product releases often lead to a surge in sales, which gradually stabilizes into regular sales over time. To reignite sales momentum, offering discounts or promotions becomes necessary. This strategy aims to stimulate interest among consumers and encourage new purchases.
Invest in Targeting the Boring People
According to the XCHANGE data presented in our public March vendor video, the sales distribution of a product typically follows the pattern where a small group of consumers, referred to as "boring people," contribute the majority of sales over time. This group gradually represents a larger portion of revenue, while Kenners and Early Adopters constitute a smaller share. It is important to caution against companies heavily relying on introductory discounts to attract customers, as this approach may result in creating artificial demand and hinder the conversion of most consumers into loyal buyers. Furthermore, we recommend vendors steer clear of mirroring competitors' pricing strategies and instead, concentrate on strategies that promote sustained growth and client retention.
Impact of Introductory Pricing
In this section, we want to highlight the potential consequences of offering introductory specials on profits and customer behavior. Our observations indicate that a segment of customers, known as keeners, exhibit a strong desire to be early adopters of products regardless of price considerations. However, it is crucial to note that concentrating solely on this segment may not yield sustainable profitability, given their relatively small contribution to overall sales in the foreseeable future. We urge XCHANGE vendors to evaluate the lasting effects of discount activities and underscore the significance of appealing to a broader customer demographic.
Sales Quantity vs Profit
Adjusting your pricing strategy requires a nuanced approach as it significantly impacts both sales volume and profit margins. For instance, reducing the price of a luxury item like a Porsche could drive greater sales, yet incur lower overall profits over time. Conversely, increasing the price of an affordable product such as a Honda might lead to reduced sales but potentially higher profits per unit sold. Your company must determine and analyze the optimal pricing point for your offering by considering market demand and production costs.
Drawing insights from our vendor march video, we showcase practical examples of various pricing tactics, illustrating scenarios where some businesses achieved high sales figures but suffered from lower profitability, while others maintained healthy bottom lines despite lower sales volumes. XCHANGE advises caution against drastic price reductions, as it could be challenging to subsequently raise prices without negatively impacting customer perceptions.
Some companies on XCHANGE have been seen experimenting with price adjustments, lowering them initially to increase sales, but then raising them back up, confusing customers. One particular instance includes a company that reduced prices for Black Friday, although the reduction was not substantial enough to make a notable difference. Successful companies establish pricing strategies and maintain consistency, steering clear of frequent alterations that may lead to customer disorientation. Additionally, some brands opt for annual sales events rather than sporadic price fluctuations.
Conclusion
In summary, pricing is a key element in determining the success of a product. By understanding the needs and preferences of different buyer groups, audio tech businesses can manipulate their pricing strategies to optimize sales quantity and profit margins. At XCHANGE, we want to emphasize the significance of vendors having confidence in the value of your audio products or services. If you don’t, no one else will. We advise aiming for long-term consistent profits instead of gaining sales immediately.
By becoming an XCHANGE vendor, you’ll have access to our all-in-one platform to engage with resellers and our annual vendor meetings (both online and in-person) to gain insights on trends and strategies to help achieve your business objectives.
Sign up today.
Keeners
Keeners are individuals who exhibit a high level of enthusiasm and dedication toward a particular product or service. They are known for their eagerness to be among the first to acquire the product, driven by a desire to either be the trendsetter in owning the latest innovation or to create content related to it. The key characteristic of keeners is their proactive "being first" mindset, which motivates them to stay ahead of the curve. One of the notable advantages of engaging with the keener demographic is their ability to generate substantial attention and excitement around a new product launch, thus contributing to significant buzz and promotional activity.
Early Adoptors
On the other hand, Early Adopters exhibit a cautious approach by waiting for positive reviews and feedback before committing to a purchase. Their desire to be among the first to own the latest release is balanced by the need for affirmation from trusted sources, often by Keeners. It doesn’t take much positive influence for an early adopter to feel validated in their choice to invest in a new product or technology.
Majority
The majority of sales come from this group, which is the main contributor to the product's success in the market. We advise targeting this group in the long term because this is where your real profit will be.
Laggards
Laggards are the customers who are more resistant to change and tend to stick with older versions unless enticed with substantial discounts.
Based on our large transaction data, new product releases often lead to a surge in sales, which gradually stabilizes into regular sales over time. To reignite sales momentum, offering discounts or promotions becomes necessary. This strategy aims to stimulate interest among consumers and encourage new purchases.
Impact of Introductory Pricing
In this section, we want to highlight the potential consequences of offering introductory specials on profits and customer behavior. Our observations indicate that a segment of customers, known as keeners, exhibit a strong desire to be early adopters of products regardless of price considerations. However, it is crucial to note that concentrating solely on this segment may not yield sustainable profitability, given their relatively small contribution to overall sales in the foreseeable future. We urge XCHANGE vendors to evaluate the lasting effects of discount activities and underscore the significance of appealing to a broader customer demographic.
Sales Quantity vs Profit
Adjusting your pricing strategy requires a nuanced approach as it significantly impacts both sales volume and profit margins. For instance, reducing the price of a luxury item like a Porsche could drive greater sales, yet incur lower overall profits over time. Conversely, increasing the price of an affordable product such as a Honda might lead to reduced sales but potentially higher profits per unit sold. Your company must determine and analyze the optimal pricing point for your offering by considering market demand and production costs.
Drawing insights from our vendor march video, we showcase practical examples of various pricing tactics, illustrating scenarios where some businesses achieved high sales figures but suffered from lower profitability, while others maintained healthy bottom lines despite lower sales volumes. XCHANGE advises caution against drastic price reductions, as it could be challenging to subsequently raise prices without negatively impacting customer perceptions.
Some companies on XCHANGE have been seen experimenting with price adjustments, lowering them initially to increase sales, but then raising them back up, confusing customers. One particular instance includes a company that reduced prices for Black Friday, although the reduction was not substantial enough to make a notable difference. Successful companies establish pricing strategies and maintain consistency, steering clear of frequent alterations that may lead to customer disorientation. Additionally, some brands opt for annual sales events rather than sporadic price fluctuations.
Conclusion
In summary, pricing is a key element in determining the success of a product. By understanding the needs and preferences of different buyer groups, audio tech businesses can manipulate their pricing strategies to optimize sales quantity and profit margins. At XCHANGE, we want to emphasize the significance of vendors having confidence in the value of your audio products or services. If you don’t, no one else will. We advise aiming for long-term consistent profits instead of gaining sales immediately.
By becoming an XCHANGE vendor, you’ll have access to our all-in-one platform to engage with resellers and our annual vendor meetings (both online and in-person) to gain insights on trends and strategies to help achieve your business objectives.
Sign up today.
Adjusting your pricing strategy requires a nuanced approach as it significantly impacts both sales volume and profit margins. For instance, reducing the price of a luxury item like a Porsche could drive greater sales, yet incur lower overall profits over time. Conversely, increasing the price of an affordable product such as a Honda might lead to reduced sales but potentially higher profits per unit sold. Your company must determine and analyze the optimal pricing point for your offering by considering market demand and production costs.
Drawing insights from our vendor march video, we showcase practical examples of various pricing tactics, illustrating scenarios where some businesses achieved high sales figures but suffered from lower profitability, while others maintained healthy bottom lines despite lower sales volumes. XCHANGE advises caution against drastic price reductions, as it could be challenging to subsequently raise prices without negatively impacting customer perceptions.
Some companies on XCHANGE have been seen experimenting with price adjustments, lowering them initially to increase sales, but then raising them back up, confusing customers. One particular instance includes a company that reduced prices for Black Friday, although the reduction was not substantial enough to make a notable difference. Successful companies establish pricing strategies and maintain consistency, steering clear of frequent alterations that may lead to customer disorientation. Additionally, some brands opt for annual sales events rather than sporadic price fluctuations.
Conclusion
In summary, pricing is a key element in determining the success of a product. By understanding the needs and preferences of different buyer groups, audio tech businesses can manipulate their pricing strategies to optimize sales quantity and profit margins. At XCHANGE, we want to emphasize the significance of vendors having confidence in the value of your audio products or services. If you don’t, no one else will. We advise aiming for long-term consistent profits instead of gaining sales immediately.
By becoming an XCHANGE vendor, you’ll have access to our all-in-one platform to engage with resellers and our annual vendor meetings (both online and in-person) to gain insights on trends and strategies to help achieve your business objectives.
Sign up today.
In summary, pricing is a key element in determining the success of a product. By understanding the needs and preferences of different buyer groups, audio tech businesses can manipulate their pricing strategies to optimize sales quantity and profit margins. At XCHANGE, we want to emphasize the significance of vendors having confidence in the value of your audio products or services. If you don’t, no one else will. We advise aiming for long-term consistent profits instead of gaining sales immediately.
By becoming an XCHANGE vendor, you’ll have access to our all-in-one platform to engage with resellers and our annual vendor meetings (both online and in-person) to gain insights on trends and strategies to help achieve your business objectives.
Sign up today.
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