Hi!
I’m still on our start-of-the-year pricing focus.
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Many of you took a few moments to share your thoughts on pricing with me last week: Thank you!
If you haven’t already, give me 60 seconds to tell me what’s up with you and pricing with your business.
This morning, I’m going to look at the number in the headline:
- 36.4% of people tell me they price poorly because they don’t understand their market.
Why does this happen?
I will give you a few ideas from my conversations with folks over the last few months.
First, people don’t know their markets because Market Orientation is hard to achieve in many organizations.
What is Market Orientation?
It is a fancy marketing word that means customer-focused.
Why does it matter?
Being Market Oriented matters because it requires you to recognize a few things:
- You aren’t the customer.
- Your opinion of what the customer wants is likely wrong and may be dangerous.
- That the only solution is to do some research.
Later in the year, I’m going to roll out a few ways that we can work on doing research on a big or small scale, but I’m going to share a blog post I wrote towards the end of 2022 that covered a few of the things I learned doing some big and small market research projects since 2021 with a number of sports clubs around the world.
Second, another reason that folks don’t know their market is that they aren’t doing any research.
I’ve talked to a lot of businesses at this point that are still using data from before 2020 to make decisions about what their value is to the market, what their customers value, and where people’s attention is.
I almost feel punked.
Why does this happen?
There are many reasons people don’t do enough research:
- Not enough time
- Not enough money
- Not sure where to begin.
All of these aren’t valid reasons because making decisions about your business based on data that is several years old is malpractice.
Another blog I wrote was for the ALSD on the idea of “Backward Market Research”.
You’ll like this because it is 3 steps:
- Define the question you are looking to answer.
- Figure out how this question’s answers will show up.
- Design your survey around that.
Get really familiar with the difference between primary and secondary research. It matters.
Finally, people don’t know their egos get in the way.
My marketing professor taught us that to be a great marketer, you have to have a certain amount of “humility”.
This means you have to be comfortable with the reality that you don’t know everything. That the customer has a mind of their own. That there is life outside of what you can see or do.
Why does this happen?
EGO.
EGO is the enemy.
But that loops back to Market Orientation and the reality that you are not your customer.
Why does this topic matter?
First, you need to know the market to make good pricing decisions.
There isn’t one best pricing decision, but you can make better ones by knowing the market.
Second, if you don’t know your market you can’t manage the perception of your brand and product in the market.
This goes to the heart of your price.
Third, if you don’t know your market, you can’t know that you are targeting the right customers.
This means that price might not be the problem. It could be something much worse like trying to sell the right thing to the wrong people.
But we could go on with this for a while.
Dave
P.S. I’m in Seattle this week from 23-26 January. Let me know if you are in the area. I’ll be at INTIX on Wednesday and Thursday, but out in Seattle on Monday and Tuesday with friends.