Business Engineers Asia
Business Engineers Asia
We all know that consumer goods is a traditionally capital intensive industry with a small number of brands ever seeing the light of day on a massive scale. In the case of a SME or micro SME, the harsh reality that a quality product may just be not enough to get a long queue of people waiting to spend their hard earned money on your product is easier to dream about that actually coming true. In a world where variety of options leaves anyone spoilt for choice is possibly the reason many fail even before they start.
In a highly competitive consumer goods market with limited marketing budgets, adopting a price skimming strategy can prove to be a highly effective approach. Price skimming involves setting an initially high price for a new product and gradually lowering it over time. So how do we do it? And why is this a good strategy?
One of the key advantages of price skimming is its ability to target early adopters— consumers who are willing to pay a premium price for new and unique products. By launching a product at a high price, a company can tap into this segment of the market, which is typically less price-sensitive and more interested in experiencing the latest offerings. This initial influx of revenue can help the company recoup its development and production costs more quickly. As this is your product’s first interaction it’s important that the your customers have a memorable experience, a "This is amazing" winning feel that can be addictive and they want to repeat the process for all your new products & launches.
2. Creating a Perception of Premium Quality
A higher price can often create the perception of premium quality in consumers' minds. By positioning a product as high-end and exclusive, companies can differentiate themselves from competitors and enhance their brand image. Consumers may associate the higher price with superior features, cutting-edge technology, or exceptional quality raw materials used to create a superior product. This perceived value can help justify the initial price and generate interest among a target audience willing to pay a premium for perceived quality. If you have a limited marketing budget then it is important you spend a good portion of it to highlight the 'premiumness' of your product, quality of your materials or ingredients through your website and packaging. It will go a long way to ' justify ' your intial higher price
Launching a product with a high price can create a sense of exclusivity and generate anticipation among consumers. By strategically promoting the product's features, benefits, and unique selling points, the company can generate buzz and excitement within the market.
However, as Singaporeans are highly skeptical, very little are willing to pay the premium for a product they’ve never tried before. Premium pricing can easily put off skeptics and the way to get around it is strategic promotions, curated events, key partnerships and educating on the quality of products to create a buzz. Early adopters will be open to trying the product at minimal losses since initial costs are low.
This buzz, managed correctly will increase demand if you are successful in pushing out the right image of perceived worth & value. This in turn will amplify it's visibility.
In the past 7 years of helping over 50 plus clients, introducing over 200 brands into Singapore & South East Asia, we have helped launch strategies like price skimming help new market entrants overcome many obstacles to enjoy early success and gaining a foothold in a highly open & competitive market, both online & offline. We will be happy to share our winning strategies if you set your sights to enter Singapore.