Business Engineers Asia
Business Engineers Asia
Brands in Singapore have successfully used price-skimming to launch their products. This is a pricing strategy where a brand initially sets a high price for its product or service and then gradually lowers it over time. It lowers the barrier of entry for potential consumers to get the product, be hooked to it and continue purchasing it even when the price increases back to the original retail price.
It's often used to target early adopters and capture maximum profit before competitors enter the market.
Here are some examples of brands that have historically used price skimming to successfully launch in Singapore.
A well-known brand for premium home appliances, has employed price skimming for its innovative vacuum cleaners, hair dryers, and air purifiers. They often introduce their products at higher price levels and then gradually make them more accessible to a wider audience.
This worked because Dyson adopted the price skimming strategy with large omni-channel awareness campaigns from influencer partnerships to bulletin ads around Singapore. The messaging from these campaigns helped associate Dyson as the best functional premium home appliance brand. As we all have a fear of missing out, many Singaporeans were quick to snatch up the deal before it was gone.
Mate-mate
An energy drink that recently entered the fight for sales of energy drinks. The difference between theirs and existing market leading energy drinks is that it's an all natural energy drink. While this space is dominated by the runaway leader, Redbull, Mate Mate employed price skimming strategies to get consumers to make ‘curiosity buys’ then they launched a strong marketing campaign with the focus on all natural ingredients that supposedly makes the energy boost last longer with the crash & jitters more chemical based energy drinks cause when effects wear off.
As the target market for energy drinks are more exploratory in nature looking to be the first to try new food, drinks and activities. A $1+ dollar drink was a no brainer to try especially when it's an energy drink that seemed to have 0 downsides. With their packaging noting key value propositions such as natural and flavours that fit the Singaporean market, Mate Mate's target market were quick to snatch up the drink to try it.
Offering a range of cake & cookie snacks that in spite of its misleading name is actually made in Dubai. They priced their products at premium prices but offered good discounts shortly after to attract first ‘impulse buys’ and then drew in more customers with the lowered promotional prices. Now as they reverted back to their normal pricing, online sales is still doing well.
However, it must be noted that Eurocake had a strong distribution backing which allowed them to get into almost all retail outlets. The simple fact of constantly being in front of your customers will daily would lead to sales even if it's just curiousity purchases.
Entering Singapore within less than 6 months, they are an Australian company offering premium Japanese Green Tea in Nespresso compatible capsules. Taking our advice, they had a successful run using price skimming by listing at $19.90 then selling on promotion between $12.90 - $14.90. With minimal marketing $0 in media buying spent, they have sold out of their initial shipment with over 40% selling at their retail price of $19.90 in less than 6 months.
This worked as they faced minimal competition that had poor packaging, e-commerce listing and no brand affiliation. With Grow Green Tea, we managed to use a mix of influencer partnerships and optimised e-commerce listing to rank ahead of the other brands in the marketplaces.
Please note that the success of price skimming strategy can vary
depending on several factors, the benefits it creates can lead to a boost in sales
revenue. Always ensure that at some point of your brand launch strategy you have put in sufficient effort to associate your products as a premium brand. Dropping the prices alone can get you increased sales but will also lead to an elastic demand curve that when the prices increase back to your original your sales will decrease.
Let us know if you'd like a quick price analysis, we'll be happy to provide it to you!